Brazil mining capex expected to reach US$38bn

Mining capex in Brazil is expected to keep rising and reach US$38bn by 2024, according to mining association Ibram.

The prediction is based on the resilience the sector has shown during the pandemic. The figure would be the highest since the 2014-2018 period when capex totaled US$53.6bn. 

Capex has been rising since the start of the pandemic in the first quarter of 2020. Projected capex for the 2020-2024 period back then was US$34.5bn. 

"We are in fact seeing an upward trajectory and I believe that in the coming quarters we may even have to announce more upside revisions regarding the level of investments in the segment," Ibram chairman Wilson Brumer said during an online press conference in response to a question from BNamericas.

"The mining sector is still unexplored in Brazil in proportion to its territory, so I believe that we have a long way to go in terms of new investments, including the exploration of new minerals," he added. 

The highest capex share – 40.7% – is expected to go toward iron ore mining, followed by alumina/bauxite (21.5%), fertilizer components (16.7%), copper (5.3%), nickel (4.3%), and gold (4.3%). 

Rising commodity prices pushed mining revenues to a record 209bn reais (US$39bn) last year, up 36% from 153bn reais in 2019, according to Ibram. Fourth-quarter revenues totaled 83bn reais, up from 51bn reais in the third quarter.

"2020 ended with extremely positive numbers, which was impacted by the price variation of the commodities Brazil sells most, and due to the depreciation of the Brazilian real versus the US dollar," Brumer said. 

The main revenue generators were iron ore (139bn reais, up 39% year-on-year), gold (23.2bn reais, up 7.7%), and copper (13.8bn reais, up 34%). 

Also, the segment is employing 180,365 workers, compared with around 174,650 at the start of 2020. 

POTENTIAL IMPACTS OF THE PANDEMIC 

Although coronavirus infections and deaths have spiked and the vaccination program advances only slowly, Ibram doesn’t expect disruptions. 

"The mining sector has been considered an essential activity by the government since the beginning of the pandemic. Of course, a second wave of the pandemic is bad for the entire society, but in terms of mining production, we do not expect any impact on production," Brumer said.