* First cargo is en route to China
* Plans to ramp up output to 26.5 million tonnes
* Iron ore prices down 40 pct this year
By Silvia Antonioli
LONDON, Oct 27 (Reuters) - Anglo American shipped the first iron ore cargo from its long-delayed Minas Rio project in Brazil, it said on Monday, injecting more material into an already over supplied market.
The cargo of more than 80,000 tonnes of iron ore is en route to customers in China from the port of Açu in Rio de Janeiro state, the company said.
Minas Rio - the biggest-ever foreign investment in Brazil - had been plagued by delays and cost overruns since Anglo bought it in 2007-2008 from former Brazilian billionaire Eike Batista for about $5.5 billion. The project will end up costing almost $9 billion.
The China delivery is in line with a vow made by Anglo Chief Executive Mark Cutifani after a review last year. While it reflects well on his ability to honour promises, the timing of the delivery is not ideal.
Iron ore prices have shed about 40 percent this year due to more supply from miners Rio Tinto , BHP Billiton and Vale and weak demand growth.
“Minas Rio is a legacy of previous management decisions but at least now it’s in line with the latest timing and budget,” Investec analyst Marc Elliott said. “It’s just sad that it is coming through at this time and will exacerbate the oversupply situation that is rapidly evolving.”
Moody’s estimates that over 300 million tonnes of new and expanded iron ore production will enter the supply pool over the next several years.
Anglo said it is hoping to ramp up production capacity at Minas Rio to 26.5 million tonnes per year over the next 18-20 months but will need various licenses and permit renewals to move to fully operational mode.
Cutifani is confident Minas Rio will be able to withstand the tough market conditions.
“We believe that the outlook for our particular premium product remains attractive, despite the current weakness in the iron ore price, and that the fully integrated operation of Minas-Rio - from mine to port - will enable us to sustain our low operating cost position over the long term,” Cutifani said in a statement.
Anglo’s shares were down 0.6 percent by 0948 GMT, roughly in line with the FT350 Mining index. (Editing by Susan Thomas)