Mining industry plans new expansion cycle in Brazil

Aug, 30, 2023 Posted by Gabriel Malheiros

Week 202335

The mining industry is preparing to channel $50.4 billion of investments into Brazil between 2023 and 2027, marking the largest sum in a decade. However, sector leaders believe this figure, impressive as it is, falls short of the nation’s potential for attracting resources. They estimate that these investments could double, reaching $100 billion every next five years. “We are facing an enormous window of opportunities. It’s up to Brazil to seize it,” says Raul Jungmann, President of the Brazilian Mining Institute (Ibram).

These opportunities are tied to the exponential expansion of mineral consumption, classified as critical for the energy transition through renewable sources such as wind and solar energy, as well as electric vehicles. To meet this need, the International Energy Agency (IEA) anticipates that lithium output should rise by more than 40 times over the next 20 years, while the demand for nickel, cobalt, and graphite will be 20 to 25 times greater than current levels. By 2030, the global minerals and ores market might grow from $320 billion to $1 trillion.

“We will speed up the growth of our metals business platform for the energy transition,” says Eduardo Bartolomeo, CEO of Vale. In July, the company entered two agreements to invest between $25 billion and $30 billion in the next decade in strategic metals through its subsidiary, Vale Base Metals Limited (VBM), in Brazil, Canada, and Indonesia. One partnership involves Saudi Ma’aden and the Public Investment Fund of Saudi Arabia, while the other deal is with the multinational investment firm Engine No.1. These agreements will infuse $3.4 billion into VBM’s capital in exchange for a 13% stake in the company.

The investments aim to increase VBM’s copper production from 350,000 tonnes per year (kt/year) to 900 kt/year and nickel production from 175 kt/year to over 300 kt/year. “Mining is a key component of Brazil’s path toward the energy revolution and global decarbonization, and we are well positioned to support the country in this task,” he affirms.

In addition to the challenge of decarbonizing production and seeking more sustainable practices for their facilities, mining companies are grappling with the demands to decommission tailings dams, which have garnered attention due to tragedies like Mariana (2015) and Brumadinho (2019). Ibram calculates that dam decharacterization (decommissioning) will carry a cost exceeding $4.5 billion.

Vale has already invested approximately $6.2 billion in its Dam Decharacterization Program and has earmarked $17.3 billion to complete the process. However, this timeline of nine to twelve years, considered excessive by experts, has been granted to the company.

Source: Valor Econômico

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