With Surging Nickel and Copper, in Brazil Not All That Glitters Is Iron

    Brazil CVRD's Carajás mine

    Brazil CVRD's Carajás mine The record high profit posted by Brazilian mining company Vale do Rio Doce (CVRD) in the first half of this year, which was 10.937 billion reais (US$ 5.5 billion), 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 aluminum (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 tons 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 (Sunderbans).

    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 tons a year – the goal is to raise production up to 21.6 million tons 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 kilometers 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.

    Non-ferrous Boom

    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 ton, 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.

    More than Iron

    Gold occupies the last position in the Brazilian metal production ranking. Only 45 tons were produced in 2006. On the other hand, each gram of the metal is worth more than many grams of the others. And although gold is barely even mentioned when it comes to Brazilian mineral production – is seems as if gold extraction in the country is a history book thing -, companies operating in the sector should invest in expanding their mines in the next few years.

    Such is the case with company Rio Paracatu Mineração (RPM), owned to the Canadian Kinross, which has nine mines around the globe, and is the world's eighth largest gold producer. Last year, RPM produced five tons of gold. Next year, this figure will increase three-fold, thanks to a project for expanding production capacity, and to investments of US$ 470 million.

    This annual output of 15 tons should continue for another thirty years, according to the director president at Kinross Brasil and president at RPM, José Roberto Freire. In order to produce 15 tons of gold, 61 million tons of ore will be required. "The mine has the lowest grade of gold in the world, at 0.4%," he explains.

    All of the gold that leaves the mine is exported, sold basically to United States-based trading companies and banks. Freire believes that the global gold market will continue to grow, mostly due to two factors: firstly, because Asian developing countries have been buying more of the precious metal to make gold ornaments, a secular tradition among them.

    And secondly because banks have been buying gold as an alternative to the depreciated dollar. "But gold also has an industrial use, it is used in the electronics segment, for example," Freire highlights.

    Kinross also owns 50% of a mine in the midwestern Brazilian state of Goiás. Counting the production of the two mines and taking next year's expansion into account, Kinross will contribute with up to 30% of the entire national production beginning in 2008.


    Brazilian exports totaled US$ 3.174 billion last week, whereas imports reached US$ 2.554 billion, resulting on a surplus (positive balance) of US$ 620 million. Thus, the accumulated surplus for the month rose to US$ 990 million. The data were disclosed today by the Brazilian Ministry of Development, Industry and Foreign Trade.

    So far, the accumulated result for exports this year stands at US$ 92.463 billion, an increase of 15.22% over foreign sales during the same period of 2006 and imports reached US$ 67.488 billion, at a more expressive growth rates: 27.45%.

    The accumulated surplus during the 154 business days in 2007 rose to US$ 24.975 billion, a decrease of 8.51% compared with the same period of last year.

    Anba, ABr


    • Show Comments (5)

    • mm

      🙂 😉 😀 😉 🙁 🙁 😮 8) 😛 :-* 😥

    • ElGreco

      ch.c. do you even believe the b******t you are writting?
      Really … ch.c. have you ever considered why, despite your provocative texts in nearly all the postings in this site, many people just ignore you totally!?

      In case your low I.Q. does not allow you to figure it out, it is because you are a total and utter idiot and what ever you write is simply trash 😉

      By a non-brazilian that is fed up reading (now and then) your garbage.

    • conceicao

      Fact check please. Rio Doce beat out Phelps Dodge to buy Inco, which was a great play by CVRD management, and then Phelps had a deal to be acquired by Freeport McMoran. I am not sure what happened after that but I am rather sure since I own the stock and follow it that Rio Doce has not acquired Phelps Dodge. The lesson to me from the article above is the capacity that the Brasilian private sector
      has to invest and build out the economy if given access to international commodity markets at free market prices. The same kind of carry on effect in other mining sectors from the iron ore export profits
      would show itself throughout the agricultural economy if trade barriers for ag exports were lifted. The effect would be even more pronounced in the sugar / ethanol industry if just the discriminatory U.S.
      tariff on Brasilian ethanol were dropped. The U.S. financial commentators consider Rio Doce management first-rate in every way and who can argue given the results that they have produced. Plus, the
      U.S. is benefiting from investment by Rio Doce in the revived U.S. steel industry. There may be a new pellet plant being added in Maryland in the near future by Rio Doce and its partners.

