07/02/2011 Cynthia Carroll Chairman of Anglo American during their Annual results presentation held at their offices in JHB. Photo: Leon Nicholas

Anglo American, whose chief executive Cynthia Carroll is leaving, raised the estimated cost of its Minas-Rio iron ore project in Brazil for at least a fifth time to $8 billion (R69.7bn) from $5.8bn.

Licensing delays and “high cost inflation across the construction industry in Brazil” contributed to the increase, Anglo said in a statement yesterday.

Minas-Rio has had time and budget overruns since Carroll bought it in 2008. She has been criticised for overpaying for the asset, acquired near the peak of a six-year commodity rally.

Anglo shares fell as much as 4.8 percent to £17.40 (R240.83) in London trading yesterday, while its shares on the JSE closed 3.5 percent lower at R246.62.

Two of three licensing injunctions obstructing progress at Minas-Rio had been removed, and Anglo was attempting to resolve a third that was blocking work on an electricity transmission line, the company said. In July, Anglo said that if all licensing challenges were resolved by the end of this year, the first ore on ship was anticipated to be delayed to the second half of 2014.

Selling part of the project could unlock value for Anglo shareholders, Bank of America analyst Jason Fairclough said.

Anglo paid companies controlled by billionaire Eike Batista $5.1bn in two transactions in 2007 and 2008 for the mine and the right to build an export terminal at the Atlantic port of Acu.

At the time, Anglo planned to spend an additional $2.6bn completing the open pit mine, an ore processing plant, the terminal and a 525km pipeline to carry iron ore slurry to the coast. The project, Anglo said, would boost Anglo’s total iron ore output by at least 55 percent.

Anglo said it was doing a detailed cost review of the Minas-Rio project, including an independent external assessment.