Brazil mining companies’ revenues higher in 8 months of 2021 than in all of 2020

RIO DE JANEIRO, BRAZIL – Brazilian mining companies have posted revenues of R$219.9 (US$40) billion from January through August this year, 112% more than in the same period last year, according to data released Wednesday (6) by the Brazilian Mining Institute (IBRAM) during the online Exposibram trade show. In 8 months, the sector’s revenue has surpassed the whole of 2020 (R$103.7 billion)

According to IBRAM, the result reflects the appreciation of the main minerals throughout the year. Iron ore was traded above US$220 in July 2021 and despite the sharp decline in recent months, it is trading in October at a level close to the same period last year, in the range of US$120 a ton. In addition to the quotation, sales are also helped by the high dollar exchange rate.

Of the sector’s total revenues, iron ore accounts for R$162 billion. The second main product is gold, with gross revenues of R$18 billion, followed by copper, with another R$11 billion in revenues.

The sector’s production grew 9% in tons from January through August this year, compared to the same period last year, to 833 million tons, according to IBRAM’s estimates. Exports posted a 94% increase in the period, raising the share of the mineral sector in the country’s trade balance from 49% to 69%.

IBRAM considers that the reduction in the price of iron ore has not affected the sector’s results in recent months. “The global demand for mineral commodities should continue to grow, or at least remain stable,” the institute said in a statement. Thus, production should continue to grow, contributing to the recovery of the Brazilian economy, according to the entity.

PROJECTIONS

Mining companies operating in Brazil will invest US$41 billion in the 2021-2025 period, of which 47% are currently under execution (US$19.4 billion), IBRAM reported. In July, IBRAM had released a lower investment forecast, of US$38 billion.

Investments are divided between iron ore (US$13 billion); bauxite and fertilizers (US$6.4 3 billion each); copper (US$1.7 billion); and gold (US$1.4 billion), IBRAM said. Of the total amount foreseen, Minas Gerais will take the largest share: US$10.2 billion (25%). Next come the states of Bahia and Pará, which will each receive some US$7.3 billion in investments.

The ESG (environmental, social and governance) agenda was a driving factor for investments. “Now, over US$6 billion are investments under execution to implement socio-environmental projects, mainly to reduce emissions,” the institute reported. “These are investments in large ESG projects, complementary to those that mining companies are already undertaking in socio-environmental terms.”

The increase in investments by mining companies occurs despite the drop in the price of iron ore on the international market. The commodity closed September quoted at US$119.23 a ton in Qingdao, China, down 34.33% in the month, the third consecutive drop. In July, ore was traded above US$220 a ton, an historical high.

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