New Brazil Gold Cycle

With technology and expensive metal worldwide, Brazil’s gold production will double, attracting investments of US $ 2.4 billion.

Large international mining companies invest heavily in technology and explore areas previously considered uneconomical.

CRIXÁS (GO) and Brasilia - Four centuries after the gold cycle that filled the eyes of the Portuguese Crown and prompted Brazilians and foreigners on a quick gold rush, Brazil is facing the biggest race of all time for this metal. New sophisticated equipment allows foreign giants, which dominate the domestic market to tap into what might be called "the pre-salt of the mining sector". Mines in the Center-West and North parts of Brazil, as well as in other areas hitherto considered exhausted and or untouched in Minas Gerais and in the Northeast have become now economically viable,.

All this thanks to the increased gold demand in the entire planet — with price quotation surge of 540% in the last decade — stimulated by world economic growth, mainly from China, and by the need of countries to stock up the metal, which is considered one of the world's most trusted financial assets.

Metal is found at depths of over 8,202 feet in Brazil

The enthusiasm is such that the Brazilian Mining Institute (IBRAM) estimates investments to top US$ 2.4 billion in the sector until 2015. It is almost triple the previous projection of just over US$ 900 million. The mining companies do not hide their optimism and promises new projects, while the authorities estimate that gold production shall also grow strongly and may double over the next five years. Only in the Rio Grande do Norte State, production shall jump form 60 grams to six tons if all projects materialize.

Brazil has currently about legal 2,819 “garimpos” (manual gold prospecting areas) in operation. However, the National Department of Mineral production (DNPM) has awarded 1,270 new search permits in areas to be explored, and is considering more 1,173 requests filed by companies and cooperatives.

If the 2008 global financial crisis imposed slowed down developed countries’ economies, which in theory, would reduce the demand for gold, it ended up helping to devalue the U.S. Dollar and put pressure on gold prices, historically considered a safe haven by investors. World central banks never bought so much gold to beef up their international reserves since the Decade of the 80’s. The price escalation made new millionaire investments viable in research and technology.

In the past, gold gushed forth from the Earth, or from rivers, and collecting or mining it did not require much effort. Today, it is being found at depths of up to 13,123 feet in South Africa, but is already in 8,202 feet in Brazil. Sophisticated machines are able to extract less than a gram of gold from a ton weighing rock, i.e. something equivalent to the size of a car.

This explains why Brazil, which already was the world's largest producer, but lost positions in the recent past, have come back to the game, and is in the 13 place in a list of major global suppliers. In 2010, Brazil produced 62 tons through its legal garimpos, the largest volume of the Decade, and is preparing to double this number. The world's largest producer is China with 341 tons/year, followed by Australia (259 tons), United States (240 tons) and South Africa (192 tons).

The Brazilian production is very small of only 12% of its potential. Considering the proven reserves in 2010, Brazil has the annual extraction capacity of 503 tons of pure metal. The amount was calculated based on 1.3 billion tons of rocks with the ore, with an average of 2.57 grams per ton of rocks.

Technology can lead the country to the top

The expectation of the Government and of specialists is that technologies should change this scenario and can take Brazil to the top of the list once again. Instead of the traditional handpicking goldfields that filled Brazilian rivers with deadly mercury, the country already has 93.7% of its production done mechanically, according to the DNPM (National Dept. of Mineral Production). Iron ore remains the most important item in the Brazilian trade balance and corresponds to more than 80% of what the country sells out there, but the second metal is gold, with almost 5% of the total.

In Crixás, North of Goiás State, Mineração Serra Grande, a joint venture between AngloGold Ashanti, South Africa, with Kinross Gold Corporation, of Canada, already works at 2,296 feet, with tunnels, reaching a total of 37.8 miles long. The company’s plans, which owns the deepest mines in Brazil, both in Minas Gerais (Mina Cuiabá, Sabará, with 3,281 feet, and Mina Grande, in Nova Lima, with 8,202 feet), can be measured by their investment plans.

The company's Operations Director, Mr. Ricardo de Assis, claims that US$ 1.1 billion will be invested in new projects, expansion and maintenance of the mines in the country. Anglo is the second largest producer in Brazil and the third in the world.

Not far from Crixás, Paracatu is the largest open pit gold mine in the country, operated by Canadian Kinross. To get to the metal, the company had to invest in technology that allows it to get 0.4 gram of mineral per ton of rock. Over the past five years, according to the company's Vice President in Brazil, Mr. Antonio Carlos Marinho, production jumped from five to 15 tons.

At the mine in Sao Francisco, in Rio Grande do Norte State, Australian Crusader is completing surveys initiated a year ago and aims to produce three to five tons per year in this place, where few saw potential in the past. The expectation is that the gold content is 1.5 gram per ton, according to the executive responsible research, Mr. Rob Smakman, who lives in Brazil for a few years with the family and has led the company's work in the country.

— This is a little exploited region — said Smakman.

Read more about this subject here (in Portuguese): http://oglobo.globo.com/economia/novo-ciclo-brasileiro-do-ouro-3278029#ixzz1eGXZ4tkL

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