Meter running at Anglo American's Minas-Rio project

Continuing delays on Anglo American's Minas-Rio iron ore project in Brazil are likely to push up the cost of the project more than the market had been expecting.

The group had been facing three licensing challenges affecting construction activities at the beneficiation plant, as well as land access issues affecting the 525 kilometre pipeline route. Two of these injunctions were removed in September, enabling construction of the primary crusher and conveyor system at the mine site and pre-stripping work to resume, but wrangling over the injunction preventing the construction of the electricity transmission line is dragging on. Construction work not covered by the injunctions is on schedule, Anglo American said.

The mining group is carrying out a detailed cost review to assess the impact of the already announced delay and the other disruptive challenges faced by the project which include high cost inflation across the construction industry in Brazil. The review includes an independent external assessment commissioned by the board.

The current indications are that capital expenditure for the project is likely to be more than the $8.0bn upper end of the current range of analysts' expectations.

JH