Mining giant Anglo American is to take a $4 billion (£2.5bn) writedown on its Minas Rio iron ore operation in Brazil after delays and higher costs forced the group to increase its spending on the project.
The company said it expects total capital expenditure for the project to increase to $8.8bn, up from a previous estimate of about $8bn.
Outgoing chief executive Cynthia Carroll, who is set to be replaced by AngloGold Ashanti boss Mark Cutifani in April, said: “We are clearly disappointed that the diversity of challenges that our Minas Rio project has faced has contributed to a significant increase in capital expenditure.
“Despite the difficulties, we continue to be confident of the medium- and long-term attractiveness and strategic positioning of Minas Rio and we remain committed to the project.”
Sam Catalano, an analyst at Nomura International, said: “This asset has been a constant disappointment in terms of project delivery and I think it was largely expected that we would get this sort of writedown.
“The challenge that remains for Anglo is to deliver it on the revised timeline and price that they’ve given us.”