(Bloomberg) -- Billions in cost overruns and years of delays have given Anglo American (LON:AAL) Plc a thick skin when it comes to developing projects in Brazil. That’s why the company is staying upbeat in the face of one more permitting holdup.
Authorities have required more public hearings for the third and final phase of the Minas Rio iron-ore project, pushing out the expected date for granting of permits until December, Anglo’s Brazil country head Ruben Fernandes said in a telephone interview Friday.
“We had an expectation for September, then October and now December,” he said. “But now everything is ready. We don’t have anything to present. Everything is in the hands of the environmental agency.”
It’s the latest in a long list of hiccups at Minas Rio. Anglo acquired the project at close to the peak of the commodities super-cycle, with development costs ballooning to more than $8 billion after permit delays and design changes. Shipments finally started in 2014, about four years later than initially scheduled, just as prices were plunging amid a slowdown in Chinese demand.
Adding to the recent licensing delays in Brazil is a more cautious approach by regulators since a deadly tailings dam rupture at a BHP Billiton (LON:BLT) Ltd.-Vale SA joint venture in 2015.
Still, Fernandes is confident that Anglo will be able to increase annual production to 26.5 million metric tons by 2019, from about 17 million tons now. That would enable the mine to tap into more of China’s growing appetite for higher grade ores that produce less emissions in the steel-making process.
Fernandes said the mine is producing ore at between 65 percent and 68 percent iron content, which helps Chinese mills cut pollution while boosting margins.
Even though Fernandes denies speculation that Anglo once considered selling Minas Rio, he said the company did consider unloading other Brazilian assets.
“We had nickel on the table for a while,” Fernandes said, adding that Anglo eventually decided to retain the assets. “We are in the first quartile in terms of cash cost.”
Anglo’s Brazilian ferronickel operation is set to deliver 43,000 tons to 45,000 tons of the nickel-iron alloy this year with the possibility to increase that by about 10 percent by 2019.