Brazil
Q&A

Diversifying and developing the mining sector – what Brazil needs to do

Bnamericas Published: Tuesday, November 08, 2022
Diversifying and developing the mining sector – what Brazil needs to do

Brazil will need to place more emphasis on mining exploration in order to move forward with plans to diversify the mining sector in the coming years. 

That will depend on efforts by the government and the private sector to develop environmental regulations that are more flexible at the early stage of projects, as well as financing structures that assume more operational risks. 

The country will also have to develop a more extensive supply chain to allow the development of this phase of mining activity.

Marcos André Gomes Veiga Gonçalves, president of Brazil’s agency for the development and innovation of the mining sector (Adimb), talks with BNamericas about the scenario in the sector and the tasks that the new government should focus on in the coming years.

BNamericas: What is your view regarding the business environment for the mining sector from 2023 onwards?

Gonçalves: Our outlook remains positive for the sector in 2023. We see an environment for mining in Brazil that goes beyond a change of government. It goes beyond a four-year presidential term. We always look at the long term.

There are still challenges to be faced in the sector to put Brazil on the same level as Australia and Canada in terms of [mining] practices and to seek greater diversification, not just focusing on two or three commodities.

But here at Adimb I've already witnessed great progress; a lot of agreement between companies and the government.

BNamericas: What are the priorities to be addressed by the next government for the mining sector in Brazil?

Gonçalves: Brazil needs to encourage mining exploration and to do that we need to ensure that a mining title can be used as a guarantee to finance this activity. Approving this would enable this activity to be assumed by small and medium-sized companies.

We would also need to create a stock exchange mechanism in Brazil that allows non-producing companies to access the capital market, a market that functions as venture capital, focused on projects in this preliminary phase.

Brazil has a window of opportunity to expand its mining activity in the face of the energy transition, which is going to require various materials.

BNamericas: Are there concerns that environmental permits and licensing will be stricter under the new government?

Gonçalves: There's always concern about the risk of the environmental licensing phase being too cumbersome. I am not against rigid environmental licensing, on the contrary, however, there needs to be a balance, a calibration of the different environmental licensing requirements for the different phases of mining activity. Environmental legislation in Brazil is quite modern and comprehensive. However, we have to say that the mining exploration phase shouldn't be subject to so much rigidity, there has to be a sense of proportionality, 

I want to believe that we are in a process of maturing understanding of regulations and permitting.

Environmental legislation in Brazil is quite modern and comprehensive. But we have to say that the mining exploration phase shouldn't be subject to so much rigidity, there has to be a sense of proportion.

BNamericas: Why is there a lack of a database in Brazil with information on all the projects and data on the different phases of mining developments underway?

Gonçalves: The lack of data integration is real. The Brazilian geological service has done an important job, but we are still going through a digitization phase.

Nobody is against storing all the information in one place, but it takes time to do. It is very difficult to implement all this. In the oil & gas sector, this is already more developed – the database is more advanced. I would say that the data related to mining exploration is still highly disaggregated.

BNamericas: Does Brazil have the potential to be a relevant player in other segments besides iron ore?

Gonçalves: I think Brazil has the potential to be a relevant player. We can't do that by depending on iron ore and gold.

I'm not saying that Brazil will become the biggest producer in multiple segments, but I see room for Brazil to play a relevant role in lithium, perhaps graphite, and also increase our share in nickel and copper.

The point is that in terms of iron ore, our quality is unbeatable, but we have to advance in other segments as well.

But this diversification depends on efforts to advance mining exploration activities, giving more dynamism to the sector, as has already been done in Australia, Canada, Chile, where society is more aware of the benefits of mining.

BNamericas: Does Brazil have any other challenges with respect to the mineral exploration phase?

Gonçalves: We still have a limited supplier base in the mineral exploration phase – we need more suppliers. For example, we only have two companies in Brazil at present that carry out chemical analysis for mineral exploration. It's essential to have more variety.

We also need companies that work on equipment maintenance and offer geophysical equipment.

BNamericas: Adimb is going to organize the Brazilian symposium on mining exploration, Simexmim. What are your expectations for the event?

Gonçalves: Simexmim will take place between November 27 and 30 in the city of Ouro Preto, in Minas Gerais state. This will be the 10th edition of the symposium and we will have a total of 12 sessions where we will discuss the future of mining in Brazil, in addition to the current state of mining exploration in South America, with technical panels. We will also talk about the sector's financing scenario and innovations.

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