The mining industry in Brazil is in good shape
Segundo o presidente da ABPM, o crescimento de mais de 60% em 2021 foi impulsionado principalmente pelo minério de ferro e ouro, que responderam por mais de 80% da produção total.
“The mining industry in Brazil is in good shape as long as commodity prices are booming.” In these words Luís Maurício Azevedo, president of the Brazilian Association of Mineral and Mining Research Companies (ABPM) sums up the favourable performance achieved by Brazilian mining in 2021, when output increased by more than 60 percent, in local currency terms. The increase was led chiefly by iron ore and gold, the country’s leading mine products, which together account for above 80 percent of the total. Iron ore prices in 2021 averaged around US$ 160 per ton, while the gold price was about US$ 1,800 per ounce. The exchange rate also helped, with the dollar close to the R$ 5.50 level almost the whole year. As a result, companies’ sales income improved, in local currency terms.
While he celebrates the industry’s favourable performance in 2021, Azevedo regrets that he saw “not much being done to attract more investments and develop new ventures.” There is undue timidity in this area, he says, while he recognises that the resolutions adopted by the National Mining Agency (ANM) were good signs, though long delayed. “The most important resolutions - one on the system of resources and reserves, another on the reuse of tailings, and a third authorising the use of mining rights as collateral for bank borrowing - took four years to see the light of day.”
Azevedo feels frustrated, he says, in the case of the mining rights to be used as collateral because the new rule basically repeats what was already in the Mining Code. In other words, only a mining licence can serve as collateral, while the industry had been calling for the research licence - giving the holder priority to explore a given area - or the research report could also be used. “In the use of mining rights as collateral we saw a very good possibility for leveraging investments,” Azevedo says. In the question of the reuse of tailings, he says the new rule will have little effect in reducing tax exposure, while he concedes that it also has a favourable aspect, since it will facilitate sales of materials that had been a source of enormous difficulties for mining companies.
Read the whole article on Brazil Mineral Special Issue 2022
