Brazilian mining registers significant drop in 1st semester

The Brazilian mineral sector recorded a drop of 52.5 percent in the trade balance in the 1st half of 2022, compared to the same period last year. Consequently, there was a reduction of 24 percent in revenue, falling from BRL 149 billion to BRL 113.2 billion. Regarding the total production, the 441 million tons of mineral goods represented a decline of 9 percent.

The performance was strongly influenced by the reduction in exports to China. The Asian country is the main buyer of Brazilian iron ore. The balance was released on Wednesday (Jul. 27) by the Brazilian Mining Institute (Ibram), which represents the largest companies in the sector operating in the country. Considering the dollar values, transactions with China involving iron ore fell by 32.3 percent, the document reads.

According to Ibram, several factors may be associated with the reduction in Chinese imports, such as the reduced activity in the steel industry, as a measure to control air quality during the Winter Olympics, greater environmental restrictions imposed by the government, intensified price controls, and reduction in steel demand, as a result of the slowdown in industrial production amid a strict policy to combat the COVID-19 pandemic. The war between Russia and Ukraine was also mentioned as an element that generated fear in global producers, leading to greater caution.

Iron ore – which accounts for more than 70 percent of all exports in the mineral sector – recorded a reduction of 30.1 percent in the figures, falling from $ 21.5 billion dollars in the first half of 2021 to $ 15 billion dollars in the first half of this year. In the first half of 2022, China imported 64.8 percent of Brazilian exports of the product. Other trading partners that feature prominently in the balance sheet are Malaysia (5.2%), Japan (4.1%), and Bahrain (3.8%).

There were also significant drops in Brazilian exports of gold (7.8%), manganese (45%), copper (20%), and bauxite (14%). Some minerals, however, registered an increase in the values generated with exports. This is the case of niobium (9%) and kaolin (13%). Due to the variation of the dollar exchange rate, and prices in the international market, the latter yielded higher figures even with a lower volume traded.

At the same time, imports rose significantly and also had a strong influence on Brazil’s trade balance, reaching $ 9.4 billion dollars, 199.9 percent more than in the same period last year. Businesses involving coal for steel use, and potash for the manufacture of fertilizers represented 92 percent of total imports.