04/11/08

Brazil`s sprawling Amazon region, often obscured in the mining industry by the nation`s iron ore powerhouse down in Minas Gerais state, in fact accounts for a fair chunk of the country`s mineral exports. In order to discover more about what appears to be a promising region for the future of Brazilian mining, BNamericas caught up with André Reis, research coordinator for the Amazon region at the Brazilian mining institute Ibram, the association that represents the country`s mining industry. In this interview Reis shares Ibram`s knowledge of Amazonia`s contribution to Brazilian mining and offers insight into its potential for growth.  BNamericas: What is the level of the Brazilian Amazon region`s mining exports and how much do they represent out of Brazil`s total mine production?Reis: Exports from the Amazon region represent 26.7% of Brazil`s extractive mining industry and of the mineral processing industry in terms of revenues, amounting to US$7.2bn this year through August. Brazil`s total exports reached US$27bn in that period.BNamericas: What state in the Amazon region is the biggest exporter of minerals?Reis: In the Amazon region we highlight exports out of the state of Pará, the second largest mining exporting state and producer in Brazil behind Minas Gerais. Pará state accounts for 21% of all mining exports in Brazil. In the Amazon region, Maranhão state is the second leading producer followed by Amapá.This year through August Pará state`s exports totaled US$5.7bn, while Maranhão exported US$1.4bn and Amapá US$44mn. Out of the total exports from the Amazon region, 25% go to China, 15% to Japan and 9% is shipped to Germany. These three countries are the Amazon region`s greatest consumer markets. In terms of export volumes, in 2008 through August Pará`s exports equaled 59Mt, while those from Maranhão amounted to 4Mt and Amapá 498,000t.BNamericas: What is the level of production coming from the Amazon region? Reis: Production resembles exports. Pará is the top producer, followed by Maranhão and Amapá in third place. A part of the region`s iron ore production goes to pig iron and another part goes to steelmakers here in Brazil. BNamericas: How much does the region import in terms of inputs?  Reis: Pará imports coal and phosphates. Coal is usually used as fuel and phosphates are used as raw materials for making fertilizers. Pará also leads in the import category with US$52mn in coal purchases through August 2008. The state of Mato Grosso leads phosphate imports with US$20mn while Maranhão follows at US$4.7mn in purchases. BNamericas: How has the Brazilian Amazon region been performing when it comes to trade? Reis: The Amazonian region posted a US$6.5bn surplus [in export revenues versus imports in the first eight months]. This year through August exports of minerals generated dollar inflow increases of 58% compared to the same period in 2007 in the mineral extraction industry and a 13% year-on-year increase in the mineral processing industry.BNamericas: Which minerals are responsible for these sales increases? Reis: The biggest one responsible for these increases is iron ore, mostly coming out of Pará. But there were also increased exports of gold, chromite and iron ore out of Amapá as well. In dollar terms, iron ore exports totaled US$2.6bn or the equivalent of 56Mt [this year through August]. Copper came in second with US$515mn and 278,000t exported. Manganese exports amounted to US$402mn corresponding to 1.33Mt in physical sales. Manganese was sold in greater quantities than copper but its value is lower than that of the red metal. Therefore copper revenues are much greater than those for manganese.BNamericas: Where is there copper in the Amazon region? Reis: It is found in the area of Canaa dos Carajás, Paraopebas and in the municipality of Curionópolis.BNamericas: What is the potential to produce copper in the Amazon region? Reis: The Amazon region has been exporting copper for the last three years. But there are expansion possibilities. For example, projects in Curionópolis are about to start by Brazilian company Vale [the world`s largest iron ore producer]. BNamericas: Is there potential to mine gold in Amapá state? Reis: It is still in its incipient stages and quantities are still small. Gold production in Amapá is geared mostly to Brazil`s domestic market. Amapa has been producing iron ore and chromite. But in terms of gold, there is great potential in the Tapajos region of Pará. The thing about Tapajos is that the region has suffered roughly 50 years of “garimpeiro” [informal prospector exploration]. Garimpeiros have taken much of the gold from the surface. However, about 150m beneath the surface there is plenty of gold. So what is happening now is that the high price of gold is encouraging junior exploration companies to work in the Tapajos region. And obviously once they finish their analysis and research, they plan to sell the exploration rights for their projects to bigger companies. André Guilherme Dillon Reis is an economist and has held a position as a coordinator for Ibram Amazônia since the beginning of 2008. Reis is also a coordinator for the Pará mineral industry association Simineral.

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