Mining in Brazil

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Mining in Brazil Presentation by Mauricio
Vasconcelos U.S. Commercial Service
Belo Horizonte - Brazil
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Population 175 million Size 8,547,404 Km2
Main Minerals
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Brazilian inflation yearly rate IPCA 1986 Plan
Cruzado / 1991 Plan Collor / 1994 Plan Real
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Iron Ore Largest world producer (22 of world
production) Brazil has 6.7 of world deposits
(310 billion t) 5th largest deposits, but
higher content. All mines are open pit 5.4
(US3.3 billion) of BR. exports (in value) in
2002 Since 1998 strong demand from China
Strongest competitor Australia (180 million
T/year)
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Brazilian production of iron ore Million metric
tons
Domestic market 29.7 Mt pig iron and 31.1 Mt
steel in 2003.
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CVRD bought other large producers since 2000
Socoimex (100) 7 Million tons/year
Ferteco (100) 20 Mt/year (being 4 Mt pellets)
Samitri (100) 17 MT/year MBR (90 CVRD
and 10 Mitsui) 38 Mt in 2003 and forecast 41 Mt
in 2004. Samarco (50 belongs to BHP
Billiton) 16 Mt pellets, all for export. All
output of 2004 sold since early January.
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Other Brazilian producers of iron ore

• CSN 17 Mt/year. Also, second largest
  Brazilian steel producer 5.3 million Mt crude
  steel/year.
• Mineraçao Rio Verde 3 Mt/year (sells through
  CVRD)
• V M (former Mannesmann) 3 MT/year
• Min. Corumbaense Reunida ( Rio Tinto) 1
  Mt/year.
• Minerita Minérios Itaúna Ltda 1.2 Mt/y of NPO
  and building a concentration plant of 2.5 Mty to
  produce sinter-feed
• Other very small producers.

Iron ore suppliers in the world CVRD 17 of
total / Rio Tinto 9 / BHP Billiton 7.
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Iron Ore New Projects in Brazil
CSN (confirmed, 2004 to 2006) US308 million
at Casa de Pedra mine, in Congonhas/MG to expand
output to 40 Mt from currently 16.8 Mt/year
US132 million in Sepetiba Port/RJ and
US341million in a pelletizing plant of 6 Mt/y
(location not yet decided). Additionally, MRS
railroad will invest US 100 million to attend to
increased cargo demand, for probably 2500 wagons
and 100 locomotives. Samarco (probable)
US500 million to build a third pelletizing plant
and a second iron ore pipeline Mariana-Ubu.
MBR New mine of Capao Xavier, start up March
2004. Reserves of 140 Mt, to be operated in 17
years. CVRD Expansion of all mines. (Opening
Fabrica Nova, in Mariana to start up in April
2005 with 10 Mt/y. carajás to achieve 70 Mt/y in
2004 and 85 Mt in 2006. Brucutu will go from 4
Mt in 2004 to 12 Mt in 2006. Itabira from 43 Mt
in 2004 to 46 in 2006. )
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CVRD Companhia Vale do Rio Doce 2003 A year
of records. 76 of Brazilian iron ore
production and 95 of exports,2002 11.6 of all
Brazilian exports (in value) in 2002 Total
revenue 2003 R20.2 billion, approximately
US6.7 bn. Consolidated net profits 2003 R 4.51
bn (US1.5 bn). Total
exports increased 14 to US3.42 bn.
Only production
of gold and potassium fell in 2003. 186.8
Mt iron ore in 2003 ( 14 from 2002), being
90.4 M in South System, 58.9 M in North System,
31.1 M t pellets.
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• CVRD--
• Pellets 6 Mt/year in Sao Luis (North), rest
  in Vitoria / ES.
• Shares of steel manufacturers California Steel
  (US), Siderar, Acindar (Argentina), CST, Usiminas
  (Brazil). It sold the shares it had of Açominas,
  CSN, Bahia Sul, Cenibra. Also divested in
  Docenave (selling 14 of its 17 ships), Florestas
  Rio Doce, Fazenda Brasileiro and Fosfertil.
• The largest private company in Latin America,
• market value of US23.4 billion in July 2004.

