German group Thyssenkrupp is turning its Brazilian operations into a global mining engineering center due to the country’s growing demand for mining services and equipment.
“This news reinforces a very positive view of the growing investment cycle that the Brazilian mining sector is going through,” Valdir Farias, executive director at mining consultancy Fioito, told BNamericas.
The center will be the second outside of Germany, with the other one located in India, Brazilian business daily Valor Econômico reported.
The facility will have a staff of 100 who will develop equipment and solutions for clients.
“We can offer different levels of digitization to our customers, who are increasingly looking for greater efficiency, performance, and cost reduction,” Leonardo Pena, chief operating officer in Brazil, told Valor Econômico.
Companies such as Ingeniería y Construcción Sigdo Koppers (ICSK), a subsidiary of Chile’s Sigdo Koppers, and German firms FAM and Bauer Group, have recently unveiled plans to boost their operations in Brazil.
“The interest of these companies in expanding in Brazil is fueled by the iron ore segment, which is benefitting from increased production at local players and demand from China that is likely to continue growing,” said Farias, who added that Brazil is benefitting from existing tensions between China and Australia, which is a major iron ore producer.
Brazil’s mining capex is expected to reach US$38bn for 2020-24, according to local mining association Ibram. The figure would be the highest since the 2014-18 period when capex totaled US$53.6bn.
The 2020-24 capex forecast has been rising since the start of the pandemic when it was US$34.5bn.
Brazil will hold presidential elections in October next year in what is expected to be a highly polarized contest between far-right President Jair Bolsonaro and former president Luiz Inácio Lula da Silva. All recent surveys show the leftist Lula defeating Bolsonaro.
Whatever the outcome of the elections, Farias said he does not expect any major negative impact for mining firms given the sector’s importance to the Brazilian economy.