In 211, the Brazilian Mineral Production (BMP) is expected to reach a new record of US$5 billion, which would represent a 28% increase as compared to the US$39 billion in 21. Area > 3 million sq.km IN THE WORLD Population > 15 million inhabitants Hence, in 211 the BMP will show its recovery after the 29 international economic crisis, which resulted in a decrease in demand for mineral raw materials. Australia Russia USA Bangladesh Republic of Nigeria Pakistan China Mining Companies in Brazil Canada India Indonesia In 21, the DNPM National Department for Mineral Production - had 7,89 companies recorded in its Annual Mining Report and distributed per region as follows: Mexico Japan Region Companies Center-West 942 Northeast 1.258 North 439 Southeast 3.392 South 1.91 Spain Germany United Kingdom Holland Italy France South Korea GDP > US$8 billion Brazilian Mineral Production Development Beginning in year 2, the high development rate worldwide and the increased demand for minerals boosted the BMP. From 21 to the end of 211, the Brazilian Mineral Production will have shown a 55% increase, from US$7,7 billion to US$5 billion. Given the urban development rate worldwide and the growth of emerging economies, it is expected that the BPM will increase at an estimated rate of 1% to 15% per annum in the next three years. GROWTH OF IAN MINERAL PRODUCTION 5 4 3 25 2 15 1 28 = US$ 28 billion 5 29 = US$ 24 billion Variation 21/211 = 55% in US$ billions 21 = US$ 39 billion 211 = US$ 5 billion 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 91 11 Petroleum & Gas not included Forecast Years IBRAM - Brazilian Mining Association 211 3
Information and Analyses of The Brazilian Minerals Economy 6 TH edition Brazil has one of the largest mineral deposits and is one of largest mineral producers and exporters. MINERAL PRODUCTION: GLOBAL POSITION OF EXPORTER GLOBAL PLAYER EXPORTER SELF-SUFFICIENT IMPORTER / PRODUCER EXTERNAL DEPENDENCY Niobium (1st) Iron ore (1st) Manganese (2nd) Tantalum (2nd) Graphite (3rd) Bauxite (2nd) Ornamental Stone Nickel Magnesium Kaolin Tin Vermiculite Chromium Gold Limestone Industrial diamonds Titanium Tungsten Talc STRATEGIC Phosphate Diatomite Zinc Metallurgical Coal Sulphur Rare Earths Brazil is an important player in the world s mining industry. However, it still depends on some minerals that are key to the economy. Brazil is the fourth largest consumer of fertilizers, and responds for only 2% of the world s production. The Country imports 91% of the potassium and 51% of the phosphate needed, both essential for the fertilizers industry. Data collected by CFEM (Financial Compensation for Mineral Resources Exploitation) indicates that the states with the largest ore production in 21 were: Minas Gerais (48%), Pará (28%), Goiás (5%), São Paulo (4%), Bahia (2.7%), Mato Grosso do Sul (1.8%), Sergipe (1.7%), and Others (8.8%). In 21, CFEM reached another record: R$1billion, or a 46% increase in collections as compared to the R$ 742 million million in 29. For 211 the forecast is to reach R$1,3 billion. CFEM Millions of R$ 1.3 12 1.83 1 858 8 742 6 547 466 46 4 326 2 24 25 26 27 28 29 21 211e* CFEM 326 46 466 547 858 742 1.83 1.3 *forecast The mining industry in Brazil and its importance for the trade balance In 211, Iron Ore will remain #1 in the list of products that generate the highest revenues among Brazilian exports. The mining industry s share in the Commercial Trade Balance 5. 45. 4. 35. 3. 25. 2. 15. 1. 5. 11.3 4.49 6.54 15.196 5.185 1.11 22.841 9.729 13.112 26 27 28 29 21 211 e 18.96 5.497 12.599 35.36 7.756 27.64 Millions of US$ 43. 1. 33. Exports Imports Surplus 26 US$ 46 Billion Mineral Sector: % 27 US$ 4 Billion Mineral Sector = 25% 28 US$ 24 Billion Mineral Sector = 53% 29 US$25 Billion Mineral Sector = 5% 21 US$2 Billion Mineral Sector = 136% Expected 211 Brazilian Balance = US$ 23 Billion Balance of the mineral sector = 3% greater. 4 IBRAM - Brazilian Mining Association 211
Main products exported and imported in 21 and forecast for 211 (in US$) Exports % of value exported in US$ FOREIGN TRADE OF THE MINERAL SECTOR AMOUNTS IN MILLIONS OF US$ Iron Ore 81,8% Gold 4,6% Niobium 4,7% 4,1% Silicon 1,5% Manganese,6% MAIN PRODUCTS EXPORTED AND IMPORTED 21 211 e Mineral Exports Primary Goods 35,36 43,595 Iron Ore 28,912 35,745 Gold (in bars) 1,786 1,988 Niobium (iron-niobium) 1,557 2,34 1,238 1,86 Bauxite,7% Kaolin,6% Others,6% Granite,5% Silicon 46 637 Kaolin 275 258 Manganese Ore 357 276 Bauxite 27 322 Imports % of value exported in US$ Tin 8 2 Lead 12 12 Granite 219 23 Chlorate 29% Others 268 268 Imports of Primary Mineral Goods 7,756 1,23 Coal 3,575 5,78 Coal 5,7% 12,3% Sulphur 1,8% Zinc,1% Chlorate 2,24 2,94 952 1,232 Zinc 157 1 Sulphur 246 176 Others 623 623 Others 6,2% Balance of the Mineral Sector 27,64 33,572 e = Amount