Anglo American Plc’s $5.5 billion acquisition of Brazilian iron ore mines last year was “ill- timed” because commodity prices were expected to fall from their peak, former Chief Executive Officer Tony Trahar said.

Anglo, the London-based target of a proposed 23.5 billion- pound ($38.1 billion) merger from Xstrata Plc, bought the mines last year from Brazilian billionaire Eike Batista. The deal was the biggest overseen by Cynthia Carroll, Trahar’s successor. Iron ore prices are down in 2009 for the first time in seven years, with Nippon Steel Corp. and Rio Tinto Group agreeing to a 33 percent cut.

“We knew the cycle would turn. People said it was a super cycle. Now it’s a super cycle downward,” Trahar, 60, who ran Anglo from 2000 until March 2007, said today in a telephone interview. “The acquisition of the iron ore assets was at the peak of the cycle and that was an ill-timed acquisition.”

Anglo may seek a partner to invest in its Minas-Rio project, two people familiar with the plan said yesterday. Anglo gained full control of the project, which will cost $3.6 billion to develop, as part of its deal with Batista.

“Minas-Rio represented a unique opportunity to acquire control of a tier-1 iron ore asset, in terms of scale, cost and quality,” Anglo said in an e-mailed response to questions from Bloomberg News. “It is a world-class, low-cost asset in the highly attractive seaborne iron ore segment.”

Xstrata Plc is seeking to meet with Anglo’s management to discuss a “merger of equals.” Anglo rejected the Zug, Switzerland-based company’s approach on June 22, saying its own reorganization plans would be more profitable for shareholders.

Mining M&A

Anglo has mostly focused on developing its own assets and buying metal deposits while rival mining companies such as Rio Tinto Group and BHP Billiton Plc pursued acquisitions to bolster revenues.

Xstrata has completed more than $33 billion deals in the past six years. Anglo has $12.4 billion of debt while London- based Rio has $53 billion and Xstrata $18.4 billion, according to data compiled by Bloomberg.

“Anglo’s approach has always been to be cautious and that has worked through thick and thin,” Trahar said.

Carroll, 52, a former Alcan Inc. executive, is the first non-South African to run Anglo, which was founded in Johannesburg in 1917 and grew to become the country’s biggest company before moving its headquarters to London in 1999.