Anglo American forced to suspend Brazilian pipeline after leaks

The mining giant, which stopped work at what some analysts call the "white elephant" mine last Thursday after order from Brazil's environmental regulator, will take around 90 days to conduct a full inspection of the pipeline that carries iron ore, in slurry form, from the mine to the export terminal.

Anglo said the second "minor" leak of non-hazardous iron ore slurry was stopped within eight minutes and caused no disruption to local water supply, but occurred not far from a "similar" leak midway through the month. There were no injuries at either event.

"Specialised technical equipment will now be used to identify any other areas of potential weakness within the pipeline," the FTSE 100-listed company said, with employees had been put on paid leave until the company can demonstrate the safety of the pipeline.

"Due to the length of the pipeline and the priority of ensuring the protection of the natural environment, the current expectation is that it will take approximately 90 days for the full inspection to be completed during which time operations at Minas-Rio will remain suspended."

Anglo shares were down a few pennies to 1,657.8p in early trading on Tuesday.

Goldman Sachs said the news was negative in terms of sentiment, but felt there are "fundamental differences" between this stoppage and both BHP's Samarco disaster and Norsk Hydro's Alunorte, wit the key fact being no injuries or water contamination at Minas Rio.

As well as a boost from news of production cuts in China's Heibei province, Anglo should see "limited" financial impact, in the analysts' view, with Minas Rio contributing circa $250m of its forecast $10.3bn EBITDA for Anglo in 2018, which is 25% ahead of the consensus view.

"Even if there is a stoppage of a month, we calculate that it would lead to an EBITDA loss of circa US$20m."