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Brazilian mining: the boom has barely begun

Mining in Brazil is booming. The Brazilian Mining Institute (IBRAM) believes that 2011 ended with a production record of US$50 billion, 25% above the US$40 billion of 2010. Half of this total is attributed to the state of Minas Gerais. Pará is the other state generating high levels of production (28%).

 

According to these figures, the storms of the 2009 global crisis appear to be over for this sector, which was strongly affected (it suffered a fall of 14% compared to the previous period).

 

The mining industry is vital to the Brazilian economy, employing 165,000 workers. In addition, the Brazilian Department of Mines and Energy estimated that for each direct job post in the industry, 13 additional posts are created somewhere along the value chain, meaning that more than 2 million Brazilians are employed in a mining-related job.

 

Investments are also rising: between 2011 and 2015 they will reach US$68.5 billion, of which almost US$45 billion is for increasing iron production, which represents 80% of the country’s exports in this sector. Thus, this year’s 395 million tons will rocket to 771 million by 2015. Gold is second place in exports, representing 5.1% of the total.

 

Some of the largest companies involved in mining, out of the 7800-plus registered by the DPNM (National Department of Mineral Production), are Vale (which is also the largest mining company in Latin America, with an annual turnover close to US$28 billion), Samarco Mineraçao, Paranapanema, Magnesita and Compañía Brasileira de Metalurgia e Mineraçao. Multisector groups like Votorantim are also benefiting from the boom, as well as the major steel firms, such as CSN or Arcelormittal, the Luxembourg company that made its group’s largest global investment in Brazil in the long steel sector: US$1.2 billion in two years to double the productive capacity of a plant in Minas Gerais.

Brazil’s national goal is to exploit its very extensive exploration potential in order to attract the interest of international investors. Despite the record production of 2011, which is likely to be exceeded this year, the total invested in the country represents 3% of the worldwide total. This figure ranks it tenth in the world.

MPA

 

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