A look at Brazil diverse and lucrative mining industry

Rio de Janeiro (AFP) –


Brazil's mining wealth has fueled its economy from colonial times. Its diverse mineral deposits are among the very richest in the world, earning it around $30 billion annually in exports.

By far the biggest of over 8,000 companies in the country's mining industry is Vale, Latin America's number one miner and the top global producer of iron ore.

Vale is at the center of the disaster at one of its Brazilian iron ore mines last week that left close to 360 people dead or missing, submerged in millions of tons of muddy mining waste from a ruptured tailings mine.

The scene of the tragedy was in the southeast state of Minas Gerais that is the focus of most of Brazil's mining activity. The state's name -- which means "General Mines" -- gives away its historic importance.

- 300 mines -

According to the Brazilian Mining Association (IBRAM), more than 180 million tons of iron ore are extracted each year from Minas Gerais.

The metal is sought after, especially by China, which is easily the biggest export market for Brazil's iron ore, way ahead of the United States, Japan, the Netherlands and Canada.

Brazil also has major reserves of gold, bauxite, nickel and manganese. It produces 98 percent of the global supply of niobium, an element used to make superalloys for jet engines and gas piping.

There are more than 300 active mines in Brazil, ranging from tiny operations up to major ones. Minas Gerais hosts the very biggest producers.

- Environmental impact -

Vale's disaster-hit mine at Brumadinho was significant to its bottom line. The mine was estimated to have produced between two and seven percent of the company's total iron ore output.

While the environmental impact of the disaster was still being evaluated, it appeared likely that it would usher in tighter regulation of Brazil's mining industry.

Reform is seen as especially pressing since it was the second such mining dam breach involving Vale, suggesting no lessons had been learned from the previous incident.

Stricter additional rules would go against new President Jair Bolsonaro's promises to ease safeguards and allow more licenses.

- New rules? -

As it stands, local, state and federal authorities all have a say over mining operations, with the environment ministry imposing numerous rules and restrictions.

Environment Minister Ricardo Salles said this week the government would soon discuss new regulations.

Not all mines in Brazil use tailings dams similar to the Brumadinho one. According to data from the national water agency ANA, there are 790 such dams in use, of which nearly a quarter potentially could cause a high degree of damage if they burst.

Vale's CEO, Fabio Schvartsman, said Tuesday the company was going to decommission the 10 other tailings dams it had located at two other mining sites, and look to alternative ways to stock mining waste.

He also said Vale was looking at a cut of 10 percent of its iron ore output following the disaster, but the company said some of that would be offset by increased production elsewhere.

Iron ore prices spiked higher as the market contemplated reduced supply.