The Brazilian mining industry recently experienced a strong period of growth, and according to a study by ICD Research, the growth prospects for the industry will remain strong, despite factors such as increased royalty rates, environmental challenges and illegal mining.
London – October 12, 2011 – Increased Foreign Direct Investment (FDI) and sustained levels of demand, coupled with the recovery of global economies indicates steady future growth for the Brazilian mining industry. Brazil possesses rich natural mineral resources such as iron ore, manganese and gold, and as a result, the country’s mining industry is one of the largest in the world.
Robust economic growth and substantial demand for minerals
Fuelled by robust economic growth, the Brazilian mining industry was estimated to value approximately US$23 billion in 2009, after registering a strong Compound Annual Growth Rate (CAGR) during the review period (2005–09). In volume terms, total mineral production stood at 472 million tons in 2009.
The expansion of key end-user markets such as construction, manufacturing and power will continue to drive demand for minerals, and as a result, throughout the forecast period (2010–15) the Brazilian mining industry is estimated to register steady growth.
Demand for mineral resources and construction equipment
The mining equipment market is expected to significantly increase in value during the forecast period, and the majority of demand will continue to be met by foreign manufacturers. However, the booming economy and increased infrastructure and mining investment will create demand for more durable, safer and more reliable equipment, resulting in growth opportunities for foreign and domestic companies throughout the forecast period.
With Brazil hosting the 2014 UEFA World Cup and the 2016 Olympics in Rio de Janeiro, growth in the mining and construction equipment industry is expected to be substantial throughout the course of the forecast period.
Mining Code amendments
Prior to the 1997 amendments to the Brazilian Mining Code, the law did not encourage foreign investment in mineral resources. However, the Brazilian Constitution and the amended Mining
Code (1997) have provided greater flexibility for investment in the industry. Increased focus on privatization is expected to fuel investment, as the law now allows 100% equity ownership, either by means of privatization or by direct acquisition.
In addition, low income taxes have been included in the revised Brazilian mining code, and the import tax for minerals has been reduced, depending on the mineral type, and is levied on net profit. These changes to the mining code have made Brazil an attractive destination for domestic, private and foreign investment.
Investment potential
The Brazilian economy received total foreign investment (FDI) of approximately US$45 billion in 2008, an increase of approximately 30% over total FDI recorded in 2007. However, in 2009, as a result of the global financial crisis, investment in the mining sector was significantly less than investment recorded in the previous year.
Despite the sharp decline in investment, the effects of the global financial crisis on the country’s mining industry were relatively short lived, and due to Brazil’s substantial iron ore resources, domestic and foreign investment has been increasing since 2010. In particular, China is keen to secure stable supplies of iron ore in order to satisfy the country’s demand for metals.
Market entry
In the past two decades, the Brazilian government has implemented a series of measures in order to encourage private participation in the country’s previously controlled mining industry, such as legislation which encourages mergers, joint ventures and privatization. This resulted in increased capital inflows into new technology and expansions, leading to improved efficiency in the Brazilian mining industry.
Increased royalty rates
The Brazilian government is considering the implementation of a new royalty payment system in the industry, which could increase the fees that existing mining companies, such as Vale, pay to the Brazilian government. The revised fee is proposed for mining firms that do not add value to the domestic steel industry but export the majority of the raw material they produce to other countries. With the implementation of this royalty system, mining companies are expected to experience increased pressure on profit margins.
Criticism from environmentalists
Brazil is one of the world’s largest producers of gold and the country has significantly increased investment in the discovery and utilization of gold resources. However, expansion into the Amazon region has met considerable criticism from environmentalists worldwide. In addition, the amount of harmful mercury entering the environment from gold mining activities is expected to increase significantly in the short term.
Illegal mining
The security of mining assets is a concern for mining companies in Brazil. Companies operating within the country face the threat of theft of gold and other precious metals from mines, which result in losses for mining companies.
To purchase the full version of ‘The Brazilian Mining Industry – Market opportunities and Entry Strategies, Analyses and Forecasts’ report, please click here.
