Iron Ore Mining In Brazil

With Mining companies in Brazil facing stricter environmental requirements to obtain Mining License's and with a shortage of skilled mining workers the Brazilian Iron Ore industry is coming under increased pressure from miners from Australia. Brazil retains the quality edge over Australian producers as iron ore mined in Australia has a far higher Phosphorus content of 1.2%, Brazilian Iron ore only has a 0.2% Phosphorus so as its a contaminate Australian Iron Ore producers a lower quality steel. Brazil's biggest customer for its Iron Ore is its BricPartner China which need's Low phosphorus content iron ore to ensure China's steel mills can blend to achieve highest quality steels are required by Chinese manufacturers. Brazil can not only produce quantity but leads the world in quality Iron Ore.

The biggest difficulty for Brazil to remain competitive in its number market China is shipping as many miles separate it from its key BricPartner. To ship a tonne of iron ore from Brazil to China it costs $20 dollars but from Australia only $8 dollars per tonne so Australian producers have a big competitive advantage. Shipping time is also a key factor as it only takes 9 days sailing time from Australia to China and 42 days from Brazil to China. To try and overcome these problems Vale the Brazilian mega minor has constructed 400 000 tonne ships ''Valemax'' which are twice the size of the typical Cape size ships used in Australia . Vale which is the world's biggest iron ore producer with over 30% of the world's market share is now considering investing in the Australian Iron ore industry to help it overcome some of its competitive disadvantages. Vale needs to compete with Australian producers such BHP and Rio Tinto and buying into the Australian market will give it a more direct route.

BricPartner states it makes perfect sense for Vale to invest in the mining industry in Australia but executing this strategy is not going to be easy as generally the market is tied up by 3 Aussie producers but Brazil can not only produce quantity but leads the world in quality Iron Ore if now shipped from Brazil. 

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Disclaimer: This information has been collected through secondary research and BricPartner is not responsible for any errors.