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Cover Story

Transforming innovation

Brazilian mining invests in research and assimilates equipment, solutions and services of Canada, a country that has invested 22 billion Canadian dollars in capital in the industry and adopts a development financing and incentive model

Leandro Rodriguez 

Global investments in the exploration of non-ferrous metals, such as bronze, aluminum, zinc and lead reach in excess of US$ 7.7 billion. Canada alone concentrates 16% of this volume and ranks internationally ahead of Australia (13%) and the African continent (15%). Only Latin America, as a whole, receives more resources (26%), albeit a large part is of Canadian origin, according to the Metals Economics Group, a consultancy that publishes reference studies for the mining industry. In order to transform its projects into commercial operations, companies rely on a fundamental tool: research and development: Often expensive, albeit efficient, innovation warrants the realization of more precise prospecting, improvement of processes and equipment, and cost reduction, in addition to other countless direct and indirect benefits. Of the above mentioned US$ 7.7 billion, 32% were destined to basic exploration, in which advancements in research are essential.

As recent Canadian history shows, finding new solutions depends on economic support. “The Canadian financial market today is one of the main financing sources for mineral prospecting in Brazil. Funds raised in stock exchanges are used here by companies conducting this type of prospecting”, explains Guilherme Quentel, Institutional Relations manager at Kinross, which leads the national ranking in gold production. “The basis for the development of the Canadian economy has deep roots in the extractive sector, both in mining and forestry. There is a partnership environment between the public and private sectors, which has reinforced the industry’s regulation”, adds Quentel. According to the executive, the capital market perceives this link between public entities and the industry, increasing predictability and transparency of rules, two important conditions for investors to make decisions.

“Canada is the international capital for financing mining projects, including research. The most important for that is funding through the Toronto Stock Exchange (TSX)”, points out Carlos Horácio Bertoni, director-general in Brazil of the Canadian company Aura Minerals. In 2009, TSX congregated 55% of the world’s publicly traded mining companies, with a trading volume of 22 billion Canadian dollars. What explains this outstanding position is the disposition to assume investment risk, needed for new technologies, mainly those of uncertain success. “Prospecting is a very risky phase in mining and it is important that there be a good relationship between the financial market and the industry in general”, says the executive.

These favorable conditions revert to new products and services. In field surveys, for example, newer devices incorporate sophisticated technologies to assure more agility, safety and precision of collected data. In Brazil, the Ilris-3D Laser Scanner model, of the Canadian brand Optech, has been used by mining, engineering and oil companies. Through scanning, the laser has three dimensions and it is possible to scan up to 10,000 dots per second (or dot clouds) of mines and plots of land, faithfully reproducing prospected areas on the computer screen. The degree of detailing exceeds the capacity of other similar products and uses a database for the step and stare methodology that assures the correct spacing between dots and a 360º horizontal by 360º vertical vision.

“The mining companies use it for several activities, such as the calculation of volume and inventory and control of the slope angle, progress in excavation and opening of mine pits. Furthermore, one can analyze excavation positions, calculate mine wall inclination and produce geological and structural maps. Safety is increased because nowadays a technician can perform measurements remotely”, explains Luiz Dalbelo, Products manager of importer Santiago & Cintra. According to the executive, the demand of companies in the industry has increased. In the port of Tubarão, in Vitória (State of Espírito Santo), for example, the model is used to control iron ore volumes.

MINERAL RESIDUES – Golder Associates, in turn, for years has developed the Thickened Tailings Disposal (TTD) technology, for more efficient mineral residue disposition. “We were able to reduce the size of reservoirs and make better use of water. In the “ferrous quadrangle” region of the State of Minas Gerais, plots of land for the disposition of rejects are becoming rarer, which is why we need new structures”, observes senior geo-technician José Mario Mafra.

Therefore, innovation acts like a gearbox, lacking which, many plans come to a halt. In Brazil, which has geologically mapped only 30% of its territory, according to the Brazilian Mining Institute (Ibram), Canada’s presence is noteworthy and funds sourced in the country’s stock exchanges are used in mineral prospecting by large groups and small companies. “This is a high risk and high cost activity, especially in countries of continental dimensions”, states Quentel. However, apart from being a source of financing, the executive considers that the Canadian dynamics should be viewed as inspirational to foster mineral prospecting.
The main Brazilian barrier, however, is the lack of a significant market for risk capital and credit instruments. “Loans are very selective, granted in most cases only for projects in final development stages, with better profit prospects. With little information, however, Canadian companies were able to, in recent years, discover new reserves, which boosted the industry in Brazil”, assesses Onildo João Marini, executive secretary of the Brazilian Mineral Industry Development Agency (Adimb).