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CVRD Logistics 60 of all railroad
transportation in Brazil (by weight). Largest and
most efficient railroad operations of Brazil
Carajas-Sao Luis (890 Km), EFVM
(Itabira-Vitoria) (600 Km), 50 share of FCA
(7080 Km), 40 of MRS (600 Km) via MBR. Also
ports and navigation. Also logistics suplier
for other companies, for ores and general cargo.
Third-party cargo shipments on CVRD railroads
increased 5 to 26.3 tkus in 2003. Other
products Bauxite, alumina, aluminum, gold,
manganese, copper, potash, ferro-alloys. Sold
ownership in CSN, Florestas Rio Doce, Bahia Sul
and Cenibra in 2001 and 2002. Was privatized in
1997.
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CVRD Estimated investment for 2004 2007
Total US 1.8 billion. US 1.14 in existing
mining sites, for expansion of additional 73
million tons of iron ore, 4.5 Mt of bauxite, 1.8
Mt alumina, 250,000 tons of potash and 185,000
tons of copper metal and 7 tons of gold metal.
Announced on March 25 that expansion may be
for additional 100 Mt/y by 2007, instead of 2010.
Projections steel production up 5.8 to 180 Mt
in 2004 Aluminum additional 7.5 Mt thru 2008
and alumina additional 17.5 Mt Current
bottlenecks in Brazil Regulatory issues,
logistics, energy (high prices regulations),
environmental issues.
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Energy Power plants Igarapava, Porto Estrela,
Funil in operation (total 502 MW). Currently
building as largest partner of consortia
Candonga (140 MW) start-up Nov. 04 Aimores (330
MW) start up Sep.04, Capim Branco I (240 MW) and
Capim Branco II (210 MW) start-up 2006. Total
value of all these energy projects US317.2
million. Largest Brazilian energy consumer.
Ferro-alloy Volume climbed 10 in 2003 to
512,000 t. International Researching
currently in Angola (bauxite and diamonds),
Mozambique (coal), Gabon (manganese), South
Africa, Argentina, Bahrain Pelletizing
plant, and looking for new businesses.
California Steel (USA), Acindar, Siderar
(Argentina)
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New project under consideration USC steel slab
mill in Ceara. Estimated to cost US 570 mn for
1.5 Mt/y slabs, possibly start-up 2008.
Negotiations for probably CVRD
20 stake, Italian technology group Danieli 30
and Korean steel company Dongkuk 50. Possibly
also BaoSteel China and Arcelor.
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Copper Brazil 3 of world reserves and 0.2
of production. Reserves Chile 25, USA 14,
China and Peru 6, Poland and Zambia 5.5, Russia
4.5, Mexico and Indonesia 4, Australia and
Canada 3.5. 80,000 t/y copper concentrate,
average content 37.7 (2001) . Only one producer
Mineraçao Caraiba, in Jaguarari / BA, reserves
will end by 2006. Electrolytic cathode, copper
high grade Only one producer Caraiba Metais,
in Camaçari / BA 212,000 t/y (2001). Processes
80,000 t from Brazil and 630,000 t/y of imported
concentrate. Recycling 36,000 t/y
Brazilian Imports in 2001 Copper concentrate
US238 million, Cathode other raw materials
US257 million Manufactured products US 82
million and Chemicals US1.8 million.
Brazilian Exports 2001 Cathode other raw
materials US24 million and Manufactured
products US90 million (58 to USA)
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Projects All belong to CVRD Sossego Start up
July 2004. Total US384 million. 455,000 of
copper concentrate, equal to 140,000 t of copper
metal 3,000 Kilogram gold/year. Reserves 196 Mt
grading 1.02 copper and 0.3 g/t gold. Open pit
mine. Alemao / Igarape Bahia Start up first
phase end of 2004 and second phase 2006. Total
US 600 million. 186,000 t/y copper content. A
small part may be underground mining. Alvo 118
Start up December 2005. Total US 45 million.
45,000 t/y of copper cathodes. Cristalino
Estimated start up 2006. Total US 500 million.
150,000 t/y of copper content. Salobo Still in
feasibility study, possible start up 2007. Total
US 1.05 billion and 200,000 t/y of copper metal.
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Bauxite
Metallurgical bauxite 97 of total.
Companies MRN (cvrd)
largest of the world 14.4 Mt in 2003.
CBA 10, Alcoa 4 and Alcan 3.
Refractory Bauxite 3 of total. Companies
MSL Minerais (PA), Mineraçao Curimbaba (MG) and
Rio Pomba Mineraçao (MG)
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Bauxite / Project US 83 million. CVRD
subsidiary Min. Vera Cruz, new mine in
Paragominas / PA 4.5 Mt/y for 2004 / 2006 and
slurry pipe 230 Km to supply Alunorte. Delay in
environmental license 2004. This expansion will
boost Alunortes capacity by 1.8 Mt/y on top of
current 2.32 Mt/y in 2003 of Alumina. This
alumina project is estimated at US 182 million
for a new refinery to be built in PA or MA.
Alumina Total 3.86 Mt in 2002. The main
producers 2002 were Alunorte 1,656 Mt (increased
to 2,275 Mt in 2003), Alcoa
959,000 t CBA 520,000 t BHP Billiton
463,000 t Alcan 257,000 t. Aluminum Total
production in 2001 Brazil 1.15 Mt/y (world
production was 23.4 Mt. Smelter companies
Albras 30, Alcoa 22, CBA 20, Billiton
17, Alcan 8 and Aluvale 3. Manufactured
products (cables, coils, etc) Alcoa, Alcan, and
CBA. In 2002 1,38 Mt.
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Albras record output of 432,000 t aluminum in
2003, forecast 450,000 t for 2004. Ownership
CVRD 51 and Nippon Amazon Aluminum consortium of
Japanese companies 49. CBA expanding output to
340,000 t/y from 240,000 t in 2003. Has plans
for 385,000 t by 2006. Votorantim Group. ALCAN
total production of rolled products 210,000 t in
2003. Forecast 230,000 t for 2004.
Total revenue in Brazil US 621 million in 2003.
Smelters in Ouro Preto / MG and Aratu / BA and
processing plant in Pindamonhangaba / SP. Mines
in Caeté, Mariana and Santa Barbara 455,000 tons
in 2003 and mines in Carangola and Cataguases
only 50,000 t / year. ALCOA total sales in Brazil
US 1 billion/year. Recycling Brazil has one
of the largest Al-recycling industries of the
world 112,000 t of Al metal or 8.2 billion cans
in 2003. 89 of the total production of
cans was recycled. 160,000 people are
involved in collecting and transporting Al scrap,
earning R0.01 per can. (three cans US0.01)
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Gold Brazilian Production
41,000
Kilogram metal or 1,305,000 troy ounces in 2003
53,207 Kilogram in 2001 (11 individual
prospectors)
It was nearly
100,000 Kilogram/year in late eighties.
Potential to grow to 70,000 Kilogram again
in next 4 years.
Largest world producers Newmont (US) 8.6 M oz or
265 tons/ year AngloGold 7 M oz. Goldfields,
Barrick.
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Largest Gold producers in Brazil (2004) Troy
ounces/year
AngloGold Ashanti380,000 (13 tons in
2003 and probably 12.5 tons in 2004) CVRD 350,000

