Published February 05, 2013
CAPE TOWN – Global mining group Anglo American could bring a partner into its flagship Minas Rio iron ore asset in Brazil, outgoing chief executive Cynthia Carroll said on the sidelines of a mining conference.
The Minas Rio project - a bruising top-of-the-market deal that contributed to Carroll's fall from grace and planned departure from the company - has been hit by delays and cost overruns. Anglo wrote $4 billion off the value of the asset last week, and said the mine would cost $8.8 billion to develop, more than three times original estimates.
"If it makes economic sense we will pursue it. We have been talking about a partnership for some time. We really need to establish what that value is," Carroll told Reuters.
She declined to comment on any ongoing discussions.
Anglo, like many operators in Brazil, has come under pressure from rising costs in a country where mining activity is growing and the construction sector is booming ahead of the 2016 Olympic Games and the 2014 soccer World Cup.
But Carroll said she was "confident" Anglo would stick to revised cost estimates.
"There are always going to be surprises, but we have enormous support from the government at all levels ... They understand, they want that project to get off the ground because it means jobs and tax revenues for them," Carroll said.
Carroll, who announced last year she would step down under pressure from investors over poor returns, will be replaced by current AngloGold Chief Executive Mark Cutifani.
Top of Cutifani's to-do list is the overhaul of Anglo's problematic platinum arm, Anglo American Platinum , squeezed by weak demand, rising costs and labor unrest.
The unit, best known as Amplats, last month announced a plan to mothball two mines and sell one, potentially leading to 14,000 job cuts. The move, aimed at restoring profits, has met with fierce resistance from South Africa's government, politicians and unions.
The company said last week it would delay a two-month consultation period by two weeks.
"It is not a matter of pushing back. We have a plan and we are going to work through that plan," Carroll said.
"I spent hours with (the) minister of mines and minister of labor a few weeks ago, and we all agreed we need to be around the table together. We have a very comprehensive social plan."
Carroll said the aim was to protect the business and 45,000 jobs. Amplats on Monday unveiled its first ever annual loss.
"The industry is not in a sustainable position and Anglo American Platinum is not," she said.
"The market outlook has changed. A few years ago, all of us in the industry were forecasting 3 to 4 percent growth and now it is 2.5 percent, starting with Europe, which takes about 30 percent of platinum, and has contracted."
Carroll declined to comment on talks towards the sale of Amplats' Union mine.
(Reporting by Clara Ferreira-Marques and Ed Stoddard; Editing by Mark Potter)