|Anglo American suffers US$4b hit over Minas-Rio mine
Anglo American announced a write-off of US$4 billion caused by delays at its Minas-Rio iron-ore mining project in Brazil.
The mining giant, which has been hit in recent months by slumping platinum output owing to fatal strike action by workers in South Africa, said that it would “record an impairment charge of US$4 billion,’’ in its 2012 earnings.
“We are clearly disappointed that the diversity of challenges that our Minas-Rio project has faced has contributed to a significant increase in capital expenditure, leading to the impairment we have recorded,’’ chief executive Cynthia Carroll said in a statement. She added the company is committed to the project.
Anglo American said that capital expenditure for the Minas-Rio project could swell to US$8.8 billion, citing higher construction costs and delays to the first deliveries of iron ore to late 2014 rather than this year.
Carroll said the project's first phase would began at the end of 2014.
The project includes building a 525-kilometer pipeline that would transport iron ore slurry to the Brazilian coast.
The announcement came only a few days after Anglo American said that its production of platinum had slumped by 29 percent in the fourth quarter of 2012 because of violence at its South African mines.
Meanwhile, earlier this month, the miner named AngloGold Ashanti boss Mark Cutifani as its new chief executive to succeed Carroll, who announced in October her intention to step down as head of Anglo American in the wake of the unrest.
Also since the start of the year Anglo American, which is the world's biggest producer of platinum, announced plans to cut 14,000 jobs at its strike-hit South African operations. The vast majority of job cuts, 13,000 in all, would be lost around Rustenburg, 110 km northwest of Johannesburg that was the crucible of labor unrest that shocked the world last August and September.