Anglo American is planning to sell its stake in the Amapa iron ore project in northern Brazil. It is considering selling its majority stake in the project so that it can concentrate on the development of its Minas - Rio project in the south of Brazil.
In 2008 the UK based Anglo American had acquired control of both the Amapa operation and Minas Rio from the Brazilian billionaire Eike Batista’s MMX. It had paid $5.5 billion for the acquisition. Now the company would rather focus on Minas Rio rather than the small Amapa iron ore mine in the Amazon.
The production from Amapa began in 2010 and it is expected to produce 4.5 million tones of iron ore in 2011. However at Minas Rio the projected production is likely to be 26.5 million tones of iron ore. Also now that Amapa has become profitable ahead of schedule other issues are also being considered.
The logistical problems with operations of the mine include the restriction of ore that can be shipped from the port in the Amazon that serves the mine at Amapa. The amount of ore is limited by the capsize vessels that can navigate the river system, this also increases the freight costs of the mine ore.
The remote location of the mine in the north also takes it away from the domestic market for iron ore in Brazil. Most of the country’s large steel mills which will buy the iron ore are located in the south which is closer to the Minas Rio project.