# Presentation: 018450

## Mining in Brazil

_***Mining in Brazil***_
- Presentation by:
- Mauricio  Vasconcelos          U.S. Commercial Service      Belo Horizonte - Brazil

## Slide 2

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## Population: 175 million

- Size:  8,547,404 Km2
- Main Minerals:

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## Brazilian inflation yearly rate:  IPCA

- 1986: Plan Cruzado / 1991: Plan Collor  /  1994: Plan Real

## Slide 10

| Source: DNPM | Production 2002 | Comments |
| --- | --- | --- |
| Iron Ore | 222 Mt |  |
| Bauxite | 18.3 Mt |  |
| Coal | 6 Mt |  |
| Phosphate Rock | 5 Mt |  |
| Manganese | 2.5 M |  |
| Potash | 630,000 t |  |
| Magnesite | 310,000 t |  |
| Talc | 470,000 t |  |
| Asbestos | 173,000 t |  |
| Uranium | 310,000 t | 700 t yellow cake |
| Diamonds | 700,000 ct | Not lapidated |

## Slide 11

|  | Production 2002 | Comments |
| --- | --- | --- |
| Gold | 53,207 Kilogram | 2001 – Primary only |
| Copper | 31,000 t | 4 new projects |
| Zinc | 133,000 t |  |
| Nickel | 165,000 t  |  |
| Tin | 12,000 t | Sn contained |
| Niobium | 67,000 t |  |
| Chromium  | 280,000 t | In Cr2O3 |
| Lead | 13,000 t |  |
| Silver | 46 t (primary) | 50 t (secondary) |

## Slide 12

|  | Production 2002 | Comments |
| --- | --- | --- |
| Marble, Granite | 2.8 Mt |  |
| Aggregates | Sand 240 MT
Rock 165 Mt | Estimated
Estimated |
| Gypsum | 1.6 Mt |  |
| Graphite | 46,000 t |  |
| Lime | 6.3 Mt |  |
| Salt | 5 Mt | 22% mining
78% evaporation |
| Oil | 1.4 mn barrels | 85% consumption |
| Natural Gas

Cement | 16.6 billion m3

39 Mt |  |

## Iron Ore:* Largest world producer (22% of world production)* Brazil has 6.7% of world deposits (310 billion t)

_***Iron Ore:***_* Largest world producer (22% of world production)* Brazil has 6.7% of world deposits (310 billion t)
- * 5th largest deposits, but higher content.
- * All mines are open pit
- * 5.4% (US$3.3 billion) of BR. exports (in value) in 2002* Since 1998 strong demand from China* Strongest competitor: Australia (180 million T/year)

## Brazilian production of iron ore:  Million metric tons 

|  | TOTAL | Lump (Granulado)
 | Sinter-Feed | Pellet-Feed |
| --- | --- | --- | --- | --- |
| 1988 | 146,003 | 23,360 | 89,062 | 33,581 |
| 1994 | 177,366 | 35,473 | 99,325 | 42,568 |
| 2000 | 208,000 | 40,000 | 121,800 | 46,200 |
| 2002 | 222,198 | --- | --- | --- |

_***Brazilian production of iron ore:  Million metric tons***_

- Domestic market:  29.7 Mt pig iron and 31.1 Mt steel in 2003.

## CVRD bought other large producers since 2000:

- *  Socoimex (100%): 7 Million tons/year
- *  Ferteco (100%): 20 Mt/year (being 4 Mt pellets)
- *  Samitri (100%): 17 MT/year
- *  MBR (90% CVRD and 10% Mitsui): 38 Mt in 2003 and forecast 41 Mt in 2004.
- *  Samarco (50% belongs to BHP Billiton): 16 Mt pellets, all for export.  All output of 2004 sold since early January.

