There is no getting over the downturn in Brazil's mining
industry. Rising inflation, falling GDP, a weakening currency,
infrastructure challenges, a major resource scandal; you name it,
Brazil has experienced it.
Its fortunes are best seen through the lens of national
mega-miner miner, Vale, which accounts for around 70% of the total
revenues in Brazil's mining sector. In the three months to the
end of March Vale recorded a net loss of US$3.1 billion. This was a
turnaround from the net profit of $2.5 billion it posted in the
same period a year earlier.
The price Vale received for its iron ore fell precipitously over
this time – something the government cannot be held culpable
for. What the state can be judged on is inflation though. During
this period, Vale's interest payments and debt in US dollar
terms increased substantially, contributing heavily to the
loss.
