Strategy and growth
The core strategy of the business is to grow Anglo American’s position in iron ore and make it the cornerstone of the Ferrous Metals portfolio.
As part of that process, in mid-2007 Anglo American acquired a 49% interest in the MMX Minas-Rio iron ore project in Brazil for an effective price of $1.15 billion plus a potential payment of up to $600 million if certain criteria are met. Planned annual capacity will be 26.5 Mtpa of iron ore pellet feed, for start-up during 2010 at an anticipated cost of $3.46 billion. On 17 January 2008, Anglo American announced that it had entered into a period of exclusive discussions with the controlling shareholder of MMX Mineração e Metálicos S.A. (MMX) to acquire a 63.6% shareholding in a new company ‘Newco’ which will be demerged from MMX and will own MMX’s current 51% interest in the Minas-Rio iron ore project and 70% interest in the Amapá iron ore mine. After the acquisition of the 63.6% stake, Anglo American will offer to purchase the Newco shares held by the minority shareholders of Newco at the same price per share, for a total of approximately $5.5 billion on a 100% basis or approximately $361.12 per Newco share (assuming one Newco share for each current MMX share), as well as royalty payments to MMX beginning in 2025 for the Minas-Rio project and 2023 for the Amapá mine.
Kumba, through the Sishen Expansion Project, will expand its iron ore production to 44 Mtpa by 2009, and further brownfield and greenfield opportunities will extend this to more than 70 Mtpa.
The process of selling down Anglo American’s stake in Exxaro from 23% to 10% was completed in September, realising a profit of $234 million in 2007. Anglo American will continue to hold a 10% shareholding until 2016.
Right: Drill assistant Allowize Strauss (right) and learner Maureen Tshetlho at Kumba Iron Ore’s Sishen open pit in South Africa