## Other Brazilian producers of iron ore: 

-  * CSN: 17 Mt/year. Also, second largest Brazilian steel producer: 5.3 million Mt crude steel/year.
- * Mineraçao Rio Verde: 3 Mt/year (sells through CVRD)
- * V & M (former Mannesmann): 3 MT/year
- Min. Corumbaense Reunida ( = Rio Tinto): 1 Mt/year.
-  Minerita – Minérios Itaúna Ltda 1.2 Mt/y of NPO and building a concentration plant of 2.5 Mty to produce sinter-feed
- * Other very small producers.

_***Iron ore suppliers in the world:***_
- CVRD: 17% of total  /  Rio Tinto 9%  /  BHP Billiton 7%.

## Iron Ore:  New Projects in Brazil

- *  CSN (confirmed, 2004 to 2006): US$308 million at Casa de Pedra mine, in Congonhas/MG; to expand output to 40 Mt from currently 16.8 Mt/year;  US$132 million in Sepetiba Port/RJ  and US$341million in a pelletizing plant of 6 Mt/y (location not yet decided).  Additionally, MRS railroad will invest US$ 100 million to attend to increased cargo demand, for probably 2500 wagons and 100 locomotives.
- *  Samarco (probable): US$500 million to build a third pelletizing plant and a second iron ore pipeline Mariana-Ubu.
- *  MBR: New mine of Capao Xavier, start up March 2004. Reserves of 140 Mt, to be operated in 17 years.
- *  CVRD: Expansion of all mines.  (Opening Fabrica Nova, in Mariana to start up in April 2005 with 10 Mt/y. carajás to achieve 70 Mt/y in 2004 and 85 Mt in 2006.  Brucutu will go from 4 Mt in 2004 to 12 Mt in 2006. Itabira from 43 Mt in 2004 to 46 in 2006. )

## CVRD: Companhia Vale do Rio Doce

- * 2003: A year of records.
- * 76% of Brazilian iron ore production and 95% of exports,2002
- * 11.6% of all Brazilian exports (in value) in 2002
- *   Total revenue 2003: R$20.2 billion, approximately US$6.7 bn. Consolidated net profits 2003: R$ 4.51 bn (US$1.5 bn).                           Total exports increased 14% to US$3.42 bn.                                              Only production of gold and potassium fell in 2003.
- *  186.8 Mt iron ore in 2003 ( + 14% from 2002), being 90.4 M in South System, 58.9 M in North System, 31.1 M t pellets.

## CVRD--  

- *  Pellets: 6 Mt/year in Sao Luis (North), rest in Vitoria / ES.
- Shares of steel manufacturers: California Steel (US), Siderar, Acindar (Argentina), CST, Usiminas (Brazil).  It sold the shares it had of Açominas, CSN, Bahia Sul, Cenibra. Also divested in Docenave (selling 14 of its 17 ships), Florestas Rio Doce, Fazenda Brasileiro and Fosfertil.
- * The largest private company in Latin America,
- * market value of US$23.4 billion in July 2004.

## CVRD: 

- * Logistics: 60% of all railroad transportation in Brazil (by weight). Largest and most efficient railroad operations of Brazil:  Carajas-Sao Luis (890 Km),   EFVM (Itabira-Vitoria) (600 Km), 50% share of FCA (7080 Km),  40% of MRS (600 Km) via MBR.  Also ports and navigation.
- * Also logistics suplier for other companies, for ores and general cargo. Third-party cargo shipments on CVRD railroads increased 5% to 26.3 tkus in 2003.
- * Other products: Bauxite, alumina, aluminum, gold, manganese, copper, potash, ferro-alloys.
- * Sold ownership in CSN, Florestas Rio Doce, Bahia Sul and Cenibra in 2001 and 2002.
- * Was privatized in 1997.

