Anglo American highlights progress on the development of its world class key strategic growth projects
Anglo American is hosting a visit to South America for international investors and analysts from 6th to 8th October. The visit includes a number of presentations on Anglo American’s three key strategic growth projects in Brazil and Chile, namely the Minas Rio iron ore project, the Los Bronces copper expansion project and the Barro Alto nickel project.
Anglo American has established a portfolio of world class operating assets and development projects, with a clear strategy to deploy capital towards commodities and projects that deliver long term, through-the-cycle returns. Anglo American has a $17 billion pipeline of approved projects across the most structurally attractive commodities of platinum, iron ore and copper, in addition to making targeted high quality investments in nickel.
Anglo American has prioritised investment in the development of its three key near term strategic growth projects during the economic downturn in order to position the Group to capitalise on the next phase of global economic growth. Excellent progress has been made at all three projects which remain on track to enter production from 2011 onwards and will be well placed on their respective industry cost curves, with long resource lives and positioned to allow the Group to benefit from a growing commodity demand environment.
Minas Rio (iron ore)
The Minas Rio iron ore project in Brazil is a rare multi-billion tonne resource in the highly attractive seaborne iron ore market with the benefit of an integrated logistics system and low production costs expected to be firmly in the first quartile of the cost curve. Since the acquisition of Minas Rio, Anglo American has undertaken considerable geological work to increase confidence in the resource estimates, resulting in the increase of resources from 1.2 billion tonnes at the time of acquisition in 2007 to 4.6 billion tonnes, a nearly fourfold increase, with further resource potential.
The beneficiation test work performed to date has produced excellent results, with pilot sample iron grade (Fe) above 69%. The anticipated product Fe grade over the life of the mine is expected to be above 68%, with extremely low alumina, silica and phosphorus contaminants. With such quality characteristics, Minas Rio pellet feed will rank as a top quality product in an industry that is expected to continue to experience declining ore grades. Across Anglo American’s iron ore interests, the Group has the potential to increase iron ore production to in excess of 150 Mtpa within 10 years.
There has also been excellent progress made on the delivery of the first phase of project development. Anglo American has obtained a series of important licences since acquisition in August 2008 and the overall licensing process is on track. The construction of the port at Açu is well advanced and the earthworks for the beneficiation plant and pipeline are progressing towards first production in the second quarter of 2012, with ramp-up to 26.5 Mtpa. Due to the size of the ore body and the dedicated logistics infrastructure, Minas Rio has considerable expansion potential, with planning underway to increase production in a second phase to 80 Mtpa.
Los Bronces (copper)
Anglo American’s 100% owned Los Bronces copper mine in Chile is well advanced in its expansion project, with engineering work more than 80% complete. Using proven technology, development is now well progressed into the execution phase with first production on target to be delivered in the fourth quarter of 2011. Production is scheduled to increase to an average of 415 ktpa over the first ten years of full production (490 ktpa over the first three years). At peak production levels, Los Bronces is expected to be the fifth largest producing copper mine in the world, with highly attractive cash operating costs of $0.70 per pound and reserves that support a mine life of 30 years. Resource and mineralisation studies carried out by Anglo American’s technical teams support further potential expansion.
In addition to the Group’s attractive copper growth options in other established mining jurisdictions, namely Peru and the US, Anglo American has announced two very significant and high quality new discoveries at Los Sulfatos and San Enrique Monolito close to its Los Bronces mine in Chile. These two new copper prospects together increase the Group’s copper resources (excluding reserves) by approximately 50%.
Barro Alto (nickel)
The Barro Alto nickel project is progressing well, with overall development more than 70% complete, remaining on track for start up in the first quarter of 2011. This project leverages an existing operation and proven technology and will produce an average 36 ktpa of nickel in full production (41 ktpa over the first five years), with a cost position in the lower half of the curve. Further asset optimisation initiatives are underway which are expected to improve cost positioning further.
Barro Alto has an approved life of mine of more than 25 years with further upside potential from its extensive resource base. When Barro Alto reaches full production in 2012, Anglo American’s nickel production will reach 60 ktpa, while additional potentially world class projects in the pipeline could increase production to 140 ktpa, with further upside potential, leveraging the Group’s considerable nickel laterite technical expertise.
Minas Rio, Los Bronces and Barro Alto are three projects which demonstrate Anglo American’s ability to deliver high quality, low cost projects that are well timed to deliver in a period of expected cyclical upturn as a result of consistent and focused investment through the cycle. In terms of production, Anglo American’s $17 billion pipeline of approved projects is expected to deliver organic growth of one third by 2013.
The presentations are available on the Anglo American website: www.angloamerican.co.uk.
About Anglo American
Anglo American plc is one of the world’s largest mining groups. With its subsidiaries, joint ventures and associates, it is a global leader in platinum group metals and diamonds, with significant interests in coal, base and ferrous metals, as well as an industrial minerals business. The Group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the “Code”), if any person is, or becomes, “interested” (directly or indirectly) in 1% or more of any class of “relevant securities” of Anglo American or Xstrata plc (“Xstrata”), all “dealings” in any “relevant securities” of that company (including by means of an option in respect of, or a derivative referenced to, any such “relevant securities”) must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the “offer period” otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an “interest” in “relevant securities” of Anglo American or Xstrata, they will be deemed to be a single person for the purpose of Rule 8.3.
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