Rio Tinto ( Rio
Paracatu) 250,000
Eldorado (Sao Bento) 95,049

Desert Sun 100,000

Yamana Resources 100,000
Jaguar Mining 25,000
Desert Sun (Canada) Jacobina / BA, closed down
by Anglo 1999 and in process of being re-started
by D.Sun in 2004/5. Historical resources 1.36 M
oz and inferred resources 5 M oz.
Eldorado103,533oz 2002. Proven and probable
reserves 6.6 M oz. CVRD closed down Igarape
Bahia in 2002, which was 10 of the 16 tons
produced in 2001. Closed down Almas / TO and
Caete / MG in 2000. Sold Fazenda Brasileiro to
Yamana for US21 million. Total only 9.5 t in
2002 and 5.5 t in 2003.
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Projects Jaguar Mining (NH USA) Estimated
output for 2004 30,000 oz, and project for
expansion through 2008, up to 200,000 opy over 12
years. Mines in Santa Barbara and Sabara /
MG. AngloGold US 109 million, feasibility
study due in July 2004 to expand MMV Cuiaba to
310,000 opy. Owner of Min. Serra Grande (Crixás
GO) Wheaton River (Canada) bought in 2003 the
Amapari project from AngloGold for US 22
million. Estimated start up Dec 2005. Total
reserves 1.7 million oz (measured indicated)
CVRD New copper projects will bring 20,500
Kilogram gold, starting with 3,000 Kilogram at
Sossego in 2004.
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Kaolin Brazilian production was
2.2 Mt in 2003. CADAM 800,000 t, and
planned for 1 Mt by 2005. Para
Pigmentos SA (jv CVRD-Mitsubishi-IFC) 731,000 t
Imerys Rio Capim (IRCC French group
Imerys) 600,000 t and planned for 800,000 in
2005.
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Manganese 2.24 Mt in 2003 Urucum 414,000 t in
MT. The rest in Carajas. Manganese Ferroalloys
269,000 Mt in 2001, being 26 high carbon Fe-Mn,
64 FeSiMn, and 10 medium/low carbon FeMn. Main
producers CPFL 50 Cia Paulista Ferro Ligas,
Electrosiderurgica Brasileira 26.5 and others
23.5. CPFL and El.Br. merged into RDM Rio Doce
Manganes, with 4 plants in MG and one in Simoes
Filho / BA. Also Rio Doce Manganese Europe
(Dunkerke, France) and Rio Doce Manganese Norway.
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Niobium Brazil has 91 of world reserves,
Canada 7, Nigeria 1.6. Brazil has 94.3 of
world production (2001). 2 Producers CBMM
78.3 of Brazilian production of Niobium
concentrate, or 33,900 t of Nb2O5 content in
concentrate, plus 21,500 t of Nb content in FeNb
alloy and 2,632 t of Nb oxyde. AngloAmerican in
Catalao / GO 5,153 t of Nb2O5 content in
concentrate 3,397 t of Nb content in FeNb
alloy. Brazilian exports of Nb in 2001 US
256 mn.
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Potash Only one producer CVRD at Taquari
Vassouras mine in Rosario do Catete / SE.
Output in 2001 was 600,000 t KCl or 330,000 t of
K2O equivalent. In 2003 it was 658,000 t KCl.
Also reserves in Nova Olinda do Norte / AM
(measured indicated) of 1 mn t with 18.5
average K2O. 95 used for fertilizers. 5 in
the chemical industry.
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Phosphate Brazilian production in 2001 27 Mt
ROM with average content 18 of P2O5.
4.8 Mt concentrate with 1,7 Mt
P2O5.
1,8 Mt phosphoric acid, and 5.7 Mt
intermediary products. Copebras ( Anglo
American) 13.5 (in P2O5 content)
Fosfertil / Ultrafertil 52 Uberaba,
Tapira/MG, Catalao/GO. Bunge 30.
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and 30 SP. Brazilian imports 2001 US593
mn and exports US 73 mn.
Fosfertil. Investing US80 million during
