The record high profit posted by mining company Vale do Rio Doce in the first half of this year, which was 10.937 billion reais (US$ 5.5 million), and the rise in Brazilian exports of iron ore show that not only does the country possess a natural vocation for mining, but also that it is tapping more and more into the production capacity of its mines. And this does not apply just to iron ore, which is the flagship of metals in terms of production and exports. Non-ferrous metals such as aluminium (bauxite), copper, and nickel have also been showing good results.
Iron ore production should remain accelerated until 2015, according to Paulo Camillo Vargas Penna, director president at the Brazilian Mining Institute (Ibram). "Proof of that is the fact that domestic market forecasts are constantly being revised. The Ibram has raised its forecast for investments in mineral activity between 2007 and 2011 from US$ 25 billion to US$ 28 billion," he explains.
In 2006, 317.8 million tonnes of ore were produced, 13.26% more than in 2005. In the first half of this year, foreign sales of iron ore totaled US$ 6.37 billion, 21.5% more than in the same period of 2006. The figures were supplied by the National Union of the Iron Ore and Base Metals Mining Industry (Sinferbase).
Samarco, a company that does iron ore pelletization, is a good example of this positive framework: it intends to increase its pellet production by 54% in 2008. Presently, it produces 14 million tonnes a year – the goal is to raise production up to 21.6 million tonnes next year, according to the commercial director, Roberto Carvalho.
The company, which belongs to Vale and to the Australian BHP Billiton, was established in the 1970s to operate specifically with iron ore exports. Currently, 28% of total sales go to China – that total once was as high as 45% - and 22% to the Middle East. Those are the two main markets for the company, which has its mineral reserves in the southeastern Brazilian state of Minas Gerais, and its pelletization plants in the state of Espírito Santo (also in southeast Brazil).
In order to link the two states together, the company counts on a mineral pipeline nearly 400 kilometres long. With the increased production, a new pipeline is already under construction next to the old one. It should start operating in March.
"Increased production is a result of worldwide growth. China is not the only source of demand – all developing countries are. And the more civil construction and other sectors grow, the more steel is consumed. The more the steel, the greater the need for pellets," says Carvalho.
Other metals that have been attracting attention are copper and nickel – not just for their production volume, which has grown around 11% for both compared with 2005, but mainly because of their prices in the London Metal Exchange. The price for both has more than doubled in recent years. The price of nickel, in particular, has increased even more. "It went up from US$ 8,000 a tonne, five years ago, to a current level of US$ 35,000," Paulo Camillo explains. "From 2008 onwards, we are expecting the Brazilian production to increase three-fold," forecasts the president at Ibram.
Copper concentrate production, which until very recently was limited to a single mine, should grow to the point of making Brazil self-sufficient by 2010. "Optimistic perspectives are a result of entry into operation of the Salobo mine, by Vale do Rio Doce, located in the municipality of Canaã dos Carajás," says Paulo Camillo. For many years, only the mining company Mineração Caraíba, based in the northeastern Brazilian state of Bahia, produced the concentrate.
In 2006, the Mineral Extraction Industry exported the equivalent of US$ 40.1 billion, and imported US$ 28.3 billion. The sum of those two values yields the Mineral Trade Flow, which equals US$ 68.4 billion – 27.9% more than recorded in 2005. According to the National Department of Mineral Production (DNPM), in 2003, an inversion occurred from the two previous years: in that year, exports surpassed imports and the balance recorded a surplus. Furthermore, that flow has been increasing ever since.
To Antônio Fernando da Silva Rodrigues, director of Development and Mineral Economy at the DNPM, this new mineral growth, which started to become more apparent in 2004, took many people by surprise, especially analysts who no longer believed in the Brazilian mining potential.
"In the face of this new scenario, everyone is rushing to make up for lost time, after all, two decades have passed with no investments and no geological research in reserve replacement," he says. Within this framework, Rodrigues claims that besides being competent in producing and exporting these metals, Brazil has another advantage: geodiversity. In this country, when land is dug up, nearly everything is found.
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