Brazil's mining sector optimistic amid recovery in commodities prices

Brazil's mining industry is expecting a significant increase in revenues this year thanks to rises in prices of certain commodities. 

The mining sector posted revenues of 68bn reais (US$13.0bn) in the first quarter, up 25% year-on-year, according to mining association Ibram.

"We will likely see an increase in revenue this year compared with last year and with 2022 because of the recovery in prices of items such as copper and nickel, and also with iron ore at a price of around US$100-120/t," Julio Nery, sustainability and regulations director at Ibram replied to a question from BNamericas at a conference to present the industry's first quarter results.

In full-year 2023, the Brazilian mining sector posted net revenues of 248bn reais, compared with 250bn reais in 2022, after total sales reached 339bn reais in 2021.

"Copper and nickel will tend to see price increases in the coming months as there are signs of an increase in production of electric vehicles around the world after several quarters of drops in output. Despite economic uncertainty in China, iron ore prices should remain at profitable levels," said Nery. 

Iron ore accounted for 64.2% of total mining revenues in the first quarter.

INVESTMENTS 

Ibram has maintained its forecast for the volume of investments in the mining sector, predicting they will hit US$64.5bn in 2024-28, but it warned of risks ahead. 

"Brazil has discussed taxes on mining in the tax reform that conflict with the constitution, which prevents charging taxes on exports. This causes legal uncertainty and could increase costs, which may also affect investment decisions at some point," Rinaldo Mancin, Ibram's director of institutional relations, said in response to BNamericas. 

The Ibram representatives also leveled criticism at debate in congress that could facilitate the activities of informal miners, known in Brazil as garimpeiros. 

"We need to be careful with legislation that opens up room for garimpeiros, because we know that the Brazilian government is not in a position to supervise all small operations and that could make space for activities of criminal groups to launder money and cause environmental damage," said Ibram president Raul Jungmann.