The mining industry in Brazil is riding a wave of prosperity, says Raul Jungmann, the president of Ibram, the Brazilian Mining Institute. Investments are growing, in new mineral exploration, in capacity expansion, and in new projects. One of the world's largest producers of minerals and also one of the countries holding the largest mineral reserves, with one of the most diverse geologies to be found anywhere, Brazil attracts the interest of investors within the country and around the world, and can make a contribution to meeting the growing demand for minerals for the energy transition, for food security, for technological solutions in health, comfort and well-being, and for infrastructure.
In addition to the quality, quantity, and diversity of resources, reserves, and ores, Jungmann lists other points favoring the growth of mining activity in Brazil, such as advances in technology, more detailed knowledge of the country's geology, legislation on a range of issues including the management of tailings, socio-environmental investments, and a conflict-free interna- tional geopolitical and trade relationship. He points out, however, that there is still much to be done, as there are gaps in the policies needed to support the development of the mining industry. In the question of juridical security, he singles out "the gigantic volume of laws all dealing with the same subject, mainly in matters of the environment and taxation," creating bureaucracy and complexity for mining companies. "Although we have built up, in recent years, a firm and up-to-date regulatory environment, especially in the environmental aspects, the industry still needs a juridical framework giving greater stability, clarity, and objectivity."
Jungmann also regrets the lack of financial incentives for mining. High taxation, too, is a problem. "Brazil has one of the highest tax burdens among mining countries," he notes. "That is bad for an industry that makes a hefty contribution to social and economic development, not only by paying taxes and royalties but by creating jobs, income, knowledge, training, social projects, and so many more benefits, which the government seems not to take into account when it raises taxes even higher."
Brazil has no tradition of encouraging investment in mining, Jungmann points out. "We do not have specific investment funds to finance the development of new ventures, though we do in other industries. We do not have credit lines to finance mineral research projects. We need to develop a capital market that can spread out the risks of mineral research, increasing the share of Brazilian investors in this activity."
In comparison with other countries, Jungmann says, Brazil makes little investment in mineral research. "We need to expand our geological knowledge of Brazilian territory," he says. "No more than about 4 percent of our total land area has been covered by geological mapping at a scale of 50,000 to 1, which is what mining needs."
Another obstacle is the delay in environmental licensing, which he considers "slow, bureaucratic, complex, and antiquated. Our international competitiveness is significantly reduced by the slowness and complexity of the environmental licensing procedure for mining projects. Other countries handle this much more quickly, enabling them to respond to the demands and updates of projects and investments. They bring their projects on stream more quickly," he says, "and they improve their position in the investment attraction rankings, while we always lag behind."
Infrastructure is yet another bottleneck, in Jungmann's opinion. While he recognizes that there has been growth in transport infrastructure in Brazil, he says there is still a great deal of progress to be made. "Several prospective projects have been shelved," he recalls, "due to the lack of infrastructure for shipping the minerals out and for deliveries of inputs and supplies."
Finally, he mentions labour legislation, which he considers outdated for underground mining, impeding Brazil's competitiveness in several mineral chains. "The impact is in placing limits on depth and on the advance of operations," he says, "because the laws were designed to deal with the operating conditions prevailing several decades ago, whereas today mines and operating conditions are extremely technological and controlled."
Strategic minerals
Brazil has the potential to increase its output of strategic minerals, Jungmann says, but it needs to adopt a wide-ranging policy specifically designed for this specialized sector of the industry, "that removes the obstacles we have been experiencing for decades and that have been left unsolved." These are regulatory obstacles in the environmental, tax, and financial spheres, where far-reaching actions are called for, "such as scaling back the licensing bureaucracy, in the production and dissemination of quality geological information, in tax compensation for risky investments in exploration and production, and incentives for entrepreneurship in the mining industry."
As part of this policy, Jungmann lists a half-dozen specific proposals: funds and credits to be introduced for financing, on the scale required by the mining industry, and that can be accessed and executed quickly and effectively; reduce bureaucracy in mining processes; update and reduce bureaucracy in environmental licensing legislation for mining; develop transport infrastructure, especially in those regions with the greatest production potential for strategic minerals; ensure the juridical stability of the regulatory environment, especially in the areas of taxation and the issue of environmental and mining licenses; and, finally, speed up the auctions of mining rights for available areas, held by the National Mining Agency (ANM), halted more than a year ago, so that more areas can be handed over to companies for their research activities.
"The mining industry has it within its power to place Brazil among the global protagonists of technological innovation and the transition to a green economy," Jungmann insists. "Minerals are indispensable if the world is to meet its targets for mitigating climate change, for enhanced preservation of the environment, for renewable energy sources, for the development of electric vehicles, and for artificial intelligence systems. The trend towards decarbonization of the economy and the new global energy matrix point to new opportunities for the mining industry, particularly in the supply of new materials."
"Brazil has a high vocation as a mining country," Jungmann says, "with its mineral provinces spread out all over its territory. While in several commodities the country is already a leading player, its true mineral potential is still, to this day, not yet fully known. The main provinces and mining districts are known to have great potential for ferrous metals (Fe, Mn), nonferrous minerals (Al, Cr, graphite, talc, Sn, W), precious metals (Au), base metals (Pb, Cu, Zn), special minerals (Co, Li, Ta, ETR, Pt, Pd, Ti, Nb, Ni, V) and aggregates for civil construction. In the light of our present-day knowledge of Brazil's mineral potential, it is clearly in everyone's interest to create a favourable investment and financing environment for mineral research."