Origins — Brazil and Argentina
The grade the market is short of.
Brazil supplies the high-grade iron ore mills pay a premium for and the niobium nobody else has. Argentina runs the lithium regime Chile does not, and holds the largest undeveloped copper on the continent.
- Carajás iron ore grade
- 66 – 67% Fe
- World niobium supply
- From one mine
- Brazil, seaborne iron ore
- Second largest
- Argentine lithium regime
- Provincial and open
Overview
Grade, and one genuine monopoly.
Brazil is the seaborne market's source of grade. Carajás ore runs at 66 to 67% Fe with low silica and alumina because the geology in Pará is different in kind from the Pilbara's. Mills pay a premium for it because it lets them run at lower coke rates, which makes it a decarbonisation argument as much as a metallurgical one.
Distance is the offset. Ponta da Madeira and Tubarão to Qingdao is roughly three times the Pilbara voyage, which is why Valemax tonnage exists and why the freight leg is priced with the cargo rather than after it.
Araxá is the closest thing in commodities to a genuine monopoly. One operation supplies the overwhelming majority of world niobium into high-strength steel, and there is no meaningful second source. Any HSLA steel exposure carries a single-point dependency that is rarely priced as one.
Argentina is the counterweight to Chile on lithium. Provinces grant and administer their own concessions and there is no compulsory state partner, and that difference is the main reason new brine capital crossed the Andes eastward.
Minerals desk
Iron ore, and what the market pays for grade.
Two systems, not one. The Northern System in Pará is high grade, low impurity and expanding; the Southern System in the Iron Quadrangle is lower grade, older and constrained. Quoting Brazilian ore without saying which system it came from says almost nothing.
Tailings are a supply fact here, not only a safety story. After Brumadinho, upstream dams were prohibited and are being decommissioned, and the capacity that came out of the market with them has not come back. That is part of why the high-grade premium persisted.
The commercial question is the 65% index and its differential to the 62% reference the rest of the market is written on. When coking coal is expensive or emissions constraints bind, mills pay up for grade and the differential widens; when they do not, it compresses. Trading this ore is trading that spread.
Minerals desk →| Operation | Product and system | Owner and note |
|---|---|---|
| Carajás S11D | 66 – 67% Fe, Northern System | Vale, Pará — the highest-grade large iron ore operation in the world |
| Carajás Serra Norte and Serra Leste | Northern System | Vale — railed to Ponta da Madeira |
| Itabira, Brucutu, Vargem Grande | Southern System | Vale, Minas Gerais — lower grade, constrained by tailings capacity |
| Minas-Rio | 67% Fe pellet feed | Anglo American — 500 km slurry pipeline to Açu, avoiding the rail network entirely |
| Casa de Pedra | Southern System | CSN, Minas Gerais |
| Samarco | Pellets | Vale and BHP — restarted at reduced capacity after the 2015 dam failure |
Metals desk
Niobium, and what a monopoly looks like in practice.
Ferroniobium goes into high-strength low-alloy steel at additions measured in hundredths of a percent, and it raises strength enough to take weight out