forecast for 211 Labor Force in the Mining Industry Importance of Mining for the Generation of Jobs 16 12 1 8 Multiplier Effect: 1 : 13 11 6 4 2 2 1 Suppliers Mineral Extraction First transformation Total Jobs 2 1 11 Date: 211 Source:National Secretary for Geology, Mining and Mineral Transformation of the MME In 211, a total of 165, workers were employed by the mining industry in Brazil. Studies undertaken by the National Secretariat of Geology, Mining and Mineral Transformation of the Ministry of Mines and Energy show an employment ratio of 1:13 in the mining industry, i.e. for each position created in the mining industry, another 13 direct jobs were created along the productive chain, and that added to other indirect jobs. Therefore, one may consider that in 211 the mineral sector employs about 2,1 million workers directly, apart from the jobs generated during exploration, prospecting and planning stages, and the people working in the garimpos (panners). IBRAM - Brazilian Mining Association 211 5
Information and Analyses of The Brazilian Minerals Economy 6 TH edition HDI of mineral producing municipalities The Human Development Index is greater in mineral producing municipalities than the average in the respective States. Even when far from large urban centers or in areas of poverty, a mining company has become a real possibility for the sustainable development of the region. The HDI is calculated by the United Nations Development Program - UNDP. EXAMPLES OF MINING MUNICIPALITIES AND THEIR RE- SPECTIVE IDH IN COMPARISON TO THE IDH OF THE STATE Municipality -State Mineral State IDH Municipal IDH Itabira - MG Iron.766.798 Araxá - MG Niobium.766.799 Nova Lima - MG Gold.766.821 Catalão - GO Phosphate.773.818 Cachoeiro de Itapemerim - ES Ornamental Stone.767.77 Parauapebas - PA Iron.72.74 Barcarena - PA Bauxite.72.769 Presidente Figueiredo - AM Cassiterite.713.742 Source: UNDP The graph shows an increase in the amount of investments in the Brazilian mining sector. The numbers compiled by IBRAM are forecast for a fiveyear period. Based on data collected from mining companies, the Institute foresees significant investments in the amount of US$68.5 billion for the period 211-215, and a new record for the mining industry. Investments 8 in the mineral sector 7 6 5 4 3 25 28 2 27-211 32 48 28-212 57 21-2 29-213 47 49 54 Billions of US$ 21-2 62 211-215 68,5 64,8 The private sector invests more in the Country, an average of over US$13 billion per year. This amount is periodically reassessed by IBRAM, as shown in the graph. 1 jan/7 mar/7 Investments in the amount of US$68.5 billion forecast for the period 211 to 215 represent an increase of 1.5% as compared to the period 21-2. These investments apply to a number of minerals, and since Iron Ore is the most significant one, it will take 63% of the total. 44.969 39.23 New investments in the mineral sector 211 to 215: US$ 68,5 billion Investments in the mineral sector 21 to 2: US$ 62 billion Iron Ore Alumina Nickel Phosphate Gold Manganese Niobium Zinc Limestone Vanadium Coal 5.22 8.187 6.55 6.716 1.89 2.51 2.542 2.657 2.418 2.3 2.675 4 3 4 66 631 31 2 27 4 44 31 may/7 jul/7 sep/7 nov/7 jan/8 mar/8 may/8 jul/8 sep/8 mar/9 jan/1 apr/1 aug/1 jan/11 may/11 Investments of the mineral sector by mineral from 21 2 Billions of US$ 6 IBRAM - Brazilian Mining Association 211
Private Investment in Mineral Exploration Other Countries 31% Brazil (US$ 321 million) 3% Argentina 3% China 4% Russia 4% Chile 5% Peru 5% USA 8% Mexico 6% 1 leading countries Total: US$ 1.7 billion Canada (US$ 2,3 billion) 19% Australia (US$ 1,2 billion) 12% Despite significant investments in production/extraction, Brazil still invests little in mineral exploration. In 29 and 21 the country received only 3% of the world s total private investment in exploration, and ranks well behind smaller countries, such as Peru and Chile. Besides, less than 3% of the Brazilian territory is geologically mapped in the 1:1, scale. Investments in mineral exploration in the world Global Investment (US$ 1.7.) Area (sq.km) x 1. Absolute Investments (US$) Share of Investments (%) Absolute Investments/Area (US$/ sq.km) Brazil Investment vs Countries Brazil 8547 321. 3, 1 Canada 9971 2.33. 19,2 5.4 Australia 7682 1.284. 12,2 4.5 Peru 1285 535. 5,4 11.1 USA 9373 856. 8,3 2.4 Mexico 1973 642. 6, 8.7 Russia 1775 428. 4,7.7 Chile 757 535. 5, 18.8 China 96 428. 4,1 1.2 Argentina 278 321. 3,1 3,1 US$ 1. The table shows the disparity between the total amounts invested by countries assessed as compared to Brazil. The analysis takes into account the countries sizes, and confirms that smaller countries (Peru, Chile and Mexico) or countries of similar territorial areas overcome Brazil in exploration investment (except for Russia). IBRAM - Brazilian Mining Association 211 7