Brazil stands as a global powerhouse in the realm of mineral wealth. From the glimmering allure of gold to the industrial significance of iron ore and the valuable deposits of bauxite, niobium, and manganese, this South American nation boasts an impressive array of sought-after minerals.
However, navigating this mineral-rich landscape demands a deep understanding of the local specifics. In this comprehensive guide, we unveil the path to ethically source minerals from Brazil while upholding social and environmental responsibilities.
Map of Brazil's mineral-rich regions
What does Brazil's mining sector look like at present?
Issues with Illegal Gold
The exploitation of minerals comes with its fair share of challenges. Illegal mining activities in Brazil have grown in scale and impact over the years, presenting significant challenges to the country. These activities are small-scale, informal, and often unauthorized mining operations.
These activities involve individuals or small groups of miners who engage in the extraction of minerals without proper licenses, permits, or compliance with environmental and social regulations. Those activities have been responsible for over 70% of the domestic output of informal gold mining in Brazil. They are frequently found in the Amazon rainforest and other biodiverse regions of Brazil, including the Cerrado savanna and parts of the Atlantic Forest. These areas are known for their rich mineral deposits, such as gold, diamonds, and precious gemstones, which make them attractive targets for illegal miners.
Illegal operations are often associated with poor working conditions, lack of safety measures, and the use of rudimentary tools and techniques. The informal nature of these operations makes them difficult to regulate and monitor, exacerbating the challenges faced by the mining sector in Brazil. Mining operations in Brazil, particularly large-scale projects, have a significant environmental impact. The extraction of minerals often leads to deforestation, soil erosion, water pollution, and habitat destruction. Given Brazil's extraordinary biodiversity and the presence of protected areas, environmental protection is a critical concern in the mining sector.
New legal and regulatory action
The legal and regulatory framework surrounding mining in Brazil is complex. Compliance with environmental regulations, land rights, and indigenous rights is essential. The Brazilian Mining Code governs mining activities, but there have been discussions and proposed changes to mining laws, which adds uncertainty to the industry.
Since 2023, Lula came into power and has significantly changed the mining landscape in Brazil. One of the notable actions he took was signing a decree at the end of January to empower the Armed Forces and government ministries to stop illegal gold mining, in the Yanomami territory in the north of the country. Other Lula’s measures included closing the airspace of the Yanomami territory to all aviation and controlling the rivers with the navy. The objective was to cut off the supply the ones, who had invaded and polluted the territory with mercury, leading to a severe famine among the Yanomami people.
President Lula's firm action to halt gold mining in indigenous areas, starting with the Yanomami territory, showcases dedication to both the environment and cultural values. This shift signifies Brazil's move toward responsible and sustainable mining, addressing illegal activities and promoting a more accountable sector.
What questions should you ask yourself if you want to source from Brazil?
- Quantity and Quality Requirements:
- How many tonnes of minerals do you intend to purchase?
- Are you comfortable sourcing from Large-Scale Mining (LSM) operations, or do you prefer Artisanal and Small-Scale Mining (ASM) sources?
Here are some examples of LSM and ASM mines in Brazil:
- Iron Ore: Carajás mine, operated by Vale S.A and located in the state of Pará.
- Bauxite: Paragominas mine located in the state of Pará.
- Gold: Cuiabá mine, operated by AngloGold Ashanti. Additionally, a notable gold aggregator is Fênix DVTM.
- Niobium: Araxá mine, operated by Companhia Brasileira de Metalurgia e Mineração (CBMM), located in the state of Minas Gerais.
- Tantalum: MIBRA project, owned by Advanced Metallurgical Group (AMS:AMG), located in the state of Minas Gerais.
- Gemstones: Cruzeiro mine, operated by mining company Gemfields, and located in the state of Bahia.
- Certifications and Compliance:
- What kind of certifications or standards do you require from suppliers to ensure ethical and sustainable sourcing?
- Are there specific environmental or social compliance requirements that your company follows?
Here are some examples of certifications or standards you may require suppliers when sourcing minerals from Brazil:
- Due diligence guidelines for the Organization for Economic Cooperation and Development (OECD): These guidelines help ensure that minerals are sourced in a responsible and sustainable manner, taking into account human rights, labor practices, and environmental impact.
- Responsible Minerals Initiative (RMI): RMI is an industry initiative that promotes responsible mineral supply chains. It provides tools and resources to assess and address social, environmental, and governance risks in mineral supply chains.
- Certimine: Certification process, which consists of verifying legal, operational and environmental aspects of mining companies based on the international standards and agreements on sustainable mining practices.
