Business Monitor International


Brazil Mining Report

Published 08 July 2014

  • 101 pages
 
$1,295.00
Brazil Mining Report

BMI View: Brazil's mining sector will experience slower average growth in 2014-2018 compared with previous years , primarily on account of slowing Chinese demand growth for metal ores. Nevertheless, mine production will still see growth as both domestic and foreign miners continue to exploit the country's significant reserves of both industrial and precious metals.

We expect continued mine output growth in Brazil, particularly for iron ore, which we forecast will grow at an average annual pace of 4.3% to 2018. While we forecast iron ore prices will average lower year-on-year over the next five years, averaging USD90/tonne in 2018, Brazilian firm Vale will continue to take advantage of its low unit costs and seek to increase its global market share. The firm has cited unit costs in the USD30-50 per tonne range in the past, though reported Q114 costs as low as USD21/tonne. Shipping times and costs to China are longer and higher compared with Australian iron ore producers, though we do not forecast Brazilian competitiveness will suffer significantly.

Mining Industry To Remain Among Top Players
Brazil - Share & Rank Of Global Mining Output, 2013

Despite increasing iron ore production, we expect Brazil's total mining industry value to see only modest growth averaging 1.2% per annum to 2018. Our bearish iron ore price outlook underpins our modest growth forecast as iron ore makes up around 85% of the country's total mining export value. We believe Chinese economic growth will trend lower as steel-intensive fixed asset investment shifts to more domestic consumption, leading to lower demand growth from Vale and other iron ore producers, and further exacerbating the global glut of the steelmaking ingredient.

Iron Grip
Global - New Iron Ore Supply By Region (as % share of total output)

We maintain the country will see positive base and precious metals production growth despite a more muted external market. Bauxite and nickel production growth will continue, though...

Table of Contents

BMI Industry View
7
SWOT
10
Industry Forecast
11
Bauxite: Growth Despite Market Weakness
11
Foreign Firms To Dominate Production
11
Risks To Outlook
12
Table: Bauxite Production Forecast (Brazil 2010-2018)
13
Gold: Brazil To See Small Gains
13
Table: Select Greenfield Gold Projects
13
Table: Gold Production Forecast (Brazil 2010-2018)
14
Iron Ore: Growth To Continue Despite Weakening Chinese Demand
15
Vale To Dominate Sector
15
Risks To Outlook
18
Table: Iron Ore Production Forecast (Brazil 2010-2018)
19
Nickel: Growth To Continue
19
Table: Brazil - Key Nickel Projects
20
Indonesian Policy To Encourage Production
20
Table: Nickel Production Forecast (Brazil 2010-2018)
20
Tin: Brazil To Capture Larger Share Of Market
21
Risks To Outlook
22
Table: Tin Production Forecast (Brazil 2010-2018)
22
Industry Risk Reward Ratings
23
Risk/Reward Ratings
23
Colombia & Chile Remain At The Top
24
Table: Mining Risk/Reward Ratings
25
Mexico & Peru See Improvement, While Brazil Falls Back
25
Weak Prices & Poor Operating Environments Hold Others Back
26
Risk/Reward Ratings
26
Rewards
27
Industry Rewards
27
Country Rewards
27
Risks
28
Industry Risks
28
Country Risks
29
Table: Brazil - Mining Production & Growth
29
Regulatory Development
30
Recent Developments
30
Sector To Remain Promising, But Regulatory Hindrances To Remain
30
Potential Royalties Would Present Challenges, Though Not Game Changer
30
Licensing & Permitting Challenges To Remain
31
Tax Regime
32
Corruption To Persist
32
Table: Brazil - Political Overview
32
Table: Regional Regulatory Ratings
33
Commodities Forecast
35
Commodity Strategy
35
Ferrous Metals:
35
Iron Ore: Price Slump Overdone, Stabilisation In Sight
35
Steel: Price Forecast Revised Up
36
Non-Ferrous Metals:
38
Aluminium: Recent Break Signals Multi-Month Strength
38
Copper: Subdued Prices Into Q314
39
Lead: Prices To Strengthen As Deficit Deepens
40
Nickel: H214 Rally Unlikely
41
Tin: More Resilient Than Other Metals
42
Zinc: Sustained Break Unlikely
44
Table: Select Commodities - Performance & BMI Forecasts
45
Competitive Landscape
47
Table: Financial Data For Key Firms Listed In Brazil
47
Foreign Firms Look Beyond Iron Ore
48
Golden Opportunities Tarnished By Lower Prices
48
Company Profile
49
Alcoa
49
Recent Financial Data
52
Table: Alcoa - Key Financial Data
53
Anglo American
54
Company Strategy
57
Latest Results
58
Table: Anglo American - Financial Data
59
Vale
60
Company Overview
62
Company Strategy
63
Recent Financial Performance
64
Table: Vale - Key Financial Data
65
Company Details
65
Regional Overview
66
Americas Overview
66
1
66
2
67
Table: Americas - Regulatory Updates
68
3
69
4
70
5
73
Global Industry Overview
75
Challenges
75
Table: Mining - Select M&A Deals
79
Cause For Optimism
82
Methodology
89
Industry Forecast Methodology
89
Sources
90
Risk/Reward Rating Methodology
91
Table: Weighting Of Indicators
93

The Brazil Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Brazil Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Brazil.

Key Benefits

  • Use BMI's independent industry forecasts on Brazil to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Brazil's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Brazil.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

Executive Summary

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Ratings

BMI's Mining Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (mining companies and support service providers) in the regional mining market. The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry Ratings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2017 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2017 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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