The mixed 2025 outlook for Brazil's mining sector

The Brazilian mining sector is likely to have a positive year in 2025, helped by Beijing's recent moves to boost China’s economy.

Stronger economic growth is likely to favor investments in Brazil’s iron ore industry, as Chinese steelmakers are the top consumers of the raw material.

Conversely, mining companies are concerned about Brazil's potential new tax on the sector, which is part of the reforms being debated in the senate.

Afonso Sartorio, EY's mining and metals sector lead for South America, talks with BNamericas about the outlook for the mining sector in Brazil for 2025.

BNamericas: What is the expected scenario for the Brazilian mining sector in 2025?

Sartorio: A positive point that I see for 2025 is the clearer signs of recovery in China due to the fact that the government there is returning to making investments in infrastructure and also in the midst of a process of reducing greenhouse gas emissions from Chinese steelmakers.

This move to reduce emissions favors Brazilian iron ore since the iron ore produced in Brazil is of high quality and has fewer contaminants when compared to iron ore produced by Australian companies and other countries.

More generally, 2024 was a year in which we saw a slowdown in relation to the commodities market and now for 2025 we see slightly better price signals for metal commodities.

BNamericas: How about the challenges?

Sartorio: We have to monitor how the discussions on the introduction of a selective tax for mining will develop, within the debate on tax reform now in the senate.

Such a tax, if actually implemented, will reduce companies' operating profits.

This selective tax needs to be better discussed so that we can know whether it really makes sense to equate, for example, iron ore with other harmful products, such as cigarettes or beverages.

Mining, which is the basis of so many industrial chains, is responsible for a large part of the trade surplus and helps the development of the places where it takes place. If it is put on the same level as harmful products, that could be counterproductive for society and investors' perception.

BNamericas: Would you point to other highlights for 2025?

Sartorio: The recently launched investment fund by [development bank] BNDES and [mining firm] Vale, worth around 1bn reais [US$181mn] to invest in exploration, in junior companies, is a very positive factor.

This fund aims to structure a fundraising market in Brazil, avoiding the need for companies with projects here to finance themselves in other countries. This will tend to create a virtuous circle in the local mining sector.

BNamericas: Will this fund help create a pipeline of projects in the critical minerals segment?

Sartorio: We already have a pipeline of projects in the area of critical minerals, which is rather robust.

This specific fund will only have a long-term investment profile, we won’t see a short-term production impact.

If we’re talking about the 2025 scenario in terms of projects, I see that a large part of the projects in terms of financial resources will still be concentrated in iron ore, with Vale and CSN Mineração moving forward with investments, as well as Samarco accelerating investments.

We will have a certain diversification of the mining sector in terms of projects next year, but we have to remember that the scenario for fundraising is still not so favorable.

BNamericas: What can we expect from the critical minerals segment?

Sartorio: Lithium is going through a price correction, a very large price correction. This could cause some new investments to be reviewed for a time.

For metals such as nickel and copper the scenario is positive, as it is for gold, which benefits from global geopolitical volatility.

Gold is a haven in times of instability and the current scenario is a favorable situation.

BNamericas: Vale, the largest mining company in the country, has said it wants to invest more in copper and nickel. In your view, will these investments tend to be more concentrated in Brazil or in the company's international operations?

Sartorio: Both. Vale has assets in Canada, Indonesia, but also in Brazil.

The agenda of Vale's new CEO is very clear, with the aim of increasing investments in these segments [copper and nickel].

BNamericas: How can Brazil address a better environmental licensing model so that such processes are clearer in terms of deadlines?

Sartorio: This is something we know the recipe for but we need to apply it.

In a way, if we use as a reference good process flow practices that already exist in other countries, process automation, integration of federal entities, even though Brazil is very large, we can make phenomenal advances.

Our licensing deadlines are around 50% longer than the countries we compete with, and this is an inefficiency that we need to resolve.

Actions that provide transparency to processes are essential and we cannot forget that we also need to intensify investments in our geological mapping.

BNamericas: Have you seen changes in the perceptions of mining players?

Sartorio: A few weeks ago we published a survey with interviews with sector executives mapping risks and opportunities in mining.

In recent years we’ve seen that the focus of executives is very concentrated on the ESG agenda, the climate agenda, in addition to aspects linked to environmental licensing.

These themes remain relevant, but our most recent survey also shows changes in perceptions, with more interest in investing in new projects, themes linked to the exhaustion of reserves, and the need to adopt technologies. These are themes that are growing in strength.