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Case Study: Anglo American

Background

ERM was retained by Anglo American to assess permitting processes and associated financial and schedule implications for an iron ore acquisition in Brazil

Our Approach

With 162,000 staff and US$35.67 billion in revenue, Anglo American is a major force in mining and natural resources.

Minas-Rio is an integrated Brazilian iron ore project comprising deposits in the state of Minas Gerais, slurry pipelines and the development of a terminal in the state of Rio de Janeiro to handle capesize vessels. Anglo American acquired 49 percent of this project in April 2007. In March 2008, it gained the rest as well as a 70 percent interest in MMX Amapá. Amapá is an iron ore project which comprises a mine, railroad and port terminal in the municipality of Santana. The deals were worth US$1.15 billion and US$5.5 billion respectively.

ERM worked with Anglo American from the deal’s inception, completing due diligence on Minas-Rio areas in 2007.

As the deal concluded, Anglo American retained ERM again in 2008 to assess the environmental licensing process for factors that could delay Minas-Rio’s implementation and start-up. ERM then presented these factors as timetables, with milestones linked to every project task.

Benefits and Value

Anglo American was able to compare these timetables with engineering and investment timetables. Together with ERM opinion, this enabled assessment and discussion of potential financial impacts on the deal from licensing process delays.

This acquisition of Minas-Rio and interest in Amapá will significantly increase Anglo American's participation in the seaborne iron ore market, in line with its strategic goal to become a significant iron ore industry player.


 

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