2004-2006 to increase output of phosphate
concentrate to 3.2 Mty, or 1.7 Mty of P205
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Zinc Only one mining company CMM
115,000 t metal in 2002. Expansion underway to
160,000 t/y. Vazante and Paracatu/MG. CPM
only smelter of imported concentrate 78,000 t/y.
Both CMM and CPM belong to the Votorantim Group.
Total world reserves 2001 440 Mt, with 9 Mt
zinc content
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Nickel New project US 110 mn. Cia. Niquel
Tocantins, 21,000 t nickel and 1,100 t cobalt
2003. Expansion underway to 22,800 t/y
electrolytic nickel and 1,420 t/y cobalt by 2006.
Codemin 5.768 t Ni content in Fe-Ni alloy
2001. Min. Serra da Fortaleza 10,249 t of Ni
content in matte in 2001 and only 6,000 in 2002.
Underground mine in Fortaleza de Minas, planed to
be closed down by 2005. Company was taken over
by Votorantim Dec.2003 for US 77 mn. Investment
in research and geology may bring new life to
this company. CNT and Codemin in Niquelandia /
GO. CNTs smelter in Sao Miguel Paulista.
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Tin 74 of mining in Amazonas (M. Taboca) and
25 in Rondonia. Mamore ( Paranapanema), 80
of Brazilian production of Sn-metal (smelter in
SP).
Cesbra
(Grupo Brascan) 12 of Brazilian total Sn (in
RO) New Project, still in feasibility
study Paranapanemas Rocha Sa in Amazonas, US
72 mn for 480 t/y tabtalum, 9500 t/y Sn and 4,000
t/y of niobium, generating some US 150 mn/y in
revenues. Currently under analysis at BNDES.
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Diamonds 1 mn ct in 2000 and 700,000 ct in
2001. Most part by individual prospectors, in
MT, MG, RO, GO. Gems production declining
only 20 in 2001, compared to 80 industrial
diamonds. Brazilian Diamonds ( former Black
Swan Resources / Canada) largest producer.
Bought in 2003 reserves of De Beers (not yet
explored) in Sao Roque de Minas. Diagem
International Resource Corp. (Canada) has the
largest Brazilian reserves, in Juina / MT, 14 Mt
ore, with 0.5 carat / t, total 7 Mt ct. Start up
in 2003.
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Cement Total production in 2001 39
Mt Votorantim Group 42
Grupo Joao
Santos 12
Cimpor and Holcim 9 each
Camargo
Correa and Lafarge 9 each CP
Cimento 5 Soeicom 3
Itambe 2.1 Ciplan
1.9 Worldwide production in 2001 China
595 Mt, India 100 Mt, USA 91 Mt,
Japan 82 Mt, South Korea 52 Mt, Germany
40 Mt. Camargo Corrêa mines in Pedro Leopoldo
and Ijaci / MG
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Main Companies CVRD more than 40 of the
Brazilian mineral output. Votorantim 100 of
zinc, 82 of nickel, 12 of bauxite, 20 of
aluminum, 42 of cement, Anglo American Gold,
phosphate, niobium.
Eldorado Gold
Alcan,
Alcoa Bauxite and aluminum
BHP Billiton Aluminum and
iron ore.
Rio Tinto Gold and iron ore. (sold nickel).
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C.Correa, Joao Santos, Holcim cement
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AngloGold Ashantis assets in Brazil Mineração
Morro Velho (100 AngloGold) 7 Mty, in
continuous operation since 1835 Mineração Serra
Grande (50 AngloG 50 Kinross), 5,6 mty (in
Goiás) ( Also Cerro Vanguardia in Argentina
Patagonia) 92.5 AGold and 7.5 Fomicruz, 7 mty
gold and 78 mty silver.) Projects in Brazil
Expansion of Cuiabá Mine in MS, to increase
output from 2400 Mtday to 4000 mtday, to be
approved by second half of 2004. (US110 million)

