--Court injunction latest challenge in development of Minas-Rio
project
--Ruling bars development within 250 meters of underground
cavern
--Anglo American has appealed decision, awaiting final
ruling
(Updates with comments from Anglo American in seventh
paragraph.)
By Diana Kinch
RIO DE JANEIRO--Globally-diversified mining company Anglo
American PLC (AAL.LN, AAUKY) may face a new legal hitch in the
development of its major Minas-Rio iron-ore project in southeast
Brazil.
A regional federal court in Minas Gerais state, where Anglo's
Minas-Rio mine is located, last week upheld an injunction by a
federal court in Belo Horizonte that prevents the company from
developing activities within 250 meters of a natural cavern said to
be of environmental importance.
According to Minas Gerais state's public ministry, Anglo had
planned to install an iron-ore conveyor belt within 100 meters of
the underground cave, known as CAI 03, which measures 396 square
meters and is frequented by wildlife threatened by extinction.
"The speleology studies presented by the company are
incomplete," said the public ministry in a statement. The ministry
is calling for Brazil's federal environmental watchdog Ibama to
participate in the environmental licensing of activities in regions
where there are caves, which are considered federal patrimony, a
public ministry spokesman said.
Anglo American said in its half-year financial report last month
that it was delaying the start-up of Minas-Rio by about one year to
the second half of 2014, as the licensing and construction progress
has been "hindered by legal actions." The project has been dogged
by a series of licensing delays and legal rulings which have
affected construction of a concentrator plant and energy
transmission line, partly due to archeological investigations at
caves in the region and land-tenure issues.
It is unclear whether the latest legal restriction may represent
a further delay to the project, which could cost some $5.8 billion
to complete and is planned to produce 26.5 million metric tons a
year initially of iron ore, to sell within Brazil and to
export.
In an emailed statement, Anglo said that it had appealed the
decision and was awaiting a final ruling. "Anglo American
emphasizes that it operates in accordance with existing legislation
and follows all applicable legal channels," the company said.
Anglo chief executive Cynthia Carroll in late July described
Minas-Rio as "one of the largest and most complex projects in the
world." The executive said that due to the various impediments, the
company "cannot determine with confidence the date for first
production."
However, Ms. Carroll said at the time that "Minas-Rio is a high
quality iron ore resource with very significant expansion potential
and, despite current challenges, will prove to be a major
contributor to the Group for many decades to come."
-Jeff Fick in Rio de Janeiro contributed to this report.
Write to Diana Kinch at diana.kinch@dowjones.com
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