"Brazil Mining Report Q3 2013" is now available at Fast Market Research

From: Fast Market Research, Inc.
Published: Fri Aug 09 2013


Brazil's mining sector is poised for continued, though slower, growth as weaker foreign demand weighs on Brazilian exports. The country's large untapped reserves and relatively small mining sector relative to regional peers make it a compelling sector growth story and should continue to attract investment. Iron ore production will continue to be the main driver of mining sector investment, but we expect growth in several base metals, as well as gold, providing opportunities for mining companies and investors. Investments into infrastructure in advance of the 2014 FIFA World Cup and 2016 Olympics will not only help support demand for raw materials, but also enable more efficient transport of mineral resources through infrastructure investments.

Full Report Details at
- http://www.fastmr.com/prod/664886_brazil_mining_report_q3_2013.aspx?afid=303

We forecast that Brazil's mining industry growth will average 0.7% per annum in US dollar terms through our forecast period, reaching US$84.2bn in 2017. However, our 2013 forecast remains slightly below Brazil's 2012 mining industry value, due primarily to lower than average iron ore prices for the year. Given Brazil's status as the world's second largest iron ore producer, negative price trends for iron ore, which contributes approximately 85% of the country's total mining export value, have an outsized effect on the Brazilian mining sector. We forecast iron ore prices to average US$118/tonne in 2013 and US$104/tonne in 2014. Our below-consensus view on Chinese economic growth and belief that steel-intensive fixed asset investment will slow, as well as general weakness in demand growth both from China and the developed world, lead us to forecast modest industry growth. However, we still expect iron ore production growth to increase as new mines long in development come online and as firms remain reluctant to cut back existing production.

We also highlight two potential upsides to our outlook. Firstly, continued policy uncertainty in Indonesia may boost exports of Brazilian nickel, bauxite, and tin. Indonesia's central government foray into resource nationalism led to uneven export volumes throughout 2012, reflecting a declining business environment for mining firms. Although exports have largely resumed, further intervention by the central government to impede export growth cannot be ruled out. Secondly, we also highlight our positive outlook for Brazilian gold. Though Brazil's gold output is ranked 12th in the world, continued investment into the sector by many junior firms should increase gold's contribution to Brazil's mining industry value. However, our forecast for falling gold prices in 2013 and 2014 and restricted funding access for junior firms both through traditional bank loans and capital market fundraising may limit mine development and production in the coming years despite significant deposits of the metal.

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