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Mining Giants Head to Amazon Rain Forest

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- 1971 days ago -
In Next Five Years, About $24 Billion Will Be Invested to Boost Production in Remote, Environmentally Sensitive Region

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JL A (281)
Tuesday December 25, 2012, 8:36 pm


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BELEM, Brazil—Mining giants such as Brazil's Vale SA VALE +0.10% and U.K.-based Anglo American AAL.LN +0.19% PLC are increasing efforts to extract minerals from Brazil's Amazon rain forest, a high-stakes foray into one of the world's most remote and environmentally sensitive regions.

All together, mining companies will spend some $24 billion between 2012 and 2016 to boost production of iron ore, bauxite and other metals found in the Amazon basin, according to Brazil's mining association, Ibram. Already, Brazil is attracting a fifth of all mining investment globally, and for many the Amazon represents the country's greatest untapped potential.

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Vale is spending $8.1 billion on the expansion of its Carajas iron-ore mine, already the world's biggest, in the Amazonian state of Pará.

"The Amazon will be our California," said Fernando Coura, Ibram's president.

The push by miners into the Amazon fits with Brazil's broader strategy to tap the ain forest's natural resources to drive economic growth. Brazil is building hydroelectric dams on Amazon rivers, improving roads between far-flung Amazon towns and connecting them to the national power grid. Legal changes and government-backed lending will help pave the way for more Amazon mines.

Environmentalists are concerned the development surge may speed deforestation and overwhelm small communities in the region as the arrival of thousands of mine workers strains local infrastructure and services. world's largest remaining rain forest, roughly the size of Western Europe. Scientists say preserving the world's largest remaining rain forest and carbon sink is crucial to the global climate mix and for ensuring the survival of an estimated one-tenth of all global species.

While fewer trees are felled to dig mines than to support other Amazon industries, such as cattle ranching, the roads built to serve the mines can speed deforestation by making it easier for illegal loggers to get to remote areas, for example.

"Roads are the enemies of trees, and mines need roads," says Jared Hardner, a consultant who advises mining companies such as Rio Tinto PLC, an Anglo-Australian miner, on how to lessen the environmental impacts of their projects. "The issue for the Amazon is that a spider web of infrastructure is being placed deeper and deeper within the forest."

Raising the stakes, some investors say the mining companies have picked the wrong time to launch an expensive search for Amazon pay dirt. After surging for years, prices of iron ore, bauxite and other metals have plunged from their heights on concerns about slowing growth in China.

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"The market doesn't buy the industry's long-term growth story," said Felipe Gomes, a Brazil-based PricewaterhouseCoopers mining analyst.

Industry officials such as Ibram's Mr. Coura say the market perception is "myopic." Since it can take a decade to bring a mine into operation, companies need to look past market cycles, executives say. Iron-ore prices have recovered some of their declines in recent months, and developing hard-to-reach mines remains profitable, mining executives say. Bauxite, used to make aluminum and plentiful in the tropical Amazon, will remain profitable, they say.

"After a boom in prices, there will now be stabilization, but I believe the demand will continue," said Daryush Albuquerque, an executive for Brazilian conglomerate Votorantim Metais SA who is in charge of developing a new Amazon bauxite mine.

By far the biggest Amazon mine project under way is Vale's $8.1 billion expansion of its Carajas iron-ore mine, already the world's biggest, in the Amazonian state of Para. On Nov. 20, Vale, the world's biggest producer of iron ore, received an environmental license to build 500 miles of Amazon railway, including duplicate and new rails, to handle the production increase.

Votorantim has announced a $3 billion investment in a new bauxite mine in Para state. The logistical challenges include transporting much or all of the metal in trucks over 370 miles of sometimes difficult Amazon roads, executives said.

Anglo American is studying a $4.7 billion Amazon nickel project it says has the potential to significantly strengthen its market share. Investment groups from China and South Korea are searching for potential sites, state officials said.

Meantime, mining analysts say the U.K. company may have as many as four potential bidders for an iron mine in Brazil's Amazonian state of Amapa, including the commodities trader Glencore International GLEN.LN +0.98% PLC and the Russian steel producer OAO Severstal CHMF.RS -2.35% .

Norsk Hydro, NHY.OS 0.00% the Norwegian minerals-and-oil giant, bought Vale's aluminum and bauxite assets in 2011, including the world's third-largest bauxite mine, located in the Amazonian state of Para.

Amazon mining is hardly new. The reserves at Vale's giant Carajas iron-ore mine were discovered in the 1960s; Vale's plan to expand it is the region's biggest project under way.

But the scale of current investments is far larger than what came before. The industry is also poised to break new ground, with Brazilian lawmakers writing a bill to allow mining on Amazon Indian reservations, currently prohibited.

The mining law could add to conflicts between companies and locals that Amazon projects have already caused. Indians groups and other activists opposed to the giant Belo Monte river dam project—partly owned by Vale—have occupied the construction site on several occasions in an effort to stop it.

"What worries us are the projects that are entering into the most sensitive areas," said Valmir Ortega, senior policy director for Conservation International in Brazil. "Brazil's history of treating local populations in the Amazon isn't encouraging."

