Iron ore mining in Brazil can be traced back to 1522. The country holds some of the largest iron ore reserves in the world and is among the top three iron ore producers, placing third against China and Australia. Brazil is also home to the top producer of iron ore, Vale (NYSE:VALE).
With one of the strongest economies in Latin America, Brazil’s main challenges when it comes to its iron industry are the result of bureaucracy and infrastructure issues.
For instance, the country’s restrictions on foreign land ownership make it difficult for companies not based in Brazil to stake claims, according to Americas Quarterly. However, that is not an uncommon issue in Latin America; Argentina, for example, has the same policy.
As far as infrastructure is concerned, Brazil’s has lagged behind its industrial needs for quite some time, largely because demand for metals has outpaced infrastructure expansion efforts. Furthermore, Vale’s dominance over the sector means that much infrastructure is privatized — that makes it challenging for smaller companies to break into the space.
Vale, which was formed during World War II to manage iron exports from Brazil to the Allied countries, is now a major private company and a world leader when it comes to iron ore production; its website states that it is the biggest producer of iron ore and iron pellets. Furthermore, the Brazilian company accounts for more than 60 percent of all the iron produced in Brazil and more than 15 percent worldwide. Its mines are primarily located in Brazil, as are many of its pelletizing plants.
The Carajas mine, located in the Amazon region of the country, is Vale’s flagship operation. Its iron ore is of very high quality, and rocks found there contain 67-percent iron ore on average — that is the highest concentration on the planet. Carajas covers only 3 percent of the land that makes up the Carajas National Forest. Together with ICMBio and Ibama, Vale is preserving and protecting the remaining 97 percent.
Despite Vale’s dominance in Brazil’s iron ore space, there are still junior companies operating in the country. Here’s a look at three of them:
- Centaurus Metals (ASX:CTM) plans to produce at least 2 metric tons of iron ore per year and sell it to Brazil’s steel industry. Later, the company aims to export iron ore products from Brazil.
- South American Ferro Metals (ASX:SFZ) has a project known as Ponto Verde in Minas Gerais, an iron production center. The company owns the site and plans to use iron ore extracted from it to produce lump, sinter feed and high-grade concentrate products to sell to domestic markets.
- Cabral Resources (ASX:CBS) owns an iron ore tenement portfolio in Bahia, Brazil and hopes to begin production in 2015. The company is based in Australia.