- Responsible Jewellery Council's Code of Practice: This certification ensures that gemstones and pearls are sourced ethically and responsibly.
- Import and Trade Facilitation:
- What key documents and permits will you need for importing minerals from Brazil?
- Have you identified any specific trade facilitation measures or requirements for a smooth import process?
The specific document requirements may vary depending on the type of mineral being imported and the country of origin, but some of them are:
- Import License or Registration
- Commercial Invoice
- Bill of Lading
- Certificate of Origin
- Transport Documents
- Export Documentation
- Environmental Permits
- Packing List
- Customs Documentation
- Certificate of Analysis
- Pricing and Payment Terms:
- What are your pricing expectations for the minerals?
- Do you have any specific payment terms or methods that you prefer?
The choice of method depends on various factors such as the parties' preferences and the volume of the transaction, but the most common payment methods are: Letter of Credit (L/C), Bank Transfer, Advance Payment, Documentary Collection and Open Account.
Here are the challenges you should be aware of when choosing a payment method: Currency Exchange, Complex Domestic Regulatory and Tax Frameworks, and Trade Restrictions. It is important for both buyers and sellers to carefully consider these challenges and choose the most suitable payment method to ensure a smooth and secure transaction.
- Due Diligence and Transparency:
- What due diligence processes do you undertake when selecting suppliers for sourcing minerals from Brazil?
- How important is transparency in the supply chain, and what steps do you take to ensure it?
“In the global trade of minerals, due diligence and transparency serve as the cornerstones of a responsible and sustainable supply chain. When you venture into sourcing minerals from Brazil, it becomes imperative to exercise due diligence, carefully examining potential suppliers to ensure ethical practices and compliance with environmental regulations. Ensure your sourcing efforts align with industry best practices and global standards. Partnering with suppliers committed to initiatives like the Responsible Mining Initiative (RMI), or the Extractive Industries Transparency Initiative (EITI) demonstrates your dedication to transparency and ethical conduct. By prioritizing due diligence and transparency, you can not only unlock Brazil's mineral wealth but also contribute to a more sustainable and ethically responsible global trade ecosystem.”
- Supply Chain Traceability:
- How critical is supply chain traceability for your company?
- Do you require traceability information, such as the origin and chain of custody of the minerals?
In the world of mineral trade, supply chain traceability emerges as an indispensable pillar for companies seeking to import minerals from Brazil. The ability to trace the journey of minerals from the source to the destination empowers buyers with valuable insights into the environmental and social impacts of the extraction process. By ensuring supply chain traceability, companies can uphold their commitment to sustainable and responsible sourcing, verifying compliance with ethical standards and environmental regulations.
Traceability also mitigates the risk of inadvertently supporting illegal or unethical practices, fostering trust between buyers and suppliers. As conscientious stewards of the global trade ecosystem, companies that prioritize supply chain traceability not only unlock Brazil's rich mineral wealth but also set a precedent for a more transparent, ethical, and sustainable future. In our experience, there are numerous forward-thinking companies in Brazil such as Fênix, who integrated traceability in gold sourcing and processing activities.
- Sustainability and Environmental Impact:
- How important is sustainability in your sourcing decisions?
- Are you interested in minerals sourced from companies that follow eco-friendly practices and environmental regulations?
Sustainability, eco-friendly practices, and environmental regulations are crucial in sourcing decisions for companies importing minerals from Brazil. By prioritizing eco-friendly sourcing, companies can significantly reduce their carbon footprint and minimize negative environmental impacts, contributing to global efforts to combat climate change. Furthermore, aligning with environmental regulations, such as the Corporate Social Responsibility (CSR) or the Brazilian Forest Code, helps mitigate legal and reputational risks, fostering a positive image among stakeholders and consumers who increasingly demand ethical and responsible sourcing. Investing in sustainability not only demonstrates a commitment to environmental stewardship but also bolsters the long-term viability of the supply chain, securing access to vital resources for generations to come.
Entering the Brazilian market for sourcing legal minerals can be a challenging endeavor, requiring careful navigation of complexities such as traceability, documentation requirements, and establishing the right network of connections. The intricacies of the mining sector, coupled with regulatory nuances, demand a strategic approach for international buyers seeking a comfortable and successful entry.
At Minespider, we understand the unique challenges and opportunities presented by the Brazilian market. With our expertise and extensive network, we are here to guide and support you through the sourcing process, ensuring adherence to ethical practices and regulatory compliance. Transparency and responsible sourcing are at the core of our values, as we strive to foster strong relationships with local partners for a seamless procurement experience. Connect with us today to discuss your specific sourcing needs and discover the wealth of legal minerals that Brazil has to offer.