V Winner Post #12- Brazilian Industries- Mining

MINING

Mineral Potential and Production

Brazil's territory of 8.5 million km2, contains extremely rich mineral provinces, with internationally significant reserves of minerals, such as iron ore, aluminum, bauxite, manganese, nickel and tin. Also, the natural resources of kaolin, pewter, lithium, niobium, quartz, titanium, marble and granite are significant. Brazil's gemological provinces are the largest in the world, and the country is also one of the major producers of gold and precious stones.

Brazilian mineral production currently includes more than 100 substances and amounts to USD 6.9 billion. Mining is one of the fastest growing sectors in Brazilian industry. However, production is still very much concentrated principally on iron, gold and bauxite which, given the existing potential, shows that there is plenty of room for the Brazilian mineral-metallurgical sector to grow. The main challenge lies in obtaining reliable geological data in a country still largely unsurveyed and covered by jungle.

The Iron Quadrangle district in Minas Gerais is the best known and explored mining district in Brazil. The Carajas mining district in the state of Pará is the most important mining area in the Amazon and it contains important mineral reserves of iron ore, copper, manganese and gold. The trend in the mining sector seems to be that activities are moving more and more towards the Amazon region.

The Mining Development Program

After the stagnation of the Brazilian mining industry and the fall of mineral exploration investments in the early 90´s, the Federal Government started a Mining Developing Program in 1994. This program aims to revamp the mining industry and to maximize, on a sustainable basis, the economic return of the Brazilian mineral resources endowment. After the removal of restrictions for foreign capital in 1995, about 60 new international companies have started developing activities in Brazil, mainly looking for gold opportunities. The Federal Government offers tax incentives to encourage development of the less economically and socially favored regions of Brazil. Such incentives are only for the companies establishing, expanding or maintaining mining operations in the northeast and Amazon regions.

There are a large number of domestic and foreign mining companies operating in Brazil. However, a few big companies are responsible for the majority of the production. CVRD - Companhia Vale do Rio Doce is the largest Brazilian mining company with total sales over USD 2.5 billion in 1994. CVRD's principal minerals are iron, gold and manganese. CVRD is included in the National Privatization Program and its majority stockholding is to be sold by the Federal Government in 1997. Other major Brazilian mining companies include MBR, Samarco, Ferteco and Samitri.

Mining Equipment market

The Brazilian market for mining equipment is one of the largest in the world. In Brazil, most machinery and equipment used by the mining industry is produced domestically, either by branches of international companies or by Brazilian firms using imported technology. The annual demand for imported machinery and equipment for the mining industry is estimated to be USD 200-300 million and to grow at an annual rate of 4% until the year 1999.

The US has been the leading foreign supplier of this sector in Brazil, followed by Germany, Sweden, Japan, Italy and Finland. Finland's share of the total mining equipment imports was 3 percent in 1995. Finnish knowledge in mining technology is known in the country even though the number of underground mines in Brazil is relatively small compared to open pit mining. There are no impediments to the importation of mining machinery and components to Brazil. The best way to enter the Brazilian market for mining equipment is through a local representative or agent. Virtually all products are sold directly to the end-users, even when local representatives are involved.