Edio Lopes, the federal congressman from the Amazonian state of Roraima who is sponsoring the mining bill in Congress, said it is a myth "that any relationship between a mining company and indigenous communities is absolutely harmful, causing prostitution, alcoholism and disease." He said mining companies now possess enough technology to minimize their impact on sensitive areas.

Company executives say they are working to limit the environmental impact. Pittsburgh-based Alcoa Ínc. has vowed to replant forest at its Juruti bauxite mine in the central Amazon, and its managers live in the local town to see firsthand the mine's impact on the town.

All the same, Alcoa faced suits from state prosecutors seeking stricter oversight and a broader study of the mine's impact.

"I believe that our side is more prepared for this issue today, but we still don't have all the answers," Tito Martins, chief executive of Votorantim, said during a panel discussion at a conference on Amazon mining in November.

Marianne B (107)
Tuesday December 25, 2012, 11:51 pm
The first paragraph said it all. Envionment sensitive. Inhabitants? animals? air pollution? Nature's beauty?

Past Member (0)
Wednesday December 26, 2012, 12:48 am

Gloria p (304)
Wednesday December 26, 2012, 8:08 am
Can't anyone leave nature alone?

Robert Hardy (68)
Wednesday December 26, 2012, 8:14 am
Forgive us Lord for we know not what we do.

JL A (281)
Wednesday December 26, 2012, 8:28 am
You cannot currently send a star to Marianne because you have done so within the last week.
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Silvia Gonzalez (37)
Wednesday December 26, 2012, 8:52 am
It's terrible

Patricia H. (440)
Wednesday December 26, 2012, 8:57 am

Theodore Shayne (56)
Wednesday December 26, 2012, 9:02 am
They killed the Gulf; so I guess it's only a question of time before they kill the planet. Woe to the inhabitants of earth that will exist under the control of the Elite families who desire to become the Borg of science fiction. Don't laugh; it's their utopian dream, not mine.

JL A (281)
Wednesday December 26, 2012, 9:47 am
You cannot currently send a star to Patricia because you have done so within the last week.
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Christeen A (368)
Wednesday December 26, 2012, 12:26 pm
Please say it isn't so. We must stop them. Thank you.

David Menard (43)
Wednesday December 26, 2012, 1:18 pm
It always comes down to $$$$$$$$$$$$$$$$$$$$$$$$ the greedy few get rich the poor get poorer and the planet dies just so the oil co's and billionaire elites can get richer.The story never changes disgusting.

Marie Therese Hanulak (30)
Wednesday December 26, 2012, 2:44 pm
That is inconcievable. IT MUST BE STOPPED!

Hartson Doak (39)
Wednesday December 26, 2012, 2:49 pm
Hopefully the total global economic collapse will come before there is too much damage.

Natalie V (27)
Wednesday December 26, 2012, 3:10 pm

Lois Jordan (63)
Wednesday December 26, 2012, 4:35 pm
I've been reading about these Trans-National corporations involved in worldwide mining. It seems they're really ratcheting up lately....or is the info just becoming widely available? Here in AZ, these corporations are seeking at least 3 new mining areas that I know of. They are a plague on our planet, and we must continue to fight them. Please continue to share this info with others, we need the People Power.

Eugene C (3)
Wednesday December 26, 2012, 4:56 pm
How can we stop them! They are destroying our lungs! The Amazon forest represents the lungs of our planet which in turn represents the lungs of all living creatures! Is there no limit to where these mining companies will go? Will they eventually dig up the whole planet? I am devastated.

JL A (281)
Wednesday December 26, 2012, 5:55 pm
You cannot currently send a star to Christeen because you have done so within the last week.
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Past Member (0)
Wednesday December 26, 2012, 7:24 pm
Temporary satiation for greed over long=term sustaining if sacred life...again!

Past Member (0)
Thursday December 27, 2012, 4:59 am
mining will destroy the rain forest stop it now all in the name of money sad

wayne hall (3)
Thursday December 27, 2012, 6:48 am
We have to stop this from happening, lets save the Amozon Rain forests.

Sergio Padilla (65)
Sunday December 30, 2012, 7:14 pm
Cannot believe this, I hope there is a petition to fight this, we cannot just let them!!!
Thanks for posting

Klaus Peters (14)
Wednesday January 2, 2013, 5:06 am
The corporate dooms day machine has done it again for the $, totally ignoring the environment. Pollution will increase further hurting our environment to a point of no return. I guess the human race did not deserve this planet. It was created over billions of years and we are destroying in in a couple of hundred years thanks to greed and power by companies and government. Enjoy while it lasts.

JL A (281)
Wednesday January 2, 2013, 9:10 am
You are welcome Sergio.
You cannot currently send a star to Klaus because you have done so within the last week.

Melania Padilla (122)
Wednesday January 2, 2013, 4:38 pm
This is so wrong, it should be illegal! Thanks, noted.

JL A (281)
Wednesday January 2, 2013, 4:49 pm
You cannot currently send a star to Melania because you have done so within the last week.
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