Opportunities for Mining Technology Manufacturers in Brazil

With emerging markets and technological inventions, many opportunities are being created in various sectors, a trend that is grabbing huge investor attention. One industry that is growing at a high rate is the mining industry, where advancement in technology has enabled the production of various machines that make the mining activities easier and faster.

One country though has caught global attention from high quality mining technology manufacturers is Brazil. Brazil takes the fifth position globally when rated among mineral producers and in some areas it’s a leader, so therefore boasting one of the largest markets for mining equipments. In the past decade, Brazil has enjoyed a high rate of expansion in its mining sector, and has broken records of the importation of the mining equipment almost every year.

Competition for the Huge Resource

This country is blessed with various mineral resources that make international investors drool for just a small chance of investing in the industry. The major hindrance to this endeavor is lack of suitable infrastructure, and for the major organizations who can offer the required resources for infrastructure, this can be a huge opportunity for them. However, the new entrants into this promising mining market should not relax and assume that they will have their way unopposed. On the ground already, there is tough local competition in the form of subsidiaries of major international companies that have already set up operations there. After the economic downturn in 2009 the country's mineral output dipped significantly but with the realization of the opportunities, the investments made by various companies have improved the conditions with an increase of the production and volume of the minerals.

Local and international companies like Atlas Copco have embarked in the manufacture of effective mining equipments and their components. If the revenue figures that were revealed by Brazilian Machinery and Equipment Association are something to go by, then this is the right area of the industry to focus on. According to ABIMAQ the production of the machinery and equipments has created 4,000 companies, which in turn have employed 245,000 people. The annual revenue that they generate is about 80 billion U.S. dollars. What able company would not want to get a share of this cake?

Exports for the Improvement of the Economy

Apart from the revenues generated by the need for mining equipments, the exports of the demanded raw materials from other countries have improved Brazil’s economy a great deal. One example of the destination of its exports is China, which imports most of Brazil’s very vital mineral iron ore to help fuel its BricPartners growth. The prices for most of the minerals improved in 2011 stabilizing many of the local companies.

Full Potential Not Yet Realized

Research shows that there is a long way to go before the full discovery of minerals in Brazil so there is huge potential for the mining industry for more world class finds with surveying still going on. The slowness of the discoveries is due to the geography of Brazil with its dense forest coverage and the lack of the most modern methods for deposit find’s. Many of the mines in Brazil are open pit, and this obviously limits the mining ground level. Technological innovations are what will be depended on to bring to reality the expected full exploration of Brazilian mineral resources, which is focused to be in full throttle in the next seven years. For that to be realized, however, the market for the underground mining machinery and equipments has to be expanded in order to get to more of these resources.

Low Quality Products a Downside for Local Manufacturers

There is great potential in the Brazilian market for the mining machinery. This is because the products that the local companies produce are not competitive enough, a factor that has enabled a number of U.S companies take advantage of these opportunities to provide the mining companies with effective and durable products. Consumable components like conveyor belts, grinding equipments, laboratory kits, drill bits and other parts used by the mining and earth-moving machines are being sourced from the United States and to a lesser degree European and Asia suppliers . Foreign components are the most trusted because of their durability. Companies who can up their game by improving the technology and providing the components at a favorable cost-benefit ratio will make a killing before competitors realize the opportunity presented by lack of components with good prospects.

One International company that has already set camp in Brazil is Caterpillar, which has factories that manufacture products for local use as well as exports. Some of the other international companies are New Holland, Iveco, Schaeffler, JCB and Orica.

Local Products Still Significant

Brazilian technology cannot be ignored because companies like Dedini, Randon and Isomonte to name just a few have their own productions that can compete well with the foreign companies. The advantage that comes with manufacturing in Brazil is being nearer to the end user. Any company that starts business here is assured of a ready market, in the form of the mining companies that requires these products every day. The only trick is to ensure that the components or  machinery are of good quality that will make the targeted mining companies come back for more. The pricing has to be attractive in order to compete with all levels of competition.

The Dough Is Within the Boundaries

Any company that wants to tap into this huge opportunity of investing in mining equipments and components has to do it where the action is and that is only within the boundaries of Brazil. The challenges that face foreign manufacturing companies based outside Brazil but targeting the Brazilian market are the cultural and language barriers and government legislation design to protect Brazil’s own mining manufacturing industry. However, the main ones that are directly linked to business are higher taxes and complex import procedures. These factors raise the cost of their products to a level that it becomes hard to compete with the companies that are manufacturing their products in Brazil.

With the economic and political instabilities that had threatened to derail Brazil now behind it, there is increased foreign investment where companies are comfortable setting bases in the country. This is a great chance for the Brazilian government to fulfill its huge potential, and to continue being and improving its position as a global leader in the mining industry.