The recently announced first shipment of iron ore from the Brazilian operations of Anglo American, the Southeastern System, is expected to impart a good sales margin for the company.
According to Anglo, the pellet feed grade ore, with an iron contents of 68 percent after concentration, has a cost for the company in the $33/mt to $35/mt range, wet basis, FOB port of Acu, in the state of Rio de Janeiro.
Although Anglo did not unveil the price of the 80,000 mt shipped to China, a market player has commented to SteelOrbis that the FOB price of the ore was probably around $51/mt, based on market conditions of $78/mt CFR Chinese port for the Platts 62 percent Fe, plus $8.40/mt of iron premium over 62 percent Fe, $33/mt for sea freight and $2.31/mt freight penalty for an estimated 7 percent moisture contents.
This would imply in a gross margin for Anglo between $16/mt to $18/mt, but the source added that this could be changed depending on the iron ore price level by mid-December, when the ore shipment is expected to arrive in China and the price deal will be closed.
Bought from MMX in 2008, the Southern System of Anglo American consists of iron ore mines in the cities of Conceicao do Mato Dentro and Alvorada de Minas, in the southeastern state of Minas Gerais, the Port in the neighbor state of Rio de Janeiro and a 529km ore pipeline linking the units.
It is expected to achieve full capacity of 26.5 million metric tons per year on early 2016.