2Positive Outlook for the Brazilian Mining

Brazil has one of the major mineral patrimonies and is an important producer and exporter of high quality ores. Thats why Mining is one of the strengths of the Brazilian economy.

The Mining Industry is a sector that is responsible for the positive balance of the Brazilian trade, and the outlook of this economic activity is extremely optimistic for the coming decades.

Canada

Australia

United KingdomGermanySpain

Italy South Korea France

Holland

Mexico

Japan

IndiaChina

BRAZIL

EUA Russia

Bangladesh

Republic of Nigeria

Pakistan

Indonesia

Brazil in the world

Area > 3 million km2 Population > 150 million inhabitants

GDP > US$ 800 billion

Well known worldwide for its strong presence among major producing nations of iron ore, Brazil also excels in the production of several other minerals, among which, the aggregates for the construction and the cement industries, where we can observe a rapid increase in production. The inclusion of sustainability is growing in the Brazilian mining industry, a reason for the continued attention from entrepreneurs. The promotion of sustainability in the mineral activity is one of the main objectives of IBRAM Brazilian Mining Association (www.ibram.org.br), that represents this Industry.

www.ibram.org.br

region CompaniesCenter-West 942

Northeast 1.258

North 439

Southeast 3.392

South 1.901

Mining Companies in Brazil

DNPM The National Department of Mineral Production According to Annual Reports on Mining, DNPM registered 7,932 Companies in 2010, as follows:

Shut

ters

tock

The updated data on the Brazilian Mining can be found at the website

3the mining industrys share in the CommerCialtrade BalanCe

Exports Imports Surplus Source: MDIC/IBRAM

Brazilian balance in2006 US$ 46 billion

Mineral Sector 14%

Brazilian balance in2007 US$ 40 billion

Mineral Sector 25%

Brazilian balance in2008 US$ 24 billion

Mineral Sector 53%

Brazilian balance in2009 US$ 25 billion

Mineral Sector 50%

15.196

5.185

10.011

22.841

9.729

13.112

18.096

5.497

12.59911.030

6.5404.490

50.000

45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

Millions of US$

2006 2007 2008 2009 2010 2011e

Brazilian balance in2010 US$ 20 billion

Mineral Sector 136%

Expected 2010 Brazilian Balance = US$ 23 Billion Balance of the mineral sector = 143% greater

35.360

7.756

27.604

43.000

10.000

33.000

Forecast

Voto

rant

im A

lum

nio

4Brazilian Mineral Production

2011: Forecast of Brazilian mineral production totaled $50 billion

From year 2000 on, the increased demand for minerals, especially the high global growth rate, boosted the value of the PMB. During 2001/2011, the value of the PMB will register an increase of 550%, going from US$7,7 billion to US$50 billion. With the urbanization process and the strengthening of world economies, it is estimated that the PMB will keep growing between 10% and 15% per annum (pa) over the next three years.

growth oF Brazilian mineral produCtionIn US$ billions

Petroleum & Gas not included

0

5

10

15

20

25

30

35

78Years 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 09

40

50

10 11

Forecast

mineral produCtion: gloBal position oF Brazil

Source: DNPM; IBRAM/MME

Exporter (Global Player)

Exporter Self-sufficient Importer/ ProducerExternal

Dependency

Niobium (1st)Iron ore (1st)

Manganese (2nd)Tantalum (2nd)

NickelMagnesium

KaolinTin

LimestoneIndustrial diamonds

Titanium

Metallurgical CoalPotassium

Graphite (3rd)Bauxite (2nd)

Ornamental Stone

VermiculiteChromium

Gold

CopperTungsten

Talc

PhosphateDiatomite

Zinc

SulphurRare Earths

STRATEGIC

5Geological Survey

The Brazilian mining potential is significant. To date, only 30% of its immense territory is known through geological surveys in an appropriate scale for the activity. The Indigenous areas, that account for 13% of this territory and 25% of the Amazon, are among regions that may have their mining potential assessed, as well as the coastal area, located along the Brazilian continental platform.

The graphic shows that there is a repressed demand in the field of the geology survey in Brazil. Just to illustrate, although its land area is about seven times of that of Peru, Brazil allocates only half of the amount invested by that country on geological research.

Canada (US$ 2,03 billion) 19%

Australia (US$ 1,2 billion) 12%

US 8%

Mexico 6%

Peru 5%Chile

5%

Russia 4%

China 4%

Argentina 3%

Brazil (US$ 321 million)

3%

Other Countries 31%

10 leading countries Total: US$ 10,7 billion

Source: Metals Economic Group 2009

private investment in mineral explorationThe 10 COUNTRIeS ThAT ReCeIve MORe INveSTMeNTS IN MINeRAl exPlORATION

Generates 2,1 million direct jobs in Brazil

(160,000 created by the mining industry)

Date 2009

employment generation

multiplier eFFeCt: 1:13

importanCe oF mining For the generation oF JoBs

2

11

1416

12

8

4

0

Mining

Suppliers

First Transformation

Total

JobsThe total labor force employed in mining in 2011 reached 165 thousand workers. Studies from the National Department of Geology, Mining and Mineral Processing, of the Ministry of Mines and energy, show that the multiplier effect of jobs is 1:13 in the mining sector, ie, for each mining job, 13 others are created (direct employment) along the production chain.

Therefore, it can be assumed that the mineral sector in 2011, employs about 2.1 million workers (directly), not considering the vacancies generated in phasis of research, prospecting, planning, and workforce employed in the mines.

1

6Investments in the Mining Sector

Royalties

In 2010, the collection of CFEM (royalty) hit a new record: R$1

billion, or 46% higher than in 2009, which was R$742

million. In 2011 the forecast is that the collection should

reach R$1,3 billion.

The graphics on page 7 shows the evolution of the volume of investments in the mining sector in Brazil. The values calculated by IBRAM are projected for a 5-year period. The Association expects, based on data collected from the mining companies, a significant application of $68.5 billion for the period 2011-2015, which represents a new record for the Mining sector.

Thus, it is the private sector the one that invests most in the country - an average of more than $13 billion a year. This value is periodically reassessed by IBRAM.

The total forecast for the period 2011-2015 represents an increase of 10.5% in comparison with the previous period (2010-2014). Investments refer to the most varied minerals, and the Iron Ore, the leader among them, targets 65% of the total.

Niq

uel

ndia

(Vo

tora

ntim

)