Anglo American's $17 billion pipeline of approved projects spans the most structurally attractive commodities of platinum, iron ore, copper and nickel. The decision to preserve the development of its four key near term strategic growth projects - the Minas Rio and Kolomela (formerly Sishen South) iron ore projects in Brazil and South Africa respectively, the Barro Alto nickel development in Brazil and the Los Bronces copper expansion in Chile - during the economic downturn positions the Group to capitalise on the next phase of global economic growth. The four projects are all well placed on their respective industry cost curves, have long lives, and are on track to enter production from 2011 onwards, in what is expected to be a growing commodity demand environment.
Anglo American's Los Bronces copper expansion project is on schedule, with first production planned in the fourth quarter of 2011 and output expected to increase from the fourth quarter of 2012 to an average of 490 ktpa over the first three years of full production (an average of over 400 ktpa over the first 10 years). At peak production levels, Los Bronces is expected to be the fifth largest copper mine in the world, with reserves that support a mine life of 30 years. Resource and mineralisation studies carried out by Anglo American's technical teams support further potential expansion. Two very significant high quality discoveries have been made at Los Sulfatos and San Enrique Monolito, close to Los Bronces, which together have increased the Group's copper resources (excluding reserves) by approximately 50%.
The Barro Alto nickel project is also on schedule towards start-up in early 2011, with the overall development almost 80% complete at the year end. This project, which has further potential from an extensive resource base, leverages an existing operation and proven technology and will produce an average 36 ktpa of nickel in full production with a cost position in the lower half of the curve.
Kumba Iron Ore's Kolomela project, previously known as the Sishen South project, is on track and progressing well towards first production during the first half of 2012. Kolomela is situated 80 km to the south of Kumba's world class Sishen mine and, when full production is achieved in 2013, will produce 9 Mtpa of high quality iron ore, with further potential for expansion.
The acquisition of the Minas Rio iron ore project represented a unique opportunity to gain control of a multi-billion tonne resource in the highly attractive seaborne iron ore market, with the benefit of an integrated logistics system. Anglo American obtained a series of important licences for the first phase of the project during 2009, most notably the first part of the Installation Licence for the mine and beneficiation plant, awarded in December, following the earlier award of the federal permit for land clearance at the mine. The second part of the Installation Licence is expected to be approved during the early part of 2010. Construction of the port at Açu is well advanced and the earthworks for the beneficiation plant and pipeline are progressing towards first production in the second half of 2012, with ramp up to annual iron ore production of 26.5 Mtpa in 2013.
The size of the Minas Rio orebody and the project's dedicated logistics infrastructure means that it has considerable expansion potential, with studies under way for the expansion of the project to up to 80 Mtpa. Anglo American acquired the Minas Rio project in two transactions in 2007 and 2008 and at the end of 2007 declared a resource of 476 Mt (Measured and Indicated) and an additional 770 Mt of Inferred resource. After considerable geological work, this total resource has increased fourfold since 2007 to 5.0 billion tonnes, including 843 Mt of Inferred resource.
Anglo American's forecast attributable share of the post-acquisition capital expenditure for the first phase of the project has increased by $1.1 billion, from $2.7 billion to $3.8 billion, owing to scoping changes at the mine, pipeline and port, as well as foreign exchange movements.
These four major expansion projects are the key components in driving the Group's organic production growth by more than one third by 2013. By that time, the Group's production of copper will have increased by 33%, iron ore by 82% and nickel by 139%.
In addition, Anglo American expects to make first stage approval decisions in relation to the development of two further high quality growth projects during 2010 - the 225 ktpa Quellaveco copper project in Peru and the 4.3 Mtpa Grosvenor metallurgical coal project in Australia.