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When reporting its first annual profit in five years on February 21, multinational resources group Anglo American announced it was scrapping plans to sell some of its largest assets - including the Minas-Rio iron ore project in Brazil.
Minas-Rio was part of an asset sale program first announced in 2015, when Anglo said it planned to radically restructure its portfolio by shrinking its operations 60%.
"We will continue to upgrade our portfolio as a matter of course, although asset disposals for the purposes of deleveraging are no longer required," CEO Mark Cutifani said when reporting the 2016 results.
The London-based resource group's decision primarily reflects a rebound in commodity prices and the impact of restructuring last year, Anglo said.
On March 3, ratings agency Moody's affirmed its view that Anglo has taken effective measures to adapt to the new environment of highly volatile commodity prices, as it cut costs and improved operating resilience of the iron ore division.
"The iron ore division was the largest source of earnings volatility and capital write-offs in 2015, with the flagship Minas-Rio facility written down by US$11.3bn," Moody's said.
Initially projected to ship its first ore in January 2011, the Minas-Rio complex finally made the maiden shipment in October 2014.The original cost estimate of US$3.5bn increased 143% to US$8.4bn.
The project saw large changes to the original completion and cost estimates due to difficulties of the previous owners, MMX and LLX, subsidiaries of the distressed EBX conglomerate.
Under Anglo, the project faced permit delays and design changes, requiring additional time and budget for completion. Minas-Rio was restructured into three stages until it reaches 26.5Mt/y, with each phase requiring a specific operating license.
The first phase was achieved in October 2014 with the start of commercial operations. The permit for the second phase was obtained last November, and the third phase is projected to begin operations by the end of 2019.
Minas-Rio saw a 76% increase in production last year to 16.1Mt.
Anglo confirmed that its Iron Ore Brazil unit continues to focus on operational stability and on obtaining the step 3 licenses required for the operation to access the full range of run-of-mine grades and reach its nameplate capacity of 26.5Mt (wet basis).
Minas-Rio production guidance for 2017 has been lowered to 16-18Mt (previously 19-21Mt), and for 2018 to 15-18Mt (previously 22-24Mt), subject to the timing of the step 3 licenses approval.
In Latin America, Anglo operates eight mines in Brazil, two in Chile and one in Colombia.