Engineering & Mining Journal

MAY 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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NEWS-LEADING DEVELOPMENTS 4 E&MJ; • MAY 2018 www.e-mj.com Minas-Rio Expects Operations to Resume in 4Q In late April, Anglo American said it ex- pects the Minas-Rio iron ore operation to begin to ramp up in the fourth quarter following an inspection of its pipeline in Brazil. The company is progressing with a full inspection of its pipeline at the iron ore operation, which is expected to take approximately 90 days to complete. The inspection includes an internal scan of every section of the pipeline and will then be followed by a detailed analysis of the data and an assessment of required remedial action. Mining operations will then resume once any repair work is com- pleted, the pipeline has been tested, and the regulatory authorities have provided their consent to the resumption of pipe- line operations. "Our priorities are to ensure the integ- rity of the pipeline and the protection of the natural environment, while providing as much clarity as we can for our employ- ees, customers and other business stake- holders," said Mark Cutifani, CEO of An- glo American. "Our technical teams are working alongside two specialist teams in Brazil, from the Institute of Technologi- cal Research and the Federal University of Minas Gerais, to identify the specific causes of any weakness in certain sec- tions of the pipeline." Anglo suspended operations at Minas- Rio following a "minor leak" of iron ore slurry that was identified in the pipeline at approximately 7 p.m. on March 29. This leak was stopped within eight min- utes and caused no disruption to local water supply. It occurred in close proxim- ity to a similar leak on March 12, near a pumping station. After the full inspection, Cutifani ex- pects a period of analysis and remedial work prior to testing and restart of opera- tions. "We are currently working with our unions to agree to the appropriate terms for the approximately 35% of our employ- ees at Minas-Rio who will be on an ex- tended period of leave, including provid- ing training during that time, in addition to a pay and benefits package," Cutifani said. "The majority of our Minas-Rio em- ployees continue to be deployed across our operations in Brazil, including on the construction work required to secure our Step 3 operating license in the first half of 2019 to enable the full ramp-up of Minas-Rio to 26.5 million [metric tons per year]." The halt in production comes at a time when several iron ore producers have is- sued downward revisions to production guidance, tightening the market. "A mine that was due to produce 16 million mt of iron ore this year will now produce just 3 million mt," said Alex Griffiths, senior re- search analyst at Wood Mackenzie. "The iron ore that Minas Rio was producing — pellet feed — is a type that is currently in demand, with record price premiums achieved late last year." Minas-Rio will now miss the opportu- nity to sell its product during the tail-end of these highs. And, Griffiths explained, with the market tightening, they could see premiums for quality ores stay higher for longer. Threat of Sanctions Puts Rusal in a Bind The Trump Administration amended its proposed Russia sanctions, granting a pos- sible reprieve for UC Rusal, which found itself being ostracized by the market in April. Rusal's owner, the En+ Group, was facing a possible delisting until the ma- jority shareholder, Oleg Deripaska, who is also the CEO of UC Rusal, gave up his board seat and reduced his share holdings. The U.S. Treasury granted several Russian companies, including En+, an extension for compliance. The announcement caused Rusal's stock price to rise sharply. As of press time, the company had regained al- most of the ground it lost when the U.S. sanctions where initially proposed. In April, Rio Tinto said it would de- clare force majeure for contracts involving shipments of alumina from a refinery it operates with Rusal in Australia and for bauxite shipments to a Rusal alumina refinery in Ireland, which feeds smelters in Europe. Rio's announcement rattled metals markets. Other western compa- nies are also trying to avoid becoming entangled in the sanctions. Glencore CEO This latest leak was stopped within 8 minutes and it occurred in close proximity to a similar leak on March 12, near a pumping station (above).

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