Brazil is one of the many countries in the world that produces a substantial amount of minerals. The mining sector of the country comprises almost 7% of its GDP. With rich mineral resources, Brazil is a leading mineral exporter in the world.
Mineral Resources in Brazil
The country has a high mineral production but among its many mineral resources, iron ore is its main product making Brazil the 3rd world’s largest iron ore producer.
Iron ore is a rock and mineral that contains a metallic iron. It is a sedimentary rock and is considered the most abundant among the many rock elements. The iron ore of Brazil has made the country significant to the international market. The mineral has a higher quality of iron oxide in it which is approximately 64%.
Aside from iron ore, the country also produces 72 other mineral substances. It is also a major exporter of minerals such as iron, bauxite, and niobium. Due to its unique geological formations, the country is ideal for mining activities. The main mining regions in Brazil are Carajas and the Iron Quadrangle in the state of Minas Gerais.
Brazil’s Mining Market
The mining industry of Brazil is at its peak. Large companies dominate the market and are definitely great contributors to its mining sales.
A total of 8,870 companies compete in the mining industry in Brazil but the main companies that dominate the country are; Vale which comprises almost 80% of the total mining sales. Its main minerals are iron ore, nickel, manganese, copper, coal, cobalt, and fertilizers; Camaro, a company which is half-owned by Vale and the other half is owned by BHP Billiton. Its main minerals are iron pellets, and; Namisa, which also produces iron ores. It is a company owned 60% by CSN and 40% by a Japanese consortium.
Vale is the 3rd largest company in Brazil and 4th in the world. The company expects to invest 7 billion US dollars in 2016 which will contribute a lot in the whole mining sector’s investment for 2014-2018, around 53,6 billion US dollars.
New Market Conditions for the Mining Sector
Though the mining sector has been experiencing a huge growth, new market conditions arose which caused uncertainty for some Brazilian players in the mining sector.
One of these conditions is the fluctuating mineral prices. This particular issue has affected a lot of mining companies, due to which, companies never stop looking for more solutions or alternatives to become more competitive in the market.
Despite the fact that the country produces the highest quality of iron ore, many companies still struggle to maintain its efficiency which results in high production costs. In 2013 the government introduced a new mining code in order to elevate control in the mining sector. The new code entitles a company a 40-years right of exploration. Meaning a certain company may research a mining area and discover its mineral assets in a “first come, first served” basis. The code shall also set an increased ceiling of 4% for the tax rate.
Brazil’s country data tells that once the international prices recover, the mining sector of the country is expected to regain its rapid growth. It will open doors for many opportunities and investments from larger mining companies inside and outside the country.
Brazil is certainly considered globally-competitive being the largest provider of high-quality minerals in the world. The country will hold on to this reputation and will continue to prosper in the mining industry.
