Brazilian officials say there is no room for fear when it comes to the country’s capacity to keep up with Chinese demand for iron ore. Iron ore prices hit six-and-a-half year highs last week as the Chinese construction and manufacturing sector experiences levels of activity last seen almost a decade ago.
In the past three months China’s iron ore imports have climbed 20% year on year, while year-to-date they are up 11% compared to 2019.
“We are seeing a recovery scenario that is already quite favorable for the Brazilian market,” Brazilian Secretary of Geology, Mining and Mineral Transformation, Alexandre Vidigal, told a mining industry site.
In Q2 2020, Brazilian mining companies reached a production value of R$39 billion (US$ 7.5 billion), an increase of 9% over Q1.
Brazil’s iron ore exports – which represent 59% of the country’s mineral production – totaled US$ 5 billion in Q2, 6% higher than Q1 2020, but 5% lower than in Q2 2019. The country exported 76 million tons, 8% above the total registered in Q1 2020, but 3% lower than Q2 2019.
Brazilian mining giant Vale has been returning to its pre-pandemic level operations as exports have hit 33.4 million tons in July, up nearly 60% from May.
“These are facts that signal a tendency for the sector to recover, reinforcing our understanding that the mineral industry may play a prominent role in the country’s economic recovery,” said Vidigal.
Industry group IBRAM projects that the country will export 310 million tons in 2020, lower than the 340 million tons exported in 2019.
“In 2020, besides the pandemic, intense rains at the beginning of the year and operational adjustments of mining companies to meet resolutions involving dams hit the production,” said Cinthia de Paiva Rodrigues, research and development manager at IBRAM.