To overcome the lack of specifically earmarked credit, large groups use own funds. Votorantim Metais will invest R$ 100 million in new projects in 2010, to be used in company-own initiatives or in joint ventures with other companies. Prospecting, in turn, focuses on bauxite, nickel and zinc in the Americas. “Our objective is to discover new mineral deposits that can meet the demand for concentrates and intermediary metallurgical products. Although there are many opportunities, given that Brazil’s mapping lacks detailing, the country’s precarious infrastructure makes discoveries unviable”, points out Jones Belther, director of Mineral Exploration. The executive, however, believes that the industry is up to date in the field of aero-geophysics, performed through aero-surveying and geo-physical data processing using state-of-the-art software. “We created a Mineral Exploration area in 2004 because we saw it as strategic for the company’s growth. For instance, in Canada, we partner with HTX Minerals (nickel) and Xstrata Zinc (zinc)”, he adds.

Investment in prospecting is essential
for basic mineral ore exploration

OPERATIONAL SYSTEMS – Vale will invest about R$ 60 million in 2010 in the development and application of technologies for its heavy haul railroads – the Vitória a Minas (EFVM) and Carajás (EFC) railroads – and in port facilities. Of the found solutions, the ones that stand out are the locomotive operation systems using remote control and the so-called dynamic helper that assists in operations in uphill stretches. In the Ponta da Madeira Port Terminal (State of Maranhão) alone, R$ 9 million were invested to implement the system, allowing to remotely control all lifting and recovery equipment used to transfer ore from the yard to the conveyors and on to ships. “We gained in health and safety of the operator, because (s)he is the one operating the equipment without being in the driver cabin. Furthermore, a standardization of operations takes place, with less variation in commands and movements of the recovery equipment lance”, says Angelo Santos, Automation Engineering supervisor.

At the Logistics Excellence Center (CEL), in Vitória (State of Espírito Santo), the company trains employees in a modern train simulator, developed in partnership with the Polytechnic Institute of the University of São Paulo (USP). “Since logistics seeks efficiency and productivity, it potentializes performance throughout the entire mining chain. At the CEL, we develop innovation in port and railroad operation and maintenance training. The gain is better train regularity and availability for loading at the mines”, states Gustavo Mucci, general manager of Innovation and Railroad Development.

Canadian company Yamana Gold, in turn, intends to invest about US$ 256 million in new projects in the country, such as Ernesto and Pau a Pique (State of Mato Grosso) and Santa Cruz (State of Bahia). According to Sergio Brandão, director of Exploration, the main prospecting and development initiatives, based on results and metal-genetic potential, are concentrated in these two States and in the State of Goiás. “There is still a significant undiscovered metal-genetic potential in Brazil”, says the executive. However, he warns that more investments in geological mapping and geo-physical prospecting must be made by the government on a regional scale, by private initiative, or through public-private partnerships.

In this regard, Marini, of Adimb, says that uranium is an example of Brazilian limitations in prospecting – in this case, not due to lacking technology, but because of applicable legislation. Although prospecting is viewed as low cost, given that ore can be detected by centilometers, the extraction exclusivity enjoyed by the Federal Government discourages prospecting. Flexibilization, even when controlled by federal authorities, would favor development and innovation in this area”, concludes Marini.

Translation to English: BeKom Comunicação Internacional

A world reference in mining investments, the Toronto Stock Exchange (TSX) has stood out as one of the main alternative paths for financing new projects and prospecting by companies that operate in Brazil. Last year, 49 companies with stock traded in the TSX, had operations in Brazil:

Total of companies with operations in South America

Companies operating in Brazil

Investments earmarked for Brazil 

Investments destined to South America


“Why don’t we develop a capital market for start-up companies that could be supported with risk capital for projects and prospecting?”. Albeit personal, the question of Carlos Horácio Bertoni, director-general of the Canadian company Aura Minerals, reflects a commonly asked question by executives of the Brazilian mining industry. Guilherme Quentel, manager of Institutional Relations of Kinross, for example, points out that most Brazilian banks lack experience in mineral prospecting, and also do not have a specialized technical staff qualified to assess requests for loans. “This is where we have a two-way road between the financial and the mining industries to set up an educational process”, states Quentel. In Canada, many barriers were overcome through transparency of information, allowing for more confidence of banks and ordinary and institutional investors. In Canada, National Instrument NI 43-101 sets standards for publicizing relevant information to mining companies. Furthermore, data must be collected by a Qualified Person, either an engineer or a geo-scientist, with at least five years of experience in mineral prospecting, who complies with technical norms in his/her reports. “In Brazil one needs to do something similar, so that banks, both local and international, may assess projects”, proposes Bertoni.

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