Brazil Mining Report

Providing expert analysis, independent forecasts and competitive intelligence on the mining.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Petrochemicals Risk Reward Index, Economic Forecasts, Company Profiles and Global, Regional and Country Industry Overviews.

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Brazil Mining Report
Product Price
$1,295.00

BMI View: Brazil's mining industry will be supported by solid production growth in the country's iron ore sector over the next few years. Despite this, gold, nickel and tin production growth will slow due to continued price weakness.

Brazil Mining Industry Value Forecast (2014-2020)
2014e 2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: BMI, IBGE
Mining Industry Value, USDbn 59.54 48.94 45.61 48.14 52.61 51.60 48.07
Mining Industry Value, USDbn, % y-o-y -23.50 -17.80 -6.81 5.56 9.29 -1.92 -6.84

Latest Developments & Structural Trends

  • Iron ore will be Brazil's mining industry's growth bright spot due to the sector's low production costs, and a strong output growth strategy from Brazilian mining giant Vale. We expect Brazil's share of global iron ore production to increase from 11.5% in 2016 to 13.6% in 2019, with the sector's output reaching 459mnt in 2020 from 359mnt in 2016.

  • While Brazil's iron ore production growth will not be significantly affected by the Samarco dam burst in November 2015, parent firms Vale and BHP Billiton will face significant fees of approximately USD5.2bn. Further, the deadly incident will motivate legislators to increase environmental regulation in the mining industry and heighten local opposition to the sector.

  • Vale will remain focused on increasing low-cost production to maximize output, crowding out higher-cost junior miners in a weak price environment. For instance, Vale's cash costs fell to USD15.1/tonne in Q215 from USD23.2/tonne in Q115, well below our forecasted 2016 iron ore price of USD48.0/tonne. We forecast prices will average lower y-o-y in 2015 at USD48.0/tonne, compared to USD97/tonne in 2014. Beyond 2016, prices will experience nearly flat growth to 2019.

  • Brazil will also see positive base and precious metals production growth despite a more muted external market. Bauxite and nickel production growth will continue, though we believe gold output is likely to grow the slowest in percentage terms due to falling gold prices through 2020. Specifically, average y-o-y growth for Brazilian gold production from 2016 to 2020 is 1.4%, compared to an average of 4.0% in bauxite production growth over the same time. Indonesia's ongoing ban on unprocessed nickel and bauxite ore, and its higher purity requirements on tin exports, could lead to more buyers turning to Brazil, thereby increasing export demand and incentivizing mine production growth.

  • Major mining companies will continue to divest non-core assets as low prices will continue to put downwards pressure on miners' profit margins. Junior mining companies will continue with merger and acquisition (M&A) activity as high-cost production loses competitiveness in the struggling commodity market. Over the first 9 months of 2015, Brazilian M&A of basic materials value totalled USD3.7bn, growing by 309% y-o-y. Notable deals in Q315 include Banco Bradesco SA's USD1.2bn purchase of 36.4% of Vale's Mineracoes Brasileiras Reunidas stake.

BMI Industry View
7
Table: Brazil Mining Industry Value Forecast 2014-2019
7
Latest Developments & Structural Trends
7
SWOT
9
Industry Forecast
11
Bauxite: Foreign Miners To Drive Growth
11
Foreign Firms To Be Key Growth Drivers
11
Risks To Outlook
12
Table: Bauxite Production Forecast (Brazil 2011-2019)
13
Gold: Price Weakness To Curb Growth
13
Table: Select Greenfield Gold Projects
15
Table: Gold Production Forecast (Brazil 2011-2019)
15
Iron Ore: Production To Grow, Despite Flat Prices
16
Vale Looking Forward
16
Table: Iron Ore Production Forecast (Brazil 2014-2019)
20
Nickel: Modest Price Gains To Support Output Growth
21
Table: Nickel Production Forecast (Brazil 2011-2019)
22
Tin: Growth To Come To A Standstill
23
Indonesian Ban To Boost Brazilian Market Share
24
Table: Tin Production Forecast (Brazil 2011-2019)
25
Mining Risk/Reward Index
26
Brazil Risk/Reward Index
26
Rewards
26
Industry Rewards
26
Country Rewards
26
Risks
27
Industry Risks
27
Country Risks
28
Table: Brazil - Mining Production & Growth
28
Americas Mining: The Three Key Themes
29
Key Themes:
29
Regulatory Changes On The Cards
29
Dollar Strength And Oil Price Weakness To Support Production
30
Americas To Outperform Northern Peers
31
Regulatory Development
33
Recent Developments
33
Potential Clarification Ahead
33
Higher Royalties Could Present Modest Challenges
34
Trade & Investment Risk Analysis
34
Commodities Forecast
38
Commodities Outlook
38
Table: BMI Commodities Price Forecasts
38
Competitive Landscape
39
Table: Brazil: Key Mining Firms Financial Data, 2014
39
Foreign Firms To Hold Interest In Base & Precious Metals
40
Golden Opportunities To Lose Shine
40
Company Profile
41
Global Company Strategy - Alcoa - Q4 2015
41
Company Overview
43
Company Strategy
43
Latest Results
44
Table: Alcoa - Key Financial Data
45
Table: Alcoa - Supply Chain Analysis
45
Company Details
46
Global Company Strategy - Anglo American - Q4 2015
47
Company Strategy
49
Latest Results
50
Table: Anglo American - Financial Data
51
Global Company Strategy - Vale
52
Company Overview
54
Company Strategy
55
Latest Results
56
Table: Vale - Supply Chain Analysis
57
Table: Vale - Key Financial Data
58
Company Details
58
Regional Overview
59
Americas Mining: The Three Key Themes
59
Key Themes:
59
Regulatory Changes On The Cards
59
Dollar Strength And Oil Price Weakness To Support Production
60
Americas To Outperform Northern Peers
61
Global Industry Overview
63
Global Mining: 2015 Key Themes Revisited
63
Table: Key Mining Themes For 2015
63
Theme: Mining Capital Expenditure Will Continue To Decline
63
Theme: US Dollar Strength
64
Iron Ore Consolidation & Majors Share To Increase
65
Asian Investment In Africa To Continue
66
2015's Standouts
67
Methodology
69
Industry Forecast Methodology
69
Sources
70
Risk/Reward Index Methodology
71
Table: Weighting Of Indicators
72

The Brazil Mining Report has been researched at source and features BMI Research'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

BMI Industry View

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.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • 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 (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

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

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.

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.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.