Iron Ore Market and Logistics in Brazil

The main product exported by Brazil in volume, iron ore, gained prominence in several news items at the beginning of 2021. If, on the one hand, the new coronavirus crisis strongly affected export volumes in 2020, on the other hand, the heated steel market in China and the low supply of quality ore raised prices to historic levels. In addition, there is a lot of discussion about investments in iron ore logistics, whether in terms of infrastructure, with the Auction of stretches 1 and 2 of the Oeste Leste Integration Railroad (Fiol), won by Bahia Mineração (Bamin), i.e. for socio-environmental reasons, due to the interdiction of the Tecar Terminal, owned by CSN, and the Ilha da Guaíba Terminal, owned by Vale, both in the Port of Itaguaí.

In 2020, according to data from the National Water Transport Agency (ANTAQ), Brazil exported 337 million tons of iron ore, the lowest volume since 2013. This reduction in exported volume occurred basically at Vale's Tubarão Terminal, in Vitória-ES. This terminal, which exported 67 MM ton in 2019, had a drop of more than 30% in transported volume, taking the 2020 value to 45 MM ton. The positive highlights are the Ponta da Madeira Terminal, in Itaqui, also operated by Vale, whose transported volume totaled 186 MM ton, and the Port of Açu, in São João da Barra-RJ, with the highest export volume in history of the port complex: 23,7 MM ton.

Figure 1 – Evolution of exported volumes of iron ore in Brazil. Source: Antaq. Analysis: ILOS

Despite the drop in the volume transported in 2020, commodity prices reached historic values ​​in 2021. According to Fastmarkets MB, at the end of April, the price of iron ore at the Port of Qingdao, in China, reached US$ 193,58 .13 per ton, the highest value in the 2021-year historical series. On the day of the historic maximum, the price of iron ore accumulated, in 20,6, an increase of XNUMX%.

In addition to the attractive prices, investments in infrastructure for the flow of ore were also highlighted in the news. In April 2021, the auction of stretches 1 and 2 of the West-East Integration Railway (Fiol) took place, whose concession-winning company was Bahia Mineração (Bamin), with a minimum bid of BRL 32,7 million. Bamin operates the Pedra de Ferro Mine, in Caetité, and depends on the railroad and a private use terminal (TUP) at the Port of Ilhéus to explore the iron ore deposit, whose production expectation is 18 MM ton per year . Investments in infrastructure will be essential for the flow of the commodity and will be, in the future, a possible important logistical alternative for the grains produced in the interior of Bahia.

Figure 2 – Sections 1 (from Ilhéus to Caetité) and 2 (from Caetité to Barreiras) of Fiol. Source: Investment Partnership Program.

There are great expectations about the volumes that will be able to flow through Fiol, mainly related to iron ore, and investments in logistics will make Brazilian ore increasingly competitive in the world. It is worth mentioning, however, that it will be very important to have the environmental impacts on the disposal of the product on the agenda. Tecar, in the port of Itaguaí, had its operations paralyzed due to reports of environmental impacts in Sepetiba Bay. Tecar is the main iron ore export terminal at the Port of Itaguaí, having exported, in 2020, 24,3 MM ton. In addition to Tecar, Tig (Terminal da Ilha da Guaíba), the second main terminal in the Port of Itaguaí for iron ore, with an exported volume of 23,7 MM ton in 2020, was also interdicted due to the lack of an environmental license to operate.

References:

- ANTAQ
– Forbes – Itaguaí bans CSN's iron ore export terminal
- Economic value - Iron ore hits highest price in 13 years
- Economic value - Bamin is the only one interested and wins the Fiol railroad with a minimum bid
– Brazil Agency – Vale terminal in Rio closed due to environmental damage