Minas-Rio Expects Operations to Resume in 4Q
“Our priorities are to ensure the integrity of the pipeline and the protection of the natural environment, while providing as much clarity as we can for our employees, customers and other business stakeholders,” said Mark Cutifani, CEO of Anglo American. “Our technical teams are working alongside two specialist teams in Brazil, from the Institute of Technological Research and the Federal University of Minas Gerais, to identify the specific causes of any weakness in certain sections of the pipeline.”
Anglo suspended operations at Minas- Rio following a “minor leak” of iron ore slurry that was identified in the pipeline at approximately 7 p.m. on March 29. This leak was stopped within eight minutes and caused no disruption to local water supply. It occurred in close proximity to a similar leak on March 12, near a pumping station.
After the full inspection, Cutifani expects a period of analysis and remedial work prior to testing and restart of operations. “We are currently working with our unions to agree to the appropriate terms for the approximately 35% of our employees at Minas-Rio who will be on an extended period of leave, including providing training during that time, in addition to a pay and benefits package,” Cutifani said. “The majority of our Minas-Rio employees continue to be deployed across our operations in Brazil, including on the construction work required to secure our Step 3 operating license in the first half of 2019 to enable the full ramp-up of Minas-Rio to 26.5 million [metric tons per year].”
The halt in production comes at a time when several iron ore producers have issued downward revisions to production guidance, tightening the market. “A mine that was due to produce 16 million mt of iron ore this year will now produce just 3 million mt,” said Alex Griffiths, senior research analyst at Wood Mackenzie. “The iron ore that Minas Rio was producing — pellet feed — is a type that is currently in demand, with record price premiums achieved late last year.”
Minas-Rio will now miss the opportunity to sell its product during the tail-end of these highs. And, Griffiths explained, with the market tightening, they could see premiums for quality ores stay higher for longer.