With Brazil having such a significant mining industry, it has naturally been affected by the current economic climate with weakened demand and falling prices of commodities. In 2008 Brazil’s National Department of Mineral Production issued 18,269 mining licenses, up from just 13,901 in 2007. However, this has rapidly dropped throughout 2009 as companies struggle to finance projects and cut back on capital expenditure.

In September 2009, the Brazil Iron and Steel Association stated that although steel production was up in July, it was only a tentative recovery, and caution should be exercised until the end of the year. Crude steel production jumped 22.8% in July to 2.5mn tonnes, hinting that demand for the material was making a recovery; export demand was also up during the month. Brazil had experienced a fall in exports in previous months and analysts attributed this to lower demand from China, which was thought to have stockpiled materials and as a result had large inventories of steel and iron. Though an increase in production is encouraging, the country still faces challenges ahead from the economic downturn.

Brazilian mining giant Vale (Companhia Vale do Rio Doce ) was under pressure from the government in 2009 to invest more in domestic operations after a number of projects experienced delays as the company announced it was cutting back capital expenditure. Vale was publicly criticised by President Luiz Inacio Lula da Silva who appealed to the firm to make more domestic investment and support the local economy during the challenging times. A number of expansion and investment plans were then unveiled by the Minas Gerais-based mining firm, including the construction of a US$3.7bn steel plant in the north-eastern state of Para as well as construction of a steel plant in the state of Espirito Santo. In Para, Vale is expected to invest US$3.3bn in construction of a steel plant, US$275mn into building a port facility and US$125mn in the construction of a railroad.

Meanwhile, after months of speculation, Vale announced in September 2009 that it had come to an agreement with German steelmaker Thyssenkrupp to increase its stake in Thyssenkrupp’s Brazilian steelmaker Siderurgica do Atlantico (CSA) to almost 27% – from its original stake of 10% – in a deal worth US$1.42bn, CSA is a project in the state of Rio De Janeiro with an anticipated annual production capacity of 5mn tonnes of slab steel. It is expected to begin production in 2010.

July saw significant investment in diamond mining in the country with Diamond Exploration agreeing to purchase three diamond properties from Canadian Armex Mining Corp. The properties included the Juina Property, the Rio Pari Property and the Rio Arinos Property, located in the state of Mato Grosso.

The acquisition is based on an initial payment of US$2.5mn, with a further 2% royalty to be paid on the Juina property as well as further cash payments