For years, Brazil was overlooked as a favourable mining jurisdiction within South America. But what’s recently become apparent is that times are changing. The countries that were once deemed as go-to options are now experiencing civil unrest and political instability. While these countries no longer attract the investment dollars they once did, Brazil is emerging as a mining destination of choice. This is further supported by strong consumer preference, and in some cases government mandates, to source low-carbon inputs for applications ranging from electric vehicles to regional power infrastructure. Second only to Norway in its share of power generated by renewable sources, Brazil is able to produce some of the cleanest battery metals in the world.
From a geological perspective, Brazil has vast and largely untapped mineral wealth. The country has historically been the world’s largest producer of iron ore and a significant producer of gold. Brazil is now also gaining recognition for its potential as a major supplier of the metals desperately needed for the greening of the global economy, such as copper, nickel and lithium.
Brazil recently elected Luiz Inacio Lula da Silva, better known as Lula, as the country’s 39th president, putting the country’s political dynamic directly in the global spotlight. While left-leaning Lula — who was also president between 2003 and 2010 — holds very different views from his right-leaning predecessor Jair Bolsonaro, he has returned to power with promises of attracting foreign investment, reducing rising poverty rates and advancing Brazil’s environmental agenda.
Despite changes in ruling parties over the years, there has been a consistent understanding of Brazil’s potential to be a leader in producing metals necessary to support global decarbonization targets, and to produce those metals at the lowest emissions levels in the world. Blessed by its government’s foresights in the 1960s and 1970s to develop renewable energy sources as the way forward to powering its economy, Brazil today produces over 85% of its electricity from these sources including hydro, solar and wind generation, a remarkable statistic by any measure and especially so given it is the seventh most populous country in the world.
Recognizing that it has the unique opportunity to be a global leader in the production of battery metals, Brazil has also taken significant steps to improve the mining regulatory framework, the most substantive changes the country has seen over the past 60 years. In 2018, Brazil launched the National Mining Agency (ANM), to help improve the mining sector’s performance across the country.
The advancement of the mining industry achieves two equally significant goals for Brazil. First, from a global standpoint, Brazil recognizes the role mining plays in enabling the transition to sustainable energy sources, for which much more metal is required to generate and transmit clean power. To that end, Brazil recently established its Strategic Minerals Policy in March 2021. The policy aims to prioritize the advancement of mining projects deemed strategic to the country and to global decarbonization efforts. Between the Strategic Minerals Policy and the ANM, mining companies have an established framework and licence to operate in the country.
Closer to home and the second main reason why Brazil is interested in maintaining and growing mining activity is the role the industry plays for its growing middle-class population. As South America’s largest country with one of the fastest growing populations in the world, Brazil has a pressing need to increase the standard of living for the majority of its citizens. And one of the fastest ways to do that is through mining, both from a wealth creation standpoint and as a means of increasing employment. Brazil’s mining industry generated estimated revenues of $89 billion in 2021 and directly employs over 200,000 people — including many in some lower-income states where mines are located.
Despite all of Brazil’s advancements around mining, business and green energy, the world’s view of Brazil is still associated with antiquated stereotypes that are not reflective of what the country is today and where it is headed. Nor is it reflective of Ero Copper’s experience, either.
While my company, Ero Copper, has been active in Brazil for only six years, our Caraíba Operations have been working since the late 1970s and form part of the fabric of Bahia State. We are proud to operate in Brazil and excited to see all the support from its government and people toward our industry. We have witnessed first-hand the progress the country has made in building a sustainable, healthy, efficient and transparent mining industry. Brazil is our home and we plan on staying for a while. Last month, we announced an extension of mine life for our Caraíba Operations in Bahia to 20 years, and earlier this year, we began construction of a new copper mine, Tucumã, located in the Carajás region of Para state. Across our portfolio, we have and continue to invest heavily in exploration as we recognize the potential of Brazil’s untapped and underappreciated mineral wealth, particularly when it comes to battery metals.
As we look forward to the next four years under President Lula’s leadership, we see a Brazil poised to take its position as a major producer of the metals needed to help fight climate change, and to produce those metals with the lowest carbon footprint in the world. All within an updated regulatory framework that enhances the protection of the environment and its citizens.
—David Strang is Chief Executive Officer of Ero Copper Corp.