Brazil
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'Mining will bring about a transformation' of Bahia state

Bnamericas Published: Wednesday, May 19, 2021
'Mining will bring about a transformation' of Bahia state

Brazil’s Bahia state is turning into a mining investment destination, offering a broad range of minerals. 

Bahia represented only 2% of national revenues during the first quarter of 2021, compared with Pará and Minas Gerais states’ 31% and 28% respectively, according to mining association Ibram. 

But Bahia is expected to attract US$11bn of the US$38bn projected to be invested in Brazilian mining operations by 2025, just behind Minas Gerais’ expected share of US$13bn. 

Antônio Carlos Marcial Tramm, the president of Bahia state mineral research company CBPM, talks with BNamericas about how the state manages its rising mining sector.

BNamericas: Does Bahia state have the capacity to become as important a mining location in Brazil as Pará and Minas Gerais?

Tramm: Pará’s mining production is very dependent on iron ore; Minas Gerais is highly dependent on iron ore and gold.

In Bahia we have major diversification. We have about 52 different types of minerals, which can be explored and produced.

In Bahia we have great potential for producing nickel, copper, gold, iron ore, vanadium, uranium, among others.

We are responsible for about 3% of the national mining sector's revenues, we can easily double this with ongoing projects and investments.

BNamericas: What challenges does Bahia face in developing its mining potential?

Tramm: The logistics part was a major bottleneck, but now this is being resolved.

Since I started here at CBPM, I have been working to advance the Fiol railway concession, with Bahia Mineração taking over the project, and with the Porto Sul project advancing. 

Fiol and Porto Sul combined will make feasible a series of new mining projects here in the state, there are iron and copper deposits in the region, which will be made possible with this logistics in place.

The improvement of the infrastructure in Bahia will help the state gain importance in mining compared to other states. For example, the Sul Americana project, which is in the north of Minas Gerais state, will need to use the port in Bahia.

BNamericas: Which are the state's key mining investment projects?

Tramm: In addition to the Bahia Mineração project, we have Atlantic Nickel planning to invest 1.8bn reais (US$343mn) in implementing an underground mine in Itagiba.

Mineração Caraíba has already invested 58mn reais to reopen the copper mine in Surubim.

Equinox Gold is investing 500mn reais in the Santa Luz mine. Yamana Gold is investing 300mn reais in its mines and processing plant in Jacobina, in addition to 200mn reais to be invested in RHI Magnesita and 500mn reais from Ferbasa in other projects.

In addition to these investments, there is a lot of potential in rare earths here in the state and for the production of fertilizers, to serve our agriculture.

BNamericas: What is the impact of mining on the state’s economy?

Tramm: Mining will bring about a transformation of our state. Our expectation is that over the next few years, the state’s CFEM [mining royalties] reach up to 600mn reais a year. This benefits the state government and city halls as well.

As a comparison in the first months of this year, we collected 1.8mn reais in CFEM royalties.

BNamericas: Are state governments under pressure to raise mining taxes?

Tramm: That pressure does exist.

Governments look at the mining sector reporting large profits and revenues and calculate how they can raise more cash via taxes.

I have been talking with Ibram about the fact that the sector has to show better how it has already contributed to tax collection.

When a mining company establishes itself in a region, it positively impacts the economy, it has a multiplier effect in the region and this needs to be shown.

It is not only the calculation of royalties or taxes paid directly by the company, there is also a secondary contribution that the sector generates to the entire economy where a project is located. These are elements mining companies need to better inform about.

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