## CVRD:

- * Estimated investment for 2004 – 2007:   Total US$ 1.8 billion.
- * US$ 1.14 in existing mining sites, for expansion of additional 73 million tons of iron ore, 4.5 Mt of bauxite, 1.8 Mt alumina, 250,000 tons of potash and 185,000 tons of copper metal and 7 tons of gold metal.
- * Announced on March 25 that expansion may be for additional 100 Mt/y by 2007, instead of 2010.  Projections: steel production up 5.8% to 180 Mt in 2004;  Aluminum additional 7.5 Mt thru 2008 and alumina additional 17.5 Mt
- * Current bottlenecks in Brazil: Regulatory issues, logistics, energy (high prices + regulations), environmental issues.

## * Energy:  Power plants Igarapava, Porto Estrela, Funil in operation (total 502 MW).  Currently building as largest partner of consortia: Candonga (140 MW) start-up Nov. 04; Aimores (330 MW)  start up Sep.04, Capim Branco I (240 MW) and Capim Branco II (210 MW) start-up 2006. Total value of all these energy projects: US$317.2 million.     Largest Brazilian energy consumer. 

- *  Ferro-alloy: Volume climbed 10% in 2003 to 512,000 t.
- *  _***International***__***:***_ Researching currently in Angola (bauxite and diamonds), Mozambique (coal), Gabon (manganese), South Africa, Argentina,
- *  Bahrain: Pelletizing plant, and looking for new businesses.
- *  California Steel (USA), Acindar, Siderar (Argentina)

## New project under consideration: 

- USC steel slab mill in Ceara.  Estimated to cost US$ 570 mn for 1.5 Mt/y slabs,  possibly start-up 2008.                          Negotiations for probably CVRD 20% stake, Italian technology group Danieli 30% and Korean steel company Dongkuk 50%.  Possibly also BaoSteel China and Arcelor.

## Copper     Brazil 3% of world reserves and 0.2% of production.  Reserves: Chile 25%, USA 14%, China and Peru 6%, Poland and Zambia 5.5%, Russia 4.5%, Mexico and Indonesia 4%, Australia and Canada 3.5%.

_***Copper***_     Brazil 3% of world reserves and 0.2% of production.  Reserves: Chile 25%, USA 14%, China and Peru 6%, Poland and Zambia 5.5%, Russia 4.5%, Mexico and Indonesia 4%, Australia and Canada 3.5%.
- *  80,000 t/y copper concentrate, average content 37.7% (2001) . Only one producer: Mineraçao Caraiba, in Jaguarari / BA, reserves will end by 2006.
- *  Electrolytic cathode, copper high grade:   Only one producer: Caraiba Metais, in Camaçari / BA: 212,000 t/y (2001).  Processes 80,000 t from Brazil and 630,000 t/y of imported concentrate.
- *  Recycling: 36,000 t/y
- *  Brazilian Imports in 2001:  Copper concentrate US$238 million, Cathode + other raw materials US$257 million;     Manufactured products: US$ 82 million    and   Chemicals US$1.8 million.
- *  Brazilian Exports 2001:  Cathode + other raw materials: US$24 million   and   Manufactured products: US$90 million (58% to USA)

## Projects:  All belong to CVRD

_***Sossego:***_  Start up July 2004. Total US$384 million.  455,000 of copper concentrate, equal to 140,000 t of copper metal + 3,000 Kilogram gold/year. Reserves 196 Mt grading 1.02% copper and 0.3 g/t gold.  Open pit mine.
_***Alemao / Igarape Bahia:***_  Start up first phase end of 2004 and second phase 2006.  Total US$ 600 million.  186,000 t/y copper content.  A small part may be underground mining.
_***Alvo 118:***_  Start up December 2005.  Total US$ 45 million.  45,000 t/y of copper cathodes.
_***Cristalino:***_ Estimated start up: 2006. Total US$ 500 million. 150,000 t/y of copper content.
_***Salobo:***_ Still in feasibility study, possible start up 2007.  Total US$ 1.05 billion and 200,000 t/y of copper metal.

