December 21, 2018 / 7:48 AM / a month ago

Anglo American resumes iron-ore operations at Minas-Rio

LONDON (Reuters) - Anglo American (AAL.L) said on Friday it was restarting operations at its Minas-Rio iron ore mine in Brazil after months of closure, and had received regulatory to step up production and cut costs.

FILE PHOTO: The Anglo American logo is seen in Rusternburg October 5, 2015. REUTERS/Siphiwe Sibeko/File Photo

As a result of the approval, announced late on Friday, Anglo American said it was increasing production guidance for 2019 to 18 million-20 million tonnes from the previous guidance of 16 million-19 million tonnes, while costs should fall to $28-31 per tonne from the previous guidance of $30-33 per tonne.

“Access to the Step 3 area provides greater operational flexibility and access to higher grade iron ore to support the increase of production of the operation towards its full design capacity of 26.5 million tonnes per year,” Anglo American said with reference to the new permit.

It added it would update output expectations for 2020 and 2021 “in due course”.

The company halted production at the mine after two leaks in March in the pipeline, which channels slurry more than 500 km (310 miles) from Minas Gerais state to the port in Rio de Janeiro state.

In November, a notice seen by Reuters showed the company expected the pipeline to be ready to receive iron ore from Minas-Rio by the end of that month, paving the way for a restart in December.

In a first statement on Friday, Anglo American said the resumption of operations followed an extensive technical inspection and the replacement of a 4 km stretch of pipeline where the leaks occurred and other small sections where minor anomalies were discovered.

Anglo American has also shortened the intervals for future inspections to two years from five years and fitted a monitoring system to critical sections of the link.

“The extensive analysis confirmed the sound condition of the pipeline and we have taken a number of preventative measures to provide additional reassurance for the long term,” CEO Mark Cutifani said.

Anglo said it expected an underlying EBITDA (earnings before interest, tax, depreciation and amortisation) loss of $320 million for 2018 as a result of the outage, at the lower end of a previously guided range of $300-400 million.

Reporting by Barbara Lewis; editing by David Evans

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