New Market Research Report: Brazil Mining Report Q2 2010

May 6, 2010 - PRLog -- Brazil's mining industry is experiencing a strong recovery from the economic downturn and BMI is optimistic about the sector's prospects over the forecast period. With a rejuvenated construction sector worldwide, iron ore is a particularly strongly performing commodity. As a result prices for the raw material have soared in recent months. Brazilian mining giant Companhia Vale do Rio Doce (Vale) faced criticism from European steel industry body Eurofer in March 2010 after deciding that it will abandon the benchmark pricing process and move towards a more market driven pricing policy. Vale is negotiating the current benchmark price of iron ore with European and Asian steelmakers. The benchmark pricing system has been established for over four decades and is set each year after closed negotiations between the largest mining and steel companies. The agreed price then sets a benchmark price for the year that the rest of the industry customarily follows. During the financial crisis, this system was suspended as spot prices fell far below the agreed annual price. As prices for the raw materials now increase, Vale is keen to reflect the market fluctuations in the current delivery price. This could see an increase of iron ore prices by 80-90%. This would increase costs throughout the construction and manufacturing sectors considerably. However, Vale believes that a regular review of pricing based on an independent spot market pricing index would be much more indicative of the true value of the raw materials.

The strong performance of iron ore has given Brazilian President Da Silva an opportunity to boost the domestic steel industry and in February 2010 it was announced that an export tax on iron ore may be introduced. In addition, the government is considering removing a tax on finished steel goods as a way to encourage the domestic processing of steel goods. While the move will not be favourable to Vale, the government also announced it would be offering tax incentives on fertiliser exports, no doubt a move to placate the mining giant which recently acquired significant fertiliser assets.

In November 2009, Credit Suisse analysts forecast that Brazil will increase its iron ore exports in the next 4 years with a growth rate to overtake Australia. It was anticipated that exports will reach 354.9mn tonnes in 2010, an increase of 21%, driven by demand from China, which, encouraged by the economic recovery, is beginning to rebuild stockpiles of the material. By 2013, it was estimated that Brazil could reach 443.3mn tonnes of iron ore exports, compared to an estimated 549.6mn tonne from Australia.

Gold is also performing very well and the state of Para, which has large reserves of the precious metal - has attracted significant investment in recent months. In December 2009, it was reported that Brazauro Resources Corporation had signed an option with Talon Metals to purchase 100% of the agua Branca gold project, which is located in Para. Meanwhile, in January 2010 Brazilian Gold Corporation, announced an agreement to acquire a 51% stake in Boa Vista, which holds two large exploration concessions.

Global Overview

BMI examines the phenomenon of increased Chinese activity in the global mining sector and what this means for the industry.

Industry Forecast

Calls to introduce tax cuts for mining companies have been rebuffed by the authorities and in November reports from Reuters indicated that a hike on royalties looked likely. Despite a marginal growth in real terms in 2009, BMI estimates that the Brazilian mining sector will experience strong growth of 7.0% in real terms in 2009. By 2014, the market should be expanding by around 4.8% a year in real terms and will reach a value of US$46.4bn, an increase of around 87%, compared with 2008.

For more information or to purchase this report, go to:
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Report Table of Contents:

Executive Summary
SWOT Analysis
- Brazil Political SWOT
- Brazil Economic SWOT
- Brazil Business Environment SWOT
Special Focus: Outlook For Global Mining
- Table: Biggest Chinese Acquisitions In Australia Since 2005
Industry Trends And Developments
- Overview
- Table: Mines In Brazil
- Latest Developments
- Regulatory Structure
Key Projects
- Metals
- Bauxite And Alumina
- Gold
- Iron
- Copper
- Nickel
- Tungsten
- Uranium
- Minerals
- Coal
- Diamonds
Business Environment
- Americas Overview
- Table: South American Mining Business Environment Ratings
- Legal Framework
- Labour Force
- Table: Brazil - Demographic Indicators, 2000-2030
- Foreign Investment Policy
Political Environment
Forecast Scenario
- Aluminium Outlook
- Table: BMI's Aluminium Forecasts
- Table: Aluminium Indicators, 2005-2011
- Copper Outlook
- Table: BMI's Copper Forecast
- Table: Copper Indicators, 2005-2011
- Brazil's Mining Industry Forecast
- Table: Brazil's Mining Forecast, 2007-2014
Competitive Landscape
- Table: Key Players In Brazil's Mining Industry
Company Monitor
- Brazilian Mining Corporation (Formerly Sao Luis Mining)
- Jaguar Mining
- Vale
Global Assumptions Q210
- Table: Global Assumptions, 2007-2014
- Table: Developed States' Real GDP Growth, 2007-2012
- Table: Emerging Markets Growth, 2007-2014 (%)
- Table: Global And Regional Real GDP Growth And Exchange Rates, 2007-2014
Business Environment Ratings Methodology

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