## Bauxite:  

|  | Reserves % | Production 2001 |
| --- | --- | --- |
| Brazil | 12% |   10% - 14 Mt |
| Australia | 22% |   39% - 54 Mt |
| Guinea | 27% |   11% - 15 Mt |
| Jamaica  | 8% |   9.5%  -   ---- |
| China 
India | 6%
4.0% |   7% - 9.5%
  5.8%  -  ---- |

- Metallurgical bauxite: 97% of total.    Companies:                      MRN (cvrd) largest of the world: 14.4 Mt in 2003.                      CBA 10%,  Alcoa 4%  and  Alcan 3%.
- Refractory Bauxite: 3% of total.   Companies: MSL Minerais (PA), Mineraçao Curimbaba (MG) and Rio Pomba Mineraçao (MG)

## Bauxite / Project:  US$ 83 million.  CVRD subsidiary Min. Vera Cruz,  new mine in Paragominas / PA 4.5 Mt/y for 2004 / 2006 and slurry pipe 230 Km to supply Alunorte.  Delay in environmental license 2004.  This expansion will boost Alunorte’s capacity by 1.8 Mt/y on top of current 2.32 Mt/y in 2003 of Alumina. This alumina project is estimated at US$ 182 million for a new refinery to be built in PA or MA. 

_***Alumina:***_   Total 3.86 Mt in 2002.   The main producers 2002 were: Alunorte 1,656 Mt (increased to 2,275 Mt in 2003), 	                 Alcoa 959,000 t;      CBA  520,000 t;      BHP Billiton 463,000 t;  Alcan  257,000 t.
_***Aluminum:***_   Total production in 2001: Brazil 1.15 Mt/y (world production was 23.4 Mt.        Smelter companies:   Albras 30%,  Alcoa 22%,  CBA 20%,  Billiton 17%,  Alcan 8%  and  Aluvale 3%. Manufactured products (cables, coils, etc): Alcoa, Alcan, and CBA. In 2002: 1,38 Mt.

## Recycling:  Brazil has one of the largest Al-recycling industries of the world:  112,000 t of Al metal or 8.2 billion cans in 2003.          89% of the total production of cans was recycled.     160,000 people are involved in collecting and transporting Al scrap, earning  R$0.01 per can.  (three cans = US$0.01) 

_***CBA***_ expanding output to 340,000 t/y from 240,000 t in 2003.   Has plans for 385,000 t by 2006. Votorantim Group.
_***ALCAN***_ total production of rolled products: 210,000 t in 2003.        Forecast  230,000 t  for 2004.  Total revenue in Brazil: US$ 621 million in 2003. Smelters in Ouro Preto / MG and Aratu / BA and processing plant in Pindamonhangaba / SP.  Mines in Caeté, Mariana and Santa Barbara 455,000 tons in 2003 and mines in Carangola and Cataguases only 50,000 t / year.
_***ALCOA***_ total sales in Brazil > US$ 1 billion/year.
_***Recycling:***_  Brazil has one of the largest Al-recycling industries of the world:  112,000 t of Al metal or 8.2 billion cans in 2003.          89% of the total production of cans was recycled.     160,000 people are involved in collecting and transporting Al scrap, earning  R$0.01 per can.  (three cans = US$0.01)

## Gold                        Brazilian Production:                                    41,000 Kilogram metal or 1,305,000 troy ounces in 2003             53,207 Kilogram in 2001 (11% individual prospectors)                                                                     It was nearly 100,000 Kilogram/year in late eighties.                 Potential to grow to 70,000 Kilogram again in next 4 years. 

| 2001 | World Reserves | World Output |
| --- | --- | --- |
| South Africa |   43.0% |    15.5% |
| USA |   7.0% |    13.6% |
| Australia |   7.0% |    11.2% |
| China |   5.1% |    7.2% |
| Canada |   4.2% |    6.2% |

- Largest world producers: Newmont (US) 8.6 M oz or 265 tons/ year;  AngloGold 7 M oz.    Goldfields,   Barrick.

