Construction
The future of tailings-free mining
The Brazilian mining industry offers construction companies and contractors many growth opportunities. Sérgio Machado, CEO of U&M, believes that in a global landscape snarled with logistics challenges and geopolitical shocks, the more that can be done locally, the better.
The Brazilian mining industry is well-positioned to take a localized approach, with positive demographics and a strong industrial sector enabling mining and construction companies to source both goods and labor from the country. Compared to other South American countries, the Brazilian mining industry rests on a strong industrial footing. Fernando Aragão, CEO of the equipment rental company, Armac, said: “Brazil has a strong local supplier base, with local factories for all the main OEM equipment, a large population (+200 million), and a developed local financial market.”
Despite being a well-structured and well-developed industry, in recent years the construction industry has remained weak. March 2023 saw a decline in activity for the fifth consecutive month. Some of this lessening in activity is believed to be related to extreme high inflation and high energy and construction material prices. High interest rates and lower demand have not helped the situation.
The National Confederation of Industry (CNI) together with the Brazilian Chamber of Construction Industry (CBIC) published a Construction Industry Survey in March 2023 that identified March as the fifth consecutive month in which the industry scored below 50. Any value that is less than 50 shows a decline in activity from the previous month. Infrastructure construction, in particular, has been soft – the segment scored 47.4 in March 2023, while building construction work scored 47.9.
These poor numbers have come with a drop in industry confidence. The country’s business confidence indicators (ICEI) in the construction industry dropped in the first quarter of 2023, down to 50 in April 2023 from 51.1 in March. The average confidence score for January-April was 50.6 in 2023, while during the same period in 2022 that number was a much higher 55.8. The confidence score is divided in industry segments, and confidence in specialized services for construction deteriorated from 54.7 to 50.7 in that period, while confidence in infrastructure construction decreased from 53.8 to 51. A score above 50 indicates industry entrepreneurs are confident in the sector’s growth prospects, while below 50 demonstrates a lack of confidence.
GlobalData predicts that Brazil’s construction industry will grow by 2.7% in real terms in 2023, which is significantly less than 6.9% the previous year, and 10.0% in 2021. However, the industry will be bolstered by investment in housing, energy, and transport, in addition to strong development in the mining sector. In transport, for example, the government’s ‘Pro Trilhos’ (Pro Rail) program has led to the authorization of significant rail projects, including the investment of 50 billion reais by the rail service TAV Brasil to enable the construction of the Rio-São Paulo railway line, with construction on the 380km project expected to be completed at the end of 2031.
The mining industry’s construction needs provide a positive boost to the segment. Brazil’s local construction and contracting industry is central to supporting both greenfield and brownfield projects. To meet the demand from mining companies for major construction projects to meet their production goals, the construction industry is investing continuously in technological development.
For example, U&M Mineração e Construção, a company specializing in rock and earth movement, has experienced significant growth in the mining segment, working in some of Brazil's largest mining operations. The company has benefited from this growth by acquiring new equipment with electrical and automated technologies. U&M carried out a project with Hexagon to transform conventional equipment to autonomous. Mauricio Casara, commercial director at U&M, stated: “There is a global trend toward electrification and automation, so we have been carrying out important projects in this direction since 2018."
"We expect greater demand in the next three years due to the growing dynamism of the Brazilian mining industry."
- Sérgio Machado, Acting CEO, U&M Mineração e Construção
Automation also provides a solution to a continued challenge: workforce supply. The construction industry, like the mining industry, has struggled with maintaining a sufficient supply of skilled labor. This has been particularly challenging when supplying construction labor for the mining industry. Mining construction projects require teams to spend extended periods living in rural areas, such as deep in the Amazon. Post-pandemic, priorities have changed, and many construction workers do not want to spend months on end away from their families, building mines or participating in development projects.
This is exacerbated by larger industry labor trends. The CNI’s index of the evolution of the number of employees in the construction industry identified March 2023 as the fifth consecutive month of decline in the number of employees in the construction industry. As of March 2023, the index of employees in construction dropped to 49.2 points, demonstrating a decline.
Autonomous construction is fairly new, but plays a vital role both in reducing labor needs and in improving safety. Construtora Barbosa Mello (CBM), has been carrying out autonomous projects since 2019, and is a leader in the area. In our conversation with CBM, they described their autonomous service as consisting of a high-precision scan of the area carried out by drones which send information to the cloud. That data can be used to generate 3D models of the projects, which are then transmitted to equipment through the Internet of Things. The benefit of this type of autonomous planning is that it allows operators based outside the construction site to integrate the data and use the information technology infrastructure combined with cameras to carry out remote-control of the vehicles.
Moving to autonomous operations does not, however, require disposing of existing equipment and replacing it entirely. Utilizing all new equipment is a major cost in terms of expense and carbon footprint. Adapting existing equipment allows construction companies to move forward without waste. CBM, for example, described sustainability as a priority addressed on multiple fronts. Those included renewing old equipment to integrate new technology for automation and electrification.
Image courtesy of Anglogold Ashanti