    • ch.c.

      ooops…typing mistake….
      should read…. :
      Archer Daniels, Cargill and the likes could also include the Brazilians grains exports various countries into the USA exports when exports were made by these companies.

      I bet Brazilians would disagree….!!!!! but only a few….of course !!!!!!!!

    • ch.c.

      More idiot, more unknowledgable, more ignorant, more wrong, than this article, there is NOT !!!!!!!
      It happens that Vale by now is a large producer of Non Precious Metals, outside of iron ore……..BECAUSE IT BOUGHT PHELPS DOGE !!!!

      It also happens that PHELPS DODGE produces most of their metals…..OUTSIDE BRAZIL !

      Therefore to include PHELPS DOGE sales into Brazilian exports is like saying…….EXXON foreign oil production should be included in the USA exports !!!!!
      While in reality the value of exports belongs to the COUNTRY OF PRODUCTION……NOT THE COMPANY PRODUCING GOODS !
      Otherwise total sales of a company like Nestlé…would by itself only…..nearly double the total of Swiss exports, since the country, based upon the false indications in the above article, could include into Swiss exports, bottled water sales such as French Perrier (owned by Nestlé and Italian San Pellegrino (also owned by Nestlé) into the total of Swiss exports.
      Switzerland could even include in its exports, Brazilian bottled water sales to the Brazilian people, because Nestlé is Swiss and not Brazilian.
      Archer Daniels, Cargill and the likes could also include the Brazilians grains exports to the USA exports whjen exports were made by these companies.

      And then they caress their navel with their “so great exports EXPERTISE and competitive nature” while in reality, even in 2007, it represents less than US$ 1000.- annually…..PER CAPITA !


      It is always a pleasure to deal with a Brazilian idiot. Tons of money can be made by using their ignorance in basic common sense !

      Brazil wake up ! Start by going to basic education and then higher education…to do more trade…in exports AND imports !

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *


    You May Also Like

    Beach in Brazilian Northeast

    Brazil Invites World to Make Tourism Money in the Northeast

    It ends today, May 30, in the northeastern Brazilian state of Pernambuco the Nordeste ...

    Obama shakes hands with Chavez

    Obama Tells Brazil’s Lula He Wants to See Now a Gesture of Cuba

    Barack Obama, the American president, in a call to Brazilian president Luiz Inácio Lula ...

    700 Indians Protest in Brazil’s Capital

    Around 700 representatives of 89 Indian ethnic groups from nearly all of the states ...

    Brazil Sends High-Level Team to London to Probe Death of Brazilian Killed by Police

    The Brazilian government expressed indignation over new information published in the media about the ...

    Ilsa Brasil

    Brazil Solves Leather Residue Problem Turning It into Fertilizer

    Tanning and shoe industries' leather residue, which have been an environment problem thus far, ...

    Brazil’s Timber Blocked by Greenpeace in Portugal

    The cargo ship Skyman had nearly made its delivery of more than a quarter ...

    Beer Makers in Brazil Busted for Half a Billion Tax Fraud

    The tax embezzlement scheme allegedly practiced by the Schincariol beverage company may have diverted ...

    Piracy: In Brazil, If It Can Be Copied It Will Be

    Brazil has always been the target of pirates, starting in the 16th century, when ...

    Brazil’s Finance Minister Knocks on Door of Private Sector

    During a speech in the Planalto Palace yesterday, November 10, before the Economic and ...

    Argentina Wants More Business with Brazil’s Northeast

    The Brazil-Argentina Chamber of Commerce, with offices in Rio de Janeiro, Porto Alegre, and ...