Drilling, Blasting and Laboratories
A barometer for growth
The scale of the Brazilian market, high incoming projected investments, and the country’s vast unmapped potential, mean that the drilling, blasting and laboratory service providers are experiencing high times and can expect a good pipeline of business. In addition, given the scale of the Brazilian economy and projects outside mining, including in civil construction and hydroelectric projects, these companies enjoy a diversified portfolio; a significant advantage in comparison to other Latin mining markets, and an opportunity for service providers to build moats around their businesses, shielding them from the cyclical nature of the mining business.
The leading laboratory service provider in Brazil is SGS Geosol, a joint venture between the SGS and Geosol groups, a combination of international and local expertise in laboratory, drilling and testing services. The company provides a spectrum of laboratory services, including on-site analytical services through an outsourcing model for mining customers. As the market leader, SGS Geosol has exposure to the entire primary mining sector, across iron ore and gold, critical minerals, graphite, uranium and others. Guilherme Gomes, president of SGS Geosol, summed up the company’s outlook on the market: “In short, from all aspects we can see through the SGS Geosol lenses, mining in Brazil shows excellent perspectives.”
The unique nature of the Brazilian market, and the potential for diversification, have been key drivers of growth for Master Drilling Brasil. The South African drilling company has been in Brazil since 2000, providing expertise in underground mining. Paulo Medeiros, country manager of Master Drilling Brasil, discussed how in Brazil, the relatively small importance of underground mining across the sector has driven Master Drilling to explore opportunities outside mining: “While we focus on mining, we also explore opportunities in other sectors. For example, we are looking into small hydropower plants (PCHs), which have gained traction despite a decline in recent years due to thermal and wind power competition.”
Nevertheless, its mining portfolio has grown significantly since their entry into the market, and includes major projects with companies such as AngloGold Ashanti, Vale, Nexa Resources and others. The company has focused on introducing new technologies, solidifying its lead as a provider of safe and efficient proceses. This includes enhancing the autonomy of its operations and introducing new machinery specifically catering to Brazil. Medeiros said: “We are bringing to Brazil our technology company A&R, specializing in tracking missing persons, aiming to provide greater safety for workers.”
“Over the past six years, we have seen significant increases in our client requests. Brazil’s mining sector tends to keep going up, diversifying in terms of commodities and geographically expanding. We see more strategic planning and robust prospects.”
Guilherme Gomes, President, SGS Geosol
Like Master Drilling, Foraco, the French drilling multinational, also entered the Brazilian market in 2000. Starting in Goiás state, the company has steadily expanded its geographic reach, providing rotary and diamond core drilling services across the leading mining states of Brazil. Foraco employs over 700 people in the country and has set a growth target of 50% over the next three years. The company is tapping into its global network to introduce new techniques, such as reverse circulation drilling technology.
Concerns over long regulatory lead times were also expressed by Francisco Jiménez, country manager of Orica Brasil. The company employs over 700 people across three manufacturing sites in Brazil, providing blasting, mining chemicals and now investing in digital solutions to help mining companies identify and classify ore bodies. Jiménez pointed that out that the Brazilian market is an early adopter of technology, making it an attractive opportunity for service providers willing to foray outside of their traditional business lines. Orica’s investment in digital solutions is tailored towards a holistic package, as Jiménez explained: “This is where Orica's digital and chemical offerings come into play—we provide tools that allow mining companies to know their ore bodies better, optimize their blasting, and improve the entire downstream operation.”
Diversification has also been a source of steady growth. The company has been able to tap into new business outside of traditional mining, piggybacking on Brazilian government schemes to improve infrastructure in the country. Jiménez added: “Aggregates and construction materials are another key focus for us. The aggregate business is larger in terms of volume than traditional mining in Brazil. It is a massive industry and it is growing even faster than mining.”
“We are seeing an increasing interest in sophisticated products from Brazilian customers, indicating a shift in market readiness. We are expanding into various commodities and greener technologies, such as lead-free environments and eco emulsions.”
Carlos Goncalves, Managing Director LATAM, AECI Mining
The aggregates market has been a source for growth for ENAEX Brasil too, a blasting and explosives company that is part of the Chilean Sigdo Koppers group. The company has also been active in small and mini hydroelectric projects. João Sorbile, ENAEX Brasil’s managing director, reported the company has a 75% market share in that niche, reflecting the trend among service providers to diversify away from mining activities as a way to shield their business from commodity price volatility. ENAEX is doubling down on the mining sector too, as Sorbile explained: “We have made substantial investments, including opening Brazil’s largest explosives factory in Goiás, which was chosen for its strategic location in the center of the country, close to many mining projects.”
AECI Mining, the South African blasting and chemicals company, entered the Brazilian market in 2020, establishing an explosives factory in the state of São Paulo and, in 2023, expanding through M&A to operate in the strategic mining regions of Minas Gerais and Bahia. The company is targeting South American markets for further growth as their core South Africa market matures, and it has rapidly established relationships with gold and iron ore producers in Brazil. Carlos Goncalves, managing director Latam for AECI Mining, commented: “Entering Brazil came with its own challenges due to complex regulations and taxes. We adopted a cautious approach by acquiring a small explosives facility, allowing us to gradually understand local market dynamics.”
“Recently, Master Drilling has been involved in the expansion of mining operations at Ero Copper's Caraíba mine, which includes constructing a large-diameter shaft for efficient copper extraction and transportation.”
Paulo Medeiros, Country Manager, Master Drilling Brasil
Article header image courtesy of Core Case