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Anglo American plc

Anglo American plc resumes Minas-Rio iron ore operation

Anglo American plc (LON:AAL) announced the resumption of operations at its Minas-Rio iron ore operation in Brazil. The restart of the integrated iron ore operation follows an extensive and detailed technical inspection of the 529km pipeline that carries the iron ore in slurry form from the mine to the port, the pre-emptive repair of certain sections of the pipeline, and receipt of the appropriate regulatory approvals. The inspection of the entire pipeline by specialist pipeline inspection devices (“PIGs”), and the analysis of the collected data by expert teams drawn from Brazil and internationally, confirmed the pipeline’s integrity.

Anglo American has taken a responsible approach and has pre-emptively replaced a 4km stretch of pipeline where the two leaks of non-hazardous material had occurred, as well as a small number of individual sections of pipe where the PIGs detected minor anomalies below the normal threshold for intervention. Furthermore, Anglo American has shortened the intervals for future inspections by PIGs from five years to two years to ensure the long-term integrity of the pipeline, while also fitting a fibre-optic system of acoustic, temperature and vibration sensors along critical sections of the pipeline to monitor its performance.

Mark Cutifani, Chief Executive of Anglo American, said: “The protection of the natural environment surrounding local communities and the overall integrity of the pipeline have formed the focus of our work to restart Minas-Rio and meet our obligations to our host communities, employees, customers and other stakeholders. We congratulate our team on the ground that so quickly restored the waterways to full health and put in place an improved additional water supply to the nearby community. We also thank our technical teams and the group of specialist institutions in Brazil and beyond for their diligence and spirit of partnership, and to our regulators for their constructive approach. The extensive analysis confirmed the sound condition of the pipeline and we have taken a number of preventative measures to provide additional reassurance for the long term.

“The majority of our employees have been deployed across our operations in Brazil during this year, including on the construction work required to secure our Step 3 operating licence for Minas-Rio, and safety and other refresher training has been under way since early November in preparation for the restart.”

Anglo American expects the operation to ramp up to 1.2 million tonnes (wet basis) per month and to produce approximately 16-19 million tonnes (wet basis) of iron ore in 2019, with the expectation that the Step 3 licences are received as planned. Minas-Rio is expected to report an underlying EBITDA loss of $320 million for 2018, compared to guidance of a loss of $300-400 million.