Mining to Brazil
Trends and opportunities
Brazil is amongst the biggest global players in the mining sector. It is the second largest exporter of iron ore, manganese and bauxite and the largest exporter of niobium. Iron ore accounts for 80 per cent of Brazil’s mining exports and provides 30 per cent of global demand, the remainder is provided by Australia (Source: Brazilian Mining Institute (IBRAM), Oct 2014).
According to the Brazilian Government’s National Mining Plan, this will rise to over 800 million tons by 2022 and 1.1 billion tons by 2030. China is the largest export destination for Brazilian iron ore with over 45 per cent of approximately 330 million tons exported in 2012.
The minerals sector represents 4.2 per cent of Brazil’s Gross Domestic Product (GDP) and 20 per cent of total Brazilian exports, which generates 8 per cent of all jobs in the Brazilian industry. Brazil has the largest mining operations for iron ore, with 2012’s output at 480 million metric tons per year, representing nearly 16.5 per cent of the world’s total. (Source: National Mining Plan 2030, May 2012).
The key government body for the mining sector is the National Department of Mineral Production (DNPM), part of the Ministry of Mines and Energy. Environmental regulations are under the auspices of the Ministry of Environment and the National Council of Environment (CONAMA), while the Brazilian Institute for Environment and Renewable Resources (IBAMA) is also involved in licensing.
According to IBRAM, the Brazilian mining industry is expected to invest approximately US$75 billion between 2012 to 2016, with sixty per cent of this investment will go to iron ore projects. Mining companies in Brazil are looking at solutions to increase productivity and reduce costs. There is growing appreciation for innovation in the mining sector through research and development.
The Brazilian mineral potential still has not been fully surveyed and significant discoveries of mineral deposits are expected in the future. In June 2013, the Brazilian Government submitted to the National Congress a bill of law that sets the new legal framework for the country’s mining sector. If approved it should introduce substantial change to the provisions of the current Mining Code.
Most of Brazil’s mines are open pit so the underground mining equipment and technology market is very small, but more underground mines are expected to open in the future.
With the major expansion plans for the Brazilian mining industry, particularly iron ore projects and its vast unexplored and unmapped areas, there are a wide range of opportunities for Australian companies.
In view of Brazil’s on-going rise on the global mining scene, there is reportedly huge potential across a number of project types and locations, particularly for those able to hasten the development of the industry. (Source: Brazil Mineral magazine – Mining in Brazil, still attractive, 2014)
Opportunities exist in:
- Mine software
- Mining processing technologies
- Mining equipment
- Engineering services
- Dump body and transportation technologies
- Mine safety
- Environmental equipment and consulting
- Mining education and training services
- Mining research and university collaboration
- Mineral production concessions (including iron ore, gold, manganese, magnesium, niobium, nickel, copper, bauxite and zinc)
- Mineral exploration
The mining, equipment, technology and services industry (METS), is very competitive with most multinational vendors in the market.
Mining companies, even the very large ones, prefer to contact Brazilian representatives instead of contacting foreign suppliers directly.
Vale, CSN, Samarco and Anglo American are the key players in the Brazilian iron ore sector.
Vale is by far the largest player in the market, responsible for over 53 per cent of Brazilian Mineral Production. Its mega mine complex in Carajas located in the state of Pará, consists of five open-pit iron ore mines. This project is predicted to surpass Minas Gerais and make the state of Para Brazil’s biggest minerals producer within five years. (Source: Folha de São Paulo May 2012).
Carajás new project S11D alone will supply 90 million metric tons of iron ore per year and when it reaches its full capacity, Vale’s total ore production in Pará state should reach 230 million metric tons per year. (Source: Carajás S11D Iron Project brochure)
Other major projects recently announced include, Anglo American Minas-Rio project, Samarco’s P4P’s expansion project and CSN expansion of Casa de Pedra mine. (Source: Brazil Mineral magazine, special issue 2014. Mining in Brazil – Still attractive)
Tariffs, Regulations and Customs
All products exported to Brazil are taxed by an import tax (unless specifically exempt).
Key points on import tax include:
- levied on the customs value
- generally assessed based on the transaction value which coincides with the cost, insurance and freight (CIF) value
- import tax rate is selective and depends on the product's tariff classification.
Special preferences are granted on a wide range of items imported from member countries of the Latin American Integration/Development Association, in particular, from Mercosur member countries - Argentina, Uruguay and Paraguay.
Products manufactured or exported to Brazil are classified under the Mercosur Common Nomenclature (NCM) classifications. It is important to check the sub-classifications, as there is a wide variation of import tax rates. Companies called ‘despachantes’ provide a valuable service by doing this check. For more information, visit NCM.
Most duties are ad valorem, based on the GATT Valuation Code (approximately CIF value) (Source: Incoterms 2000).
The drawback regime is an incentive for exports introduced by the government. The requirement for requesting the incentive is that the finished product that has been manufactured in Brazil and then exported has used some parts and pieces that have been imported into Brazil. This presents opportunities for Australian exporters in all industries.
As tariffs and duty rates are constantly revised and are subject to change without notice, Austrade strongly recommends you confirm these prior to selling in Brazil. For more information, visit the Secretariat of the Federal Revenue of Brazil.
Marketing your products and services
Austrade strongly recommends that exporters obtain professional legal and accounting advice before conducting any business in Brazil. Austrade can provide referrals to service professionals.
In order to succeed in Brazil a sound business plan, a longer-term strategy and some degree of local presence is required. Important points to address include:
- Local business presence – agent, representative office or joint venture partner:
- For most exporters it is necessary to establish a local presence through an agent/distributor, representative office or joint venture partnership. To maintain business contacts or where regular sales or service follow-up is required, it is critical to be on the ground.
- Brazil has a large choice of reputable sales agents, which are a popular way forward for new exporters looking to develop a market presence, particularly for smaller companies. The challenge is to find an agent with the right contacts and experience for your product.
- A smaller number of exporters establish representative offices, due to the high costs involved, these companies usually have needs that cannot be met by agents or distributors. Such as businesses that need a high degree of control over their products and after-sales service or have commercially sensitive intellectual property.
- One option that is increasingly popular is the establishment of a joint-venture partnership with a local company. One attraction of this method is that costs and risk are shared by the partners, with the Brazilian partner bringing to the venture local market knowledge, know-how and business experience.
- Strategies to deal with administrative and legal requirements, including tariffs and taxes.
- The need to localise manufacture of the product at some stage.
- Understanding the structure of Brazilian mining companies and their procurement process.
- The need to develop relationships with procurement offices, as well as with operation teams at mine sites.
- Presenting a concrete value proposition which demonstrates the value add of your solution.
- Understanding that there is lots of bureaucracy involved on site visits, long driving distances from Belo Horizonte and Carajás and the roads aren’t very safe.
Consider participation at Exposibram, which the largest mining show in Brazil that showcases mining companies with global operations and major suppliers of products and services. Austrade manages the Australian National Pavilion, which is an opportunity to meet with Brazilian customers and other industry contacts, liaise with potential agents and distributors and investigate the competition.
Links and industry contacts
Government, business and trade resources
Ministry of Mines and Energy
Geology, Mineral and Mining Transformation Secretary
Brazilian Geological Survey
National Department of Minerals Production
Brazilian Mining Institute (IBRAM)
Brazilian Association of Mineral Exploration
Metallurgic and Materials Brazilian Association
National Syndicate of Iron Ore and Basic Metals Industry
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
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