## Largest Gold producers in Brazil (2004):   Troy ounces/year                                                   AngloGold Ashanti:380,000 (13 tons in 2003 and probably 12.5 tons in 2004)

- CVRD 350,000                                                                              Rio Tinto ( = Rio Paracatu): 250,000                                      Eldorado (Sao Bento):  95,049                                                                            Desert Sun 100,000                                                                   Yamana Resources: 100,000                                                     Jaguar Mining: 25,000
- Desert Sun (Canada): Jacobina / BA, closed down by Anglo 1999 and in process of being re-started by D.Sun in 2004/5.  Historical resources 1.36 M oz and inferred resources 5 M oz.
- Eldorado:103,533oz 2002. Proven and probable reserves 6.6 M oz.
- CVRD closed down Igarape Bahia in 2002, which was 10 of the 16 tons produced in 2001.  Closed down Almas / TO and Caete / MG in 2000.  Sold Fazenda Brasileiro to Yamana for US$21 million.  Total only 9.5 t in 2002 and 5.5 t in 2003.

## Projects:  

_***Jaguar Mining***_ (NH – USA): Estimated output for 2004:   30,000 oz, and project for expansion through 2008, up to 200,000 opy over 12 years.       Mines in Santa Barbara and Sabara / MG.
_***AngloGold:***_   US$ 109 million, feasibility study due in July 2004 to expand MMV Cuiaba to 310,000 opy. Owner of Min. Serra Grande (Crixás – GO)
_***Wheaton River***_ (Canada) bought in 2003 the Amapari project from AngloGold for US$ 22 million. Estimated start up Dec 2005. Total reserves 1.7 million oz (measured + indicated)
_***CVRD:***_   New copper projects will bring 20,500 Kilogram gold, starting with 3,000 Kilogram at Sossego in 2004.

## Kaolin:                 Brazilian production was 2.2 Mt in 2003.    CADAM:   800,000 t, and planned for 1 Mt by 2005.                    Para Pigmentos SA (jv CVRD-Mitsubishi-IFC)   731,000 t           Imerys Rio Capim (IRCC French group Imerys)   600,000 t and planned for 800,000 in 2005. 

|  | World Reserves Total 14.2 B t | Production |
| --- | --- | --- |
| U.S.A. |   58.5% |   39.0% |
| Brazil |   28.0% |   8.3% |
| Ukraine |   7.0% |   5.0% |
| U.K. |   1.8% |   11.4% |
| China |   1.3% |   4.6% |

## Manganese:  

- 2.24 Mt in 2003: Urucum 414,000 t in MT. The rest in Carajas.
_***Manganese Ferroalloys:***_
- 269,000 Mt in 2001, being 26% high carbon Fe-Mn, 64% FeSiMn, and 10% medium/low carbon FeMn.
- Main producers: CPFL 50% Cia Paulista Ferro Ligas, Electrosiderurgica Brasileira 26.5% and others 23.5%.
- CPFL and El.Br. merged into  RDM Rio Doce Manganes, with 4 plants in MG and one in Simoes Filho / BA.  Also Rio Doce Manganese Europe (Dunkerke, France) and Rio Doce Manganese Norway.

## Niobium:

- * Brazil has 91% of world reserves, Canada 7%, Nigeria 1.6%.
- * Brazil has 94.3% of world production (2001).
- 2 Producers:
- * CBMM 78.3% of Brazilian production of Niobium concentrate, or 33,900 t of Nb2O5 content in concentrate, plus 21,500 t of Nb content in FeNb alloy and 2,632 t of Nb oxyde.
- * AngloAmerican in Catalao / GO: 5,153 t of Nb2O5 content in concentrate;  3,397 t of Nb content in FeNb alloy.
- * Brazilian exports of Nb in 2001: US$ 256 mn.

## Potash:

- * Only one producer: CVRD at Taquari Vassouras mine in Rosario do Catete / SE.   Output in 2001 was 600,000 t KCl or 330,000 t of K2O equivalent.  In 2003 it was 658,000 t KCl.
- * Also reserves in Nova Olinda do Norte / AM (measured + indicated) of 1 mn t with 18.5% average K2O.
- * 95% used for fertilizers. 5% in the chemical industry.