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• Rio Tinto Brasil
• Rio Paracatu Mineraçao (51) in Paracatu/MG, Mina
  Morro do Ouro, 7 tons/year of gold.
• Min. Corumbaense Reunida (100) in Corumbá/MS, 1
  Mmty Iron ore, with plans to increase to 10 Mmty.
  (total deposits 500 Mt).
• Rio Tinto Desenvolvimentos Minerais (100) in
  Brasilia/DF, for mireral research and
  exploration.
• Transbarge Navegacion (100) in
  Assuncion/Paraguay for river transportation of
  iron ore.

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• Paranapanema 80 of tin and 100 of copper
  metal, High debt. Belongs to Previ of BB (55)
  and pool of pension funds. Total sales approx.
  US750 millionyear. 3 divisions
• Mamoré (tin and industrial minerals) and
  Caraíba copper metallurgy.
• Eluma Manufacturing of copper tubes, bars and
  wires.
• Cibrafertil Raw material for fertilizers.
  120,000 t/y, in Camaçari / BA.
• Tin mine in Pitinga (Amazon) and tin plant in
  Bom Jesus de Pirapora (SP). Paranapanema produced
  8500 tons of tin in 2003, and Brazil total was
  11,000 tons. Domestic consumption was 6,000 tons.
  Pitinga will be closed in a few years. P. and
  BNDES studying development of a new mine Rocha
  Sã, to invest US55 mi for output of 9 to 10,000
  t/y.

