ANGLO American signed a $15bn iron ore supply agreement with Bahrain Steel for its Minas Rio iron ore mine in Brazil, said BusinessLive.
The 20-year agreement with Bahrain Steel signed with Anglo American Marketing on Thursday gives the mine a large and important client, taking eight million tonnes a year at an approximate cost of $15bn.
“Deliveries under the contract have already started, sourced exclusively from Anglo American’s Minas-Rio mine in Brazil,” Bahrain Steel said in a statement on Thursday.
Minas Rio cost more than $13bn to buy and build but has yet to come close to its design capacity, with further concerns around whether the mine will secure tailings dump permits, which, if not granted, will lead to a halt in production, said BusinessLive.
Miningmx quoted a report by JP Morgan Cazenove on April 24 that should Anglo fail to win a new license for the expansion of its tailings dam this year, the mine may face “… a full shut down in 2020”. This was in the wake of the Vale’s Feijao accident which left at least 300 people dead following a burst of the tailings dam wall in January.
Cutifani told Miningmx in February that he had confidence in Anglo American’s tailings technology. “We do an independent technical review every 12 months. Where people are talking about independently verifying these dams, we are already doing it,” he said.
Anglo re-opened its Minas Rio iron ore pipeline in the fourth quarter of the 2018 calendar year following a leak of slurry that resulted in its shut-down for most of the year, at a cost to pre-tax earnings of $400m.
Some 13% of Anglo earnings was forecast to be down to Minas Rio in its 2020 financial year, assuming 21 to 23 million tonnes, equal to $722m in earnings before interest, tax, depreciation and amortisation. Whilst JP Morgan Cazenove expected the license for the expansion to be given “… permitting timelines in Brazil are uncertain,” it said.