## Phosphate:

- Brazilian production in 2001:
- 27 Mt ROM with average content 18% of P2O5.                              4.8 Mt concentrate with 1,7 Mt P2O5.                                              1,8 Mt phosphoric acid,   and   5.7 Mt intermediary products.
- *  Copebras ( = Anglo American) 13.5%  (in P2O5 content)                 *  Fosfertil / Ultrafertil: 52%  Uberaba, Tapira/MG, Catalao/GO.              *  Bunge 30%.
- *  35% MG,   30% GO   and   30% SP.
- *  Brazilian imports 2001: US$593 mn and exports US$ 73 mn.

- Fosfertil.  Investing US$80 million during 2004-2006 to increase output of phosphate concentrate to 3.2 Mty, or 1.7 Mty of P205

## Zinc:       * Only one mining company: CMM 115,000 t metal in 2002. Expansion underway to 160,000 t/y.  Vazante and Paracatu/MG.

- * CPM:  only smelter of imported concentrate: 78,000 t/y.  Both CMM and CPM belong to the Votorantim Group.
- * Total world reserves 2001:  440 Mt, with 9 Mt zinc content

|  | Reserves 2001 | Production 2001 |
| --- | --- | --- |
| China | 21% | 19.0% |
| USA | 18% | 9.2% |
| Australia | 18% | 16.6% |
| Canada | 7% | 10.5% |
| Peru | 3% | 11.6% |
| Brazil | 1.2% | 1.2% |

## Nickel:    New project US$ 110 mn. 

- Cia. Niquel Tocantins, 21,000 t nickel and 1,100 t cobalt 2003.  Expansion underway to 22,800 t/y electrolytic nickel and 1,420 t/y cobalt by 2006.
- Codemin: 5.768 t Ni content in Fe-Ni alloy 2001.
- Min. Serra da Fortaleza: 10,249 t of Ni content in matte in 2001 and only 6,000 in 2002.  Underground mine in Fortaleza de Minas, planed to be closed down by 2005.  Company was taken over by Votorantim Dec.2003 for US$ 77 mn.  Investment in research and geology may bring new life to this company.
- CNT and Codemin in Niquelandia / GO.  CNT’s smelter in Sao Miguel Paulista.

## Tin

- *  74% of mining in Amazonas (M. Taboca) and 25% in Rondonia.
- *  Mamore ( = Paranapanema), 80% of Brazilian production of Sn-metal (smelter in SP).                                                                                 *  Cesbra (Grupo Brascan) 12% of Brazilian total Sn (in RO):
- *  New Project, still in feasibility study:  Paranapanema’s Rocha Sa in Amazonas, US$ 72 mn for 480 t/y tabtalum, 9500 t/y Sn and 4,000 t/y of niobium, generating some US$ 150 mn/y in revenues.  Currently under analysis at BNDES.

## Diamonds:     1 mn ct in 2000 and 700,000 ct in 2001. 

- Most part by individual prospectors, in MT, MG, RO, GO.       Gems production declining: only 20% in 2001, compared to 80% industrial diamonds.
- Brazilian Diamonds (= former Black Swan Resources / Canada) largest producer.  Bought in 2003 reserves of De Beers (not yet explored) in Sao Roque de Minas.
- Diagem International Resource Corp. (Canada) has the largest Brazilian reserves, in Juina / MT, 14 Mt ore, with 0.5 carat / t, total 7 Mt ct. Start up in 2003.

