Bahrain Steel says Anglo declared force majeure in the deal after the leak in MG

Anglo American has suspended a contract to supply iron ore with Bahrain Steel's customer, said the company in the Middle East in the latest puzzle for the miner, who reported leaks to a pipeline in Minas Gerais, which is responsible to take the goods to the port for export.

The contract with Bahrain Steel is about $ 1 billion a year, according to Reuters calculations based on Anglo 's average prices at its Minas Rio mine last year.

Bahrain Steel, which produces iron ore pellets for steelmakers, said the miner declared force majeure in April in his 20-year deal and is expected to deliver 13 million tonnes of iron ore a year.

Anglo froze the operations of the Minas Rio system in March after two leaks in the pipeline that transports its iron ore to an export terminal off Rio de Janeiro.

Anglo ore is transported from the mine and enrichment plant, to Conceição do Mato Dentro and Alvorada de Minas (MG), up to the port of Açu, in São João da Barra (RJ), along a 529 kilometer pipeline. which runs through 33 municipalities in Minas Gerais and Rio de Janeiro.

The suspension of the contract with Bahrain underscores the seriousness of Anglo 's problems with the project, bought at the height of the commodities boom a decade ago, for $ 5.5 billion.

However, Bahrain Steel has ruled out a serious impact on its own operations.

"We effectively guarantee and diversify our sources of raw materials, ensuring the continuity of our production and our ability to meet the needs of our customers," said Bahrain Steel (A REUTERS?), Which belongs to Foulath, a vehicle of choice. investment focused on steel in the Middle East.

Anglo said that he would not comment.

Shortly after the leaks, the miner said he would stop operations for three months and expected an impact of 3 million tonnes on production estimates for the year. Brazilian regulators have fined nearly 200 million reais.

But by the end of April, the company said the mine would be closed in the fourth quarter and that 2018 production would be estimated at only 3 million tonnes, produced before the leaks. Production in 2017 was 16.8 million tonnes.

The group's annual EBE is expected to be affected by $ 300 to $ 400 million due to closure.

Anglo also declared force majeure in a contract with Ferroport, a joint venture with port operator Açu, Plumo Logística, after the leak.

The contract is about $ 16 million a month, according to a Plumb declaration to the market in 2014, the first year of deliveries.

"Ferroport and Prumo are in the process of badyzing in detail the circumstances that led to the events of flight and whether Ferroport agrees that the events described are of force majeure," Prumo said in an April statement. .

Anglo said in March that preliminary studies have suggested that leaks were caused by cracks in the welding of ducts in the manufacturing process.

Reference prices for iron ore pellets surged nearly $ 115 last week, up 30% from last year.

Chinese steelmakers, the world's largest iron ore buyers, are increasing the use of pellets that can be blown directly into blast furnaces to reduce emissions, in line with Beijing's stricter environmental regulations.