Boston, MA -- (ReleaseWire) -- 01/28/2014 -- We see continued growth in Brazil's mining sector, though with the boom years gone and Chinese demand growth slowing, average growth rates will be more modest than in prior years. The country's large untapped reserves and relatively small mining sector relative to the larger Brazilian economy still leaves plenty of potential, and should enable production gains for both domestic and foreign producers. Iron ore will drive sector investment, but we expect continued interest in both base metals and gold.
We expect to see continued production growth in Brazil despite our mixed price outlook for metals. We believe iron ore prices will average more than 10% lower in 2014 compared to current spot prices, but recently revised our 2014 outlook up slightly to US$115/tonne. This is because Chinese steel production has been particularly strong in recent months, with output expanding by 10.1% year-on-year (y-o-y) in October 2013, accompanied by a dramatic rise in the Baltic Capesize Index. This gives us a slightly more positive outlook for producers like Vale in the shorter term. With cash costs ranging in the US$30-50 range per tonne, the firm should still maintain positive margins and will continue to grow production.
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