## Cement:      Total production in 2001:  39 Mt

- Votorantim Group:  42%                                                          Grupo Joao Santos 12%                                                         Cimpor    and    Holcim 9% each                                         Camargo Correa   and   Lafarge 9% each       		       CP Cimento 5%      Soeicom 3%                                             Itambe 2.1%        Ciplan 1.9%
- Worldwide production in 2001:     China 595 Mt,       India 100 Mt, USA 91 Mt,           Japan 82 Mt,       South Korea 52 Mt,     Germany 40 Mt.
- Camargo Corrêa: mines in Pedro Leopoldo and Ijaci / MG

## Main Companies:

- CVRD:  more than 40% of the Brazilian mineral output.
- Votorantim:  100% of zinc,  82% of nickel,  12% of bauxite, 20% of aluminum, 42% of cement,
- Anglo American:  Gold, phosphate, niobium.                                 Eldorado:  Gold                                                                            Alcan, Alcoa:  Bauxite and aluminum                                           BHP Billiton:  Aluminum and iron ore.                                           Rio Tinto: Gold and iron ore.  (sold nickel).                              Cimpor,  Lafarge,  C.Correa,  Joao Santos,  Holcim:  cement

## AngloGold Ashanti ́s assets in Brazil

- * Mineração Morro Velho (100% AngloGold) 7 Mty,  in continuous operation since 1835
- * Mineração Serra Grande (50% AngloG + 50% Kinross), 5,6 mty  (in Goiás)
- ( Also * Cerro Vanguardia in Argentina – Patagonia) 92.5% AGold and 7.5% Fomicruz, 7 mty gold and 78 mty silver.)
- Projects in Brazil  Expansion of Cuiabá Mine in MS, to increase output from 2400 Mtday to 4000 mtday, to be approved by second half of 2004. (US$110 million)

## Rio Tinto Brasil:

- Rio Paracatu Mineraçao (51%) in Paracatu/MG, Mina Morro do Ouro, 7 tons/year of gold.
-  Min. Corumbaense Reunida (100%) in Corumbá/MS, 1 Mmty Iron ore, with plans to increase to 10 Mmty. (total deposits 500 Mt).
- Rio Tinto Desenvolvimentos Minerais (100%) in Brasilia/DF, for mireral research and exploration.
-   Transbarge Navegacion (100%) in Assuncion/Paraguay for river transportation of iron ore.

## Paranapanema:  80% of tin and 100% of copper metal,   High debt.  Belongs to Previ of BB (55%) and pool of  pension funds. Total sales approx. US$750 million;year.   3 divisions:

-  Mamoré (tin and industrial minerals)  and Caraíba: copper metallurgy.
-  Eluma: Manufacturing of copper tubes, bars and wires.
-  Cibrafertil: Raw material for fertilizers. 120,000 t/y, in Camaçari / BA.
-  Tin mine in Pitinga (Amazon)  and tin plant in Bom Jesus de Pirapora (SP). Paranapanema produced 8500 tons of tin in 2003, and Brazil total was 11,000 tons. Domestic consumption was 6,000 tons.  Pitinga will be closed in a few years. P. and BNDES studying development of a new mine Rocha Sã, to invest US$55 mi for output of 9 to 10,000 t/y.

## *  The   Perfect   Rep / Distributor

- *   Financing: Very high interest rates
- *   Stocking pre-paid products: extremely expensive and risky
- *   The cost of selling: visits, travel, tests, labor, expertise, after-sales, advertising.
- *   Tests & warranty. Local maintenance.
- *   Price:  Import Tax calculated on price CIF.  Plus two local taxes on price  “CIF plus Import Tax.”
- *   Competition: very developed local industry.

## *  The Brazilian rep / distributor will need:   Technical assistance, financing,  sharing expenses,  marketing support, 

- *  Peripherals, frames, accessories (if possible): buy and assemble in Brazil, to avoid import taxes.
- *  Bonded warehouse.  Just-In-Time delivery.
- *  EXIMBANK
- *  Must spend money, before you can earn money.

## Mining Equipment Manufacturers in Brazil: 

- Large and diversified Brazilian industry. Many subsidiaries of leading international manufacturers have factories in Brazil. Some examples:

| Caterpillar | 2002 - US$ million | 2001 - US$ million |
| --- | --- | --- |
| Total Sales  | 510 | 450 |
| Brazilian market | 210 | 190 |
| Exports from Brazil | 300 | 260 |

- * Factory located in Piracicaba / SP.     2700 employees.
- * 25 different models in 2002  /  14th largest Brazilian exporter.

