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Known for sun and sand, Bahia boasts booming mining industry
Renato Alves . Feb 15, 2021
Underground mine in Bahia: 105 kilometers of galleries. Photo: Mineração Caraíba S/A
For foreigners and the vast majority of Brazilians, the northeastern state of Bahia is synonymous with sun, sand, and partying. Indeed, the region’s beaches attract millions of holidaymakers every year, with tourism being responsible for 4 percent of the state’s BRL 300 billion (USD 55.84 billion) GDP. But, as soon as you begin to go inland, the economy of Bahia changes dramatically, focused mainly on agribusiness and mining.
The agricultural sector has been the backbone of the Bahia economy since colonial times. In the year 1500, Portuguese navigators first set foot in Brazil at Porto Seguro, the southern Bahia town now known for its beaches. After settling in the region, they soon began cultivating and exporting cacao, an industry that remains until today.
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<p>However, while farming has been an important business in Bahia for half a millennium, the presence of large-scale mining operations in the state is a much more recent phenomenon.</p>
<p>In 1842, there were reports of diamonds being discovered in Bahia. Later, during World War II, the state’s deposits of manganese and quartz gained significant importance as the country went to work producing raw materials for the war effort.</p>
<p>However, it was only at the end of the 1960s that large companies began setting up shop in Bahia to extract minerals using advanced techniques. After much research, mining in the state began gaining nationwide importance in the 2000s.</p>
<p>Bahia is rich in iron, nickel, gold, bauxite, and another 48 minerals. Today, it is the country’s fourth-largest state in terms of mineral production, behind Minas Gerais, Pará, and <a href="https://brazilian.report/business/2020/12/07/the-up-and-coming-mining-capital-in-brazils-center-west/">Goiás</a>. There are roughly 221 producers spread across Bahia’s 417 municipalities, producing over 2 million tons of minerals each year.</p>
<h2>Mining boom in Bahia</h2>
<p>With a growth of 62 percent in mineral production sold in relation to 2019, Bahia was Brazil’s largest producer of 11 different minerals last year, with only three of them being exclusive to the state. The figures are taken from a survey carried out by the <a href="http://www.cbpm.ba.gov.br/">Bahia Mineral Research Company</a> (CBPM), based on data from the <a href="https://www.gov.br/anm/pt-br">National Mining Agency</a> (ANM).</p>
<p>Bahia is home to a number of substances which are so unique they are named after the state itself, such as Azul Bahia granite and Bege Bahia marble. The state is also the only place in Brazil to extract vanadium and uranium.</p>
<p>Elsewhere, Bahia is Brazil’s largest producer of chromium, halite, magnesite, talc, and baryte. It holds second place in the production of nickel, grafite, and silver, and third in copper, gold, ornamental rocks, and natural gas.</p>
<p>Gold from Bahia, which is the state’s most exported mineral, is mainly sold to Belgium, Canada, India, and Switzerland. Meanwhile, vanadium is exported to South Africa, Canada, China, South Korea, the U.S., Japan, and the Netherlands.</p>
<p>Chromite and vanadium are used as raw materials for iron and steel alloys for industry, while uranium is enriched and used in Brazil’s two nuclear power plants, located in <a href="https://brazilian.report/power/2019/08/24/jair-bolsonaro-protected-brazilian-cancun/">Rio de Janeiro</a>. </p>
<h2>Inland mining opportunities</h2>
<figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="683" src="https://brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy-1024x683.jpg" alt="mining bahia economy" class="wp-image-56728" srcset="https://cdn-statics.brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy-1024x683.jpg 1024w, https://cdn-statics.brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy-300x200.jpg 300w, https://cdn-statics.brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy-768x512.jpg 768w, https://cdn-statics.brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy-600x400.jpg 600w, https://cdn-statics.brazilian.report/wp-content/uploads/2021/02/mining-bahia-economy.jpg 1505w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Iron ore production line. Photo: Mineração Caraíba S/A </figcaption></figure>
<p>Around 90 percent of Bahia’s mineral deposits are located in the state’s poor and semi-arid inland regions. With less fertile soil and reduced job opportunities, cities such as Jacobina, Juazeiro, Jaguarari, Campo Formoso, Barrocas, Andorinha, and Itagibá get the majority of their income from mining operations. </p>
<p>The Bahia Economic Studies Commissioner estimates that mining accounts for roughly 15,000 jobs in the state — 13,500 in Bahia’s interior and 1,500 in the state capital Salvador. Investment announced for the next five years are expected to bring another 5,000 jobs.</p>
<p>“Mining is what brings wealth to the interior of Bahia. Mining companies usually have 90 percent of their workforce made up of residents of the municipality in which they are operating, as well as creating tax revenue for the surrounding region. And almost everything they consume comes from local commerce, such as fuel,” says CBPM president Antonio Carlos Tramm.</p>
<p>There are also several other indirect advantages, says Mr. Tramm. “Wherever a mining company is situated, commerce develops quickly to serve the company’s employees and executives. For example, poor cities often have luxury hotels and B&Bs which they would never have without having a mining company [operating in the municipality],” he adds.</p>
<h2>Demand for copper and iron to soar</h2>
<p>As Brazil’s third largest producer of copper and with the local iron ore industry growing, Bahia is set to benefit with the increased demand for these metals on the international market this year. The sector expects China to keep up its ravenous appetite for these commodities, putting pressure on prices.</p>
<p>Iron ore is used to make steel, while copper is used in electric circuits, wires, cables, and plumbing. Therefore, when civil construction picks up, the demand for both metals increases.</p>
<p>Bahia’s copper is produced in the Vale do Curuçá region by mining firm <a href="http://www.minacaraiba.com.br/">Mineração Caraíba</a>. The company intends to increase its production by 10 percent as of this year, investing BRL 58 million to reopen the Surubim mine, closed since 2015. This expansion is set to create 250 new jobs.</p>
<p>Gold is also set to increase in value this year, seen as a save investment amid global economic uncertainty. Approximately 30 percent of Bahia’s mineral production in 2020 consisted of gold, with the largest producers located in Jacobina (<a href="https://www.yamana.com/English/Home/default.aspx">Yamana Gold</a>), and Teofilândia and Santaluz (<a href="https://www.equinoxgold.com/">Equinox</a>).</p>
<h2>Railway hopes</h2>
<p>In December, the National Land Transport Agency (ANTT) approved a bid notice for the concession of a stretch of the West-East Integration Railway, running from the inland Bahia city of Caetité to the coast. The auction is set to take place on April 8. </p>
<p>The <a href="https://brazilian.report/business/2020/02/12/the-governments-railway-plans-to-get-brazil-back-on-track/">railway project</a> was designed to assist the yield of iron ore in Bahia by way of the construction of a new port in the town of Ilheus. The railway is being built by government-controlled engineering company <a href="https://brazilian.report/business/2020/09/25/railway-project-delays-and-corruption-keep-brazil-off-the-tracks/">Valec</a> and is 75 percent complete.</p>
<p>The concession in question will last for 35 years, and the ANTT estimates it will demand BRL 5 billion in investment.</p>
<p>Bahia has 42 projects underway related to iron ore production and all are set to benefit from the new railway. According to Mr. Tramm, more endeavors will appear as studies in the region continue.
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