About Industry Review:
Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
For more information, please visit our website at www.industryreview.com
For more information on the article, please contact:
Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com
London – October 12, 2011 – Increased Foreign Direct Investment (FDI) and sustained levels of demand, coupled with the recovery of global economies indicates steady future growth for the Brazilian mining industry. Brazil possesses rich natural mineral resources such as iron ore, manganese and gold, and as a result, the country’s mining industry is one of the largest in the world.
Robust economic growth and substantial demand for minerals
Fuelled by robust economic growth, the Brazilian mining industry was estimated to value approximately US$23 billion in 2009, after registering a strong Compound Annual Growth Rate (CAGR) during the review period (2005–09). In volume terms, total mineral production stood at 472 million tons in 2009.
The expansion of key end-user markets such as construction, manufacturing and power will continue to drive demand for minerals, and as a result, throughout the forecast period (2010–15) the Brazilian mining industry is estimated to register steady growth.
Demand for mineral resources and construction equipment
The mining equipment market is expected to significantly increase in value during the forecast period, and the majority of demand will continue to be met by foreign manufacturers. However, the booming economy and increased infrastructure and mining investment will create demand for more durable, safer and more reliable equipment, resulting in growth opportunities for foreign and domestic companies throughout the forecast period.
With Brazil hosting the 2014 UEFA World Cup and the 2016 Olympics in Rio de Janeiro, growth in the mining and construction equipment industry is expected to be substantial throughout the course of the forecast period.
Mining Code amendments
Prior to the 1997 amendments to the Brazilian Mining Code, the law did not encourage foreign investment in mineral resources. However, the Brazilian Constitution and the amended Mining
Code (1997) have provided greater flexibility for investment in the industry. Increased focus on privatization is expected to fuel investment, as the law now allows 100% equity ownership, either by means of privatization or by direct acquisition.
In addition, low income taxes have been included in the revised Brazilian mining code, and the import tax for minerals has been reduced, depending on the mineral type, and is levied on net profit. These changes to the mining code have made Brazil an attractive destination for domestic, private and foreign investment.
Investment potential
The Brazilian economy received total foreign investment (FDI) of approximately US$45 billion in 2008, an increase of approximately 30% over total FDI recorded in 2007. However, in 2009, as a result of the global financial crisis, investment in the mining sector was significantly less than investment recorded in the previous year.
Despite the sharp decline in investment, the effects of the global financial crisis on the country’s mining industry were relatively short lived, and due to Brazil’s substantial iron ore resources, domestic and foreign investment has been increasing since 2010. In particular, China is keen to secure stable supplies of iron ore in order to satisfy the country’s demand for metals.
Market entry
In the past two decades, the Brazilian government has implemented a series of measures in order to encourage private participation in the country’s previously controlled mining industry, such as legislation which encourages mergers, joint ventures and privatization. This resulted in increased capital inflows into new technology and expansions, leading to improved efficiency in the Brazilian mining industry.
Increased royalty rates
The Brazilian government is considering the implementation of a new royalty payment system in the industry, which could increase the fees that existing mining companies, such as Vale, pay to the Brazilian government. The revised fee is proposed for mining firms that do not add value to the domestic steel industry but export the majority of the raw material they produce to other countries. With the implementation of this royalty system, mining companies are expected to experience increased pressure on profit margins.
Criticism from environmentalists
Brazil is one of the world’s largest producers of gold and the country has significantly increased investment in the discovery and utilization of gold resources. However, expansion into the Amazon region has met considerable criticism from environmentalists worldwide. In addition, the amount of harmful mercury entering the environment from gold mining activities is expected to increase significantly in the short term.
Illegal mining
The security of mining assets is a concern for mining companies in Brazil. Companies operating within the country face the threat of theft of gold and other precious metals from mines, which result in losses for mining companies.
To purchase the full version of ‘The Brazilian Mining Industry – Market opportunities and Entry Strategies, Analyses and Forecasts’ report, please click here.
About Industry Review:
Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
For more information, please visit our website at www.industryreview.com
For more information on the article, please contact:
Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com
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