## Volvo Construction Equipment

- * Total sales in Brazil in 2003: US$ 138 million.
- * Exports from Brazil in 2003: US$ 95 million.
- * Sold 1010 machines in 2003, of which 564 in Brazil, 144 to the USA, 133 to Chile, 22 to Argentina.
- * Total sales in 2002: US$ 100 million.
- * Factory in Pederneiras / SP.

_***Randon:***_  Off-road trucks, components, truck beds, breaks_***  ***_
- Total sales in 2002: >US$400 M, Exports from Brazil: US$50 M
- Market leader in Brazil for segment under 35 tons
-  Joint-ventures with U.S. Arvin-Meritor and German Jost.
- Factory in Caxias do Sul / RS.

## CNH:  Case + New Holland + FIAT-Allis

- * Mining, construction and agriculture machinery
- * 15,800 machines made in Brazil in 2002
- * 44% share of Brazilian market for agriculture and construction machinery
- * Total sales in Brazil: US$ 800 million in 2002. Exports = 25% (including to USA).
- * Total sales in the world: US$ 10 billion.
- * Bank CNC Capital, has financed 30,000 clients.
- * Factories in Curitiba, Piracicaba and Contagem.

## Cummins

- * Manufactured 42,000 engines in 2003. Exported 6,500.
- * Forecast for 2004: 49,000 engines.
- * Factory in Guarulhos / SP.

_***Ingersoll Rand  ***_
- * Compressors, temperature control division Thermo King, refrigeration equipment Hussmann.
- * Factory in Londrina / PR: average of 60% Brazilian components. Exports equipment to Latin American countries and components Ingersoll Rand / USA.

## METSO  (Finland) 

- * Took over Svedala, Dynapac, Nordberg, Trellex and Faço.
- * Total sales in Brazil: approximately US$ 100 million in 2003,  exports from Brazil = 35%, especially Latin America, USA and Canada.    World total sales: Euro 5.2 billion/y.
- * Sold Euro 50 million to Sossego Project, being approximately 50% made in Brazil and 50% imported.
- * Supplier of crushers, screens, transportation systems and engineering projects. Has a foundry for 1,900 tons/year.

## Sandvik  (Sweden)

- *  Total sales 2003: US$ 190 million
- * 32% of production was mining and construction equipment, 40% tools and 28% specialty steel.
_***Palfinger (Austria) ***_
- * Cranes for mining, oil and construction. Reach stackers.
- * US$ 19 million in 2003.  Factory in Caxias do Sul / RS.
_***Haver & Boecker (Germany)***_
- * Factory in Monte Mor / SP, since 1975. Exported two giant screens to Syncrude Sweet Blend / Canada for betuminous oil sands, 2003 / 2004.

## Others:

- Atlas Copco				Voith
- Asea Brown Boveri			Wehr
- Alstom					Polysius
- Siemens				Goodyear
- G.E.					Flygt
- NSK,   FAG,   SKF  bearings		Dorr-Oliver
- Scania					Saint-Gobain ceramics
- Boart Longyear 			Komatsu
*The same in other sectors. For example: GM, Ford, VW, Fiat.*
*Aircraft manufacturer  EMBRAER*

## Trade  Shows: 

- Exposibram / The Brazilian Mining Institute: Sep 20 – 23, 2005  www.ibram.org.br
- Brazilian Geological Congress:  Oct. 17 – 22, 2004 www.42cbg.org.br

## Obrigado!   

- Thank you !!
- Mauricio Vasconcelos                                                                   U.S. Commercial Service                                                                    Belo Horizonte  -  Brazil                                                      www.focusbrazil.org.br                                                           www.export.gov                                                       mauricio.vasconcelos@mail.doc.gov                                                     Tel.: (55 – 31) 3213.1573