Anglo plots iron ore expansion

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From MiningM:

ANGLO American may nudge production from its Minas Rio iron ore mine to 29 million tonnes/year by 2020 as it optimises its processes, but it was unlikely to embark on a second stage expansion, at least in the medium-term.

Paul Castellari, CEO of Anglo American’s iron ore business unit in Brazil, said today full production of 26.5 million tonnes/year was scheduled for Anglo’s 2016 financial year as the group focused on providing returns to shareholders. Output in 2015 would be 11 to 14 million tonnes.”We have to look at the future because this is a great deposit, but we also feel there is a lot of iron ore in the market,” said Castellari addressing media during a site visit.

“We have to do a lot before we get to expansion.”The deposit is big enough – we could produce 90 million tonnes – and the port is large enough … but in the short- to medium-term, we need to ramp-up rates.

…the high quality nature of Minas Rios’ iron ore, and the fact that alot of the capital has been sunk has convinced Anglo CEO, Mark Cutifani, that the much of the heavy lifting had been completed. It was one of the reasons why he stepped back from the temptation to attract a partner to the asset.Casterllari said Minas Rio would deliver iron ore to predominantly Asian customers at a cash cost FOB of between $33/t to $35/t.

Expansion on track. And remember that the more you produce the cheaper it gets. At $34 FOB it’s not overly cheap but it is high quality so will find a market. And it’s easily expandable in future if RIO and BHP cut back.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.