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The Perfect Rep / Distributor
Financing Very high interest rates Stocking
pre-paid products extremely expensive and
risky The cost of selling visits, travel,
tests, labor, expertise, after-sales,
advertising. Tests warranty. Local
maintenance. Price Import Tax calculated
on price CIF. Plus two local taxes on price
CIF plus Import Tax. Competition very
developed local industry.
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The Brazilian rep / distributor will need
Technical assistance, financing, sharing
expenses, marketing support, Peripherals,
frames, accessories (if possible) buy and
assemble in Brazil, to avoid import taxes.
Bonded warehouse. Just-In-Time delivery.
EXIMBANK Must spend money, before you can
earn money.
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Mining Equipment Manufacturers in Brazil Large
and diversified Brazilian industry. Many
subsidiaries of leading international
manufacturers have factories in Brazil. Some
examples
Factory located in Piracicaba / SP. 2700
employees. 25 different models in 2002 / 14th
largest Brazilian exporter.
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Volvo Construction Equipment Total sales in
Brazil in 2003 US 138 million. Exports from
Brazil in 2003 US 95 million. Sold 1010
machines in 2003, of which 564 in Brazil, 144 to
the USA, 133 to Chile, 22 to Argentina. Total
sales in 2002 US 100 million. Factory in
Pederneiras / SP.

• Randon Off-road trucks, components, truck beds,
  breaks
• Total sales in 2002 US400 M, Exports from
  Brazil US50 M
• Market leader in Brazil for segment under 35 tons
• Joint-ventures with U.S. Arvin-Meritor and
  German Jost.
• Factory in Caxias do Sul / RS.

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CNH Case New Holland FIAT-Allis Mining,
construction and agriculture machinery 15,800
machines made in Brazil in 2002 44 share of
Brazilian market for agriculture and construction
machinery Total sales in Brazil US 800
million in 2002. Exports 25 (including to
USA). Total sales in the world US 10
billion. Bank CNC Capital, has financed 30,000
clients. Factories in Curitiba, Piracicaba and
Contagem.
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Cummins Manufactured 42,000 engines in 2003.
Exported 6,500. Forecast for 2004 49,000
engines. Factory in Guarulhos / SP.
Ingersoll Rand Compressors, temperature
control division Thermo King, refrigeration
equipment Hussmann. Factory in Londrina / PR
average of 60 Brazilian components. Exports
equipment to Latin American countries and
components Ingersoll Rand / USA.
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METSO (Finland) Took over Svedala, Dynapac,
Nordberg, Trellex and Faço. Total sales in
Brazil approximately US 100 million in 2003,
exports from Brazil 35, especially Latin
America, USA and Canada. World total sales
Euro 5.2 billion/y. Sold Euro 50 million to
Sossego Project, being approximately 50 made in
Brazil and 50 imported. Supplier of crushers,
screens, transportation systems and engineering
projects. Has a foundry for 1,900 tons/year.
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Sandvik (Sweden) Total sales 2003 US 190
million 32 of production was mining and
construction equipment, 40 tools and 28
specialty steel. Palfinger (Austria) Cranes
for mining, oil and construction. Reach stackers.
US 19 million in 2003. Factory in Caxias do
Sul / RS. Haver Boecker (Germany) Factory
in Monte Mor / SP, since 1975. Exported two giant
screens to Syncrude Sweet Blend / Canada for
betuminous oil sands, 2003 / 2004.
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Others Atlas Copco Voith Asea Brown
Boveri Wehr Alstom Polysius Siemens Goody
ear G.E. Flygt NSK, FAG, SKF
bearings Dorr-Oliver Scania Saint-Gobain
ceramics Boart Longyear Komatsu The same in
other sectors. For example GM, Ford, VW,
Fiat. Aircraft manufacturer EMBRAER
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Trade Shows Exposibram / The Brazilian Mining
Institute Sep 20 23, 2005 www.ibram.org.br Br
azilian Geological Congress Oct. 17 22, 2004
www.42cbg.org.br
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Obrigado! Thank you !! Mauricio Vasconcelos

U.S. Commercial Service

Belo Horizonte - Brazil

www.focusbrazil.org.br
www.export.gov

mauricio.vasconcelos_at_mail.doc.gov
Tel. (55
31) 3213.1573