How has Poyry’s presence in Brazil evolved since its establishment, and how have different business cycles affected your involvement in the mining industry?

Poyry has been established in Brazil for over 40 years, and its core business is in pulp and paper. During the 1970s and 1980s, Poyry expanded into various industries, including automotive, chemicals, oil and gas, and mining and metals, experiencing rapid growth and becoming the second-largest engineering company in Brazil. In the late 1990s, Poyry’s shareholders decided to split the firm, and the company maintained its focus on pulp and paper. Poyry continued to grow based on the pulp plants it had built and diversified its services in the mid-2000s, appointing a new Latin American CEO and hiring specialists to prepare value propositions for the mining industry. Today, Poyry employs 1,000 people in Brazil, with 200 engineers working on-site on various mining projects.

Who are Poyry’s main clients in Brazil, and how closely does the company work with junior exploration companies?

Poyry works with all major players in the Brazilian mining industry, including Magnesita, Gerdau, Alcoa, Votorantim Metais, and Yamana Gold Inc. The company conducts all engineering and commissioning for CSN’s highest priority project, which is the duplication of its iron ore production from 20 million tonnes to 40 million. In terms of junior exploration companies, the exploration business in Brazil is not as highly developed as in Canada, Peru, or Chile. Most of the junior companies in Brazil are foreign or small to medium-sized enterprises. Poyry does not have the exploration market as developed as in Canada or Australia, where junior companies are raising money on the stock exchange. However, Poyry believes that junior exploration companies are the key to developing a profitable exploration market.

Can you give us a brief overview of Pöyry’s key services and how they provide added value to clients in the Brazilian market?

Pöyry has been in the market for more than 40 years, and all of our executives are Brazilian, which enables us to handle the ups and downs of the market effectively. We adopt a holistic view of project implementation, managing all potential roadblocks that could occur during the project life and recommending integral solutions for our clients. Our management consulting division enables us to conduct market and logistics studies, and we optimize mining operations, primarily logistics, and take care of beneficiation plans. Our goal is to work with laboratories to analyze the type of mineral and develop solutions based on mineral characterization, advising on the ideal plant size and timing.

What do you think will be the impact of the new mining code on the Brazilian mining industry, and how will it affect investments in both iron ore and other minerals and metals?

The new mining code will encourage companies to develop more detailed investment plans using the auction system, making the Brazilian mining industry more professional. However, companies will have to pay for a concession, making the industry more expensive. Doubling royalties on the mining side will likely make Brazil lose competitiveness, although the royalty will vary depending on the minerals. Iron ore will have the highest royalties. Other industries, such as potash for the fertilizer industry, are likely to be incentivized. Brazil has invested USD $15-20 billion annually in the mining industry for the past five to eight years, but the new mining code may discourage future investments. Brazil will probably maintain the same levels of investment in iron ore as it has received in recent years. However, the competitiveness of the country in metals is declining due to high energy and labor costs, low productivity, and few opportunities left for nickel or aluminum. In gold and bauxite, there are still some opportunities. The failure to adopt a holistic perspective on project implementation is the main reason for the mining industry’s underperformance, with mining projects in Brazil spending, on average, 70% above their initial investment estimate.

What is your vision for Pöyry’s future?

Pöyry sees great potential for growth in the mining industry both in Brazil and globally, and our target is to quadruple our mining and metals division. We aim to diversify globally to strengthen our relationships with clients worldwide. While most of our competitors are reducing investments and downsizing their offices, we are hiring two to three employees per week in Belo Horizonte. Our strategy is to continue to grow, add more value to projects, and deliver sustainable solutions for clients worldwide. Our project management office works directly with the customer to develop contingency planning for potential economic or political risks to the project.