The Brazilian Mining Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015
- Published: November 2011
- Region: Brazil
Business Monitor International's Brazil Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's mining industry.
Domestic and foreign demand for mineral resources will spur a period of rapid growth in Brazil's mining sector, as investment exploits substantial untapped reserves. Iron ore will remain by far the primary driver of Brazilian mining growth, although base metals and gold will provide additional opportunities for sector development. Infrastructure investments in the run up to the World Cup and Olympics will allow more efficient and cost effective extraction and transport of mineral resources. BMI forecast that Brazil's mining industry will contract in 2012, primarily on the back of moderated iron ore prices. BMI expect the industry value to reach US$66.6bn in 2015, up from US$55.4bn in 2011. Driven by strong global demand for iron ore at home and abroad, BMI forecast average annual industry growth of 9.0% between 2011 and 2015.
Continued Growth In Iron Ore Production Brazilian iron ore miner Vale will continue to dominate the industry. The company's performance in 2011 supports their view that the iron ore is driving sector growth. While concerns remain over slowing Chinese economic growth, BMI expect China will be the largest importer of Brazilian iron ore for the foreseeable future. BMI forecast total iron ore output will reach 638.5mnt (mn tonnes) by 2015, as companies bring multiple large projects online. Average growth over their 2011-2015 forecast period is expected to be an impressive 11.6% year-on-year (y-o-y).
Vale's H111 iron ore production was 151.8mnt, a y-o-y increase of 4.7%, as it increased output from the Carajás mines in Brazil. As production at Carajás continues to ramp up, BMI expect Vale to produce 322mnt in 2011, 4.3% higher than 2010 levels. Iron ore will be the mainstay of the company's growth, with the Carajás Serra Sul mine in Brazil expected to reach 90mntpa (mn tonnes per annum) in 2014.
Regulatory Environment While the administration of President Dilma Rousseff is committed to continuing her predecessor's probusiness policies, discussions of reforming Brazil's mining tax laws continue. The government is in the process of approving revisions to the mining tax and industry regulatory bodies, although details and a timeline for final approval remain unknown. Government intervention in the mining sector remains a threat, especially in light of the government's ownership stake in Vale and its recent pressure to change company management.
As BMI have seen rising mining taxes in Brazil's regional competitors, Peru and Chile, BMI expect higher taxes to be a theme in Brazil in 2012. BMI believe the new structure currently being considered will increase taxes from 2% to 4% of company revenues. This compares with revised tax schemes in Peru and Chile where mining companies are taxed on operating profits in order to remain competitive. However, BMI do not expect this would make Brazil significantly less competitive relative to its regional peers, as the 4% rate is not overly burdensome. Government efforts to increase contributions from the mining sector are in line with a recurring global theme BMI have seen of late, as countries attempt to benefit from elevated metal prices and attractive long-term market fundamentals.
Key Players Several domestic Brazilian companies dominate the mining sector. Most notable is global diversified miner Vale, which operates in 14 Brazilian states and is expanding its presence internationally. Vale is also Brazil's largest logistics operator with an extensive network of railroad and ports.
Other significant Brazilian companies include Votorantim Group, Mineração Rio do Norte and Companhia Siderúrgica Nacional. Although large diversified global miners such as BHP Billiton and Rio Tinto operate in Brazil, they are not major players in the sector. That said Anglo American is developing several nickel mine projects that will substantially boost its market share. Key international firms include US-based Jaguar Mining, which explores and extracts gold in Minas Gerais state and Australian company, Mirabela Nickel which operates the Santa Rita nickel sulphide mine in Bahia state. SHOW LESS READ MORE >
Brazil Political SWOT
Brazil Economic SWOT
Brazil Business Environment SWOT
Global Mining Outlook
Table: Recent Tax Increases
Table: Largest Coal Projects
Table: Frontier Mining Projects
Industry Trends and Developments
Table: Key Mining Investments
Table: Brazil's Mining Industry, 2008-2015
Mining Business Environment Ratings
Table: Americas Mining Business Environment Ratings
Brazil’s Business Environment
Table: BMI’s Business And Operation Risk Ratings
Table: BMI’s Legal Framework Rating
Table: Labour Force Quality
Table: Foreign Direct Investment Inflows Into Selected Latin American Countries, 2006-2008
Table: BMI’s Trade And Investment Ratings
Table: Brazil’s Top Export Destinations, 2003-2009 (US$mn)
Long-Term Political Outlook
Industry Forecast Scenario
Table: Key Iron Ore Mining Investments
Table: Brazil's Iron Ore Output, 2008-2015
Table: Potential Expansion Site
Table: Brazil’s Zinc Production, 2008-2015
Table: Brazil’s Key Nickel Projects
Table: Brazil’s Nickel Production, 2008-2015
Brazil Mining Report Q1
Table: Main Bauxite Expansion Plans
Table: Brazil's Bauxite Production, 2008-2015
Table: Brazil's Tin Production, 2008-2015
Table: Key Players In Brazil's Mining Industry
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)
Business Environment Ratings Methodology
Table: Mining Business Environment Indicators
Table: Weighting Of Components
- Alcoa Inc
- Jaguar Mining
- Mirabela Nickel