What were the effects of the challenging year in 2012 on Votorantim Metais, and what strategies did the company adopt to move forward?

Votorantim Metais experienced a difficult year in 2012 due to poor domestic market conditions, a drop in metal prices, and some internal issues. As a result, the company had to cut back on important long-term investments in new projects and interrupt the development of some new processes they were working on. This led to a slowdown in production levels across all minerals. However, today the situation has changed. Although the company is still dealing with low commodity prices, they have made great strides in other areas. The production of aluminum is back to previous levels, several new processes have been implemented in their zinc transformation plants, and production of nickel has increased after adapting their processes to deal with more imported concentrate. If prices were at their previous high levels, this would be a record year for Votorantim Metais.

Can you provide some details on Votorantim Metais’ investment in a new mine and bauxite processing plant in Rondon do Pará?

Rondon do Pará is a significant project for Votorantim Metais. The final feasibility study and engineering are currently being completed, with plans to finish by the end of 2013 and begin construction in 2014. The project has over one billion tons of high-quality bauxite reserves with very low silica content. An alumina refinery will be built at the mine site. Initially, the plan was to transport aluminum from the mine to the port by road, but the Norte-Sul Railway extension from Maranhão to the Bacarena Port in Pará will pass very close by the site. The railroad is expected to be completed by 2016, which aligns with Votorantim Metais’ vision to have the Rondon plant running in early 2017. A vacant area has been secured at the Bacarena Port for their use. The project will generate 6,000 jobs during construction and 1,600 jobs in operations, bringing several social and economic advantages to the region.

Will Votorantim Metais be placing more importance on the exploration team as the company focuses more on mining?

Votorantim Metais recognizes the importance of developing a strong exploration team and has already been spending between $60 million and $75 million per year on this area. In times like these, when metal prices are falling, many companies begin to cut back on their research and exploration budget. However, Votorantim Metais believes this to be a poor strategy as their geologists and their work build the future of the company. Rondon do Pará was an in-house discovery that they have worked with from the ground up.

What is your opinion on the contents of Brazil’s New Mining Code, and what effects will it have on the industry?

The provisions given for the transformation period are very good, and Votorantim Metais is thankful that the new measures would be imposed with no time for adjustment. It is not yet clear what the eventual effects of the new code will be, and it could take up to two years for the laws to pass through Congress. The company is concerned about the proposals for the new auction system to grant concessions, as they believe it could deter investors from the country. Although royalties were always bound to increase, the commonly heard assertion that royalties in Brazil are much lower than the world average is misleading due to the plethora of additional taxes that miners have to pay there. The creation of the ANM could be a very positive move for the country, as the DNPM already functions in a similar way to an agency, and the formalization of this status will give them more resources to work with.