Anglo American takes $4bn hit for Brazil mine

MINER Anglo American is to take a $4bn (£2.5bn) write-down on its Minas-Rio iron ore project, as investment soared.

Anglo American, which commissioned a cost review into the Brazilian Minas-Rio iron ore project in November, said yesterday that investment in the iron ore project would jump to $8.8bn.

On the basis of spiralling spending on the project, Anglo American said it would record an impairment charge of $4bn in its full-year results.

Minas-Rio will now cost more than three times Anglo American’s previous estimates.

The write-down comes two weeks after fellow blue chip miner Rio Tinto wrote down two recent acquisitions by $14bn, spelling the end for chief executive Tom Albanese.

Anglo American chief executive Cynthia Carroll, who is to step down in April and be replaced by AngloGold chief Mark Cutifani, said yesterday that the company was “clearly disappointed” with the increase in capital expenditure and subsequent write-down.

“Despite the difficulties, we continue to be confident of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project,” she added.

Anglo American is targeting its first iron ore at the site at the end of the next year, it said. The FTSE 100 miner also confirmed progress on the project, saying that two grinding mills had been installed and 50 per cent of a pipeline had been laid.

Designed to help to diversify a company that was still dependent on South Africa for the bulk of its revenue, Minas-Rio was bought by the miner for $5.5bn in two stages in 2007 and 2008.

The markets reacted positively to news of the write-down, and Anglo American was the top riser on the FTSE 100 yesterday, adding 3.04 per cent to close at 1,929.5p.