LONDON – Miner Anglo American and joint venture partner Cliffs Natural Resources have agreed to sell their Amapa iron ore operation in Brazil to former commodities trader Pramod Agarwal’s Zamin Ferrous for an undisclosed sum. Report by Reuters
Anglo bought control of Amapa, in the very north of Brazil, from Brazilian billionaire Eike Batista’s MMX in 2008, as part of the $5,5 billion Minas Rio acquisition. But Amapa was deemed noncore and officially put on the block last year as the miner streamlines its asset portfolio globally.
The sale announced on Friday, which adds to privately owned Zamin’s portfolio of iron ore assets in Latin America, will allow Anglo to focus on its flagship Minas Rio in Brazil, where the miner has battled rising costs and permitting delays.
Minas Rio has been a key factor in the souring of relations between Anglo’s CE and shareholders, and, along with an upcoming review of the miner’s platinum arm, is seen as critical to the recovery of its underperforming shares.
Anglo said in November that Minas Rio is now unlikely to cost less than $8 billion, up from the miner’s most recent forecast of $5,8 billion – already twice original estimates.
“Of greater significance for Anglo’s shares (than Amapa’s sale) would be if (Friday’s) transaction were to be followed by further portfolio rationalisation at its Brazilian iron-ore assets,” JP Morgan analysts said on Friday, adding investors would likely welcome a strategic partner for Anglo in Minas Rio.
Amapa has potential for expansion according to Zamin, which owns the Zamapa iron ore processing facility in the same state, but limitations of the operation include a restriction on capesise vessels in the Amazon port that serves it, curtailing the amount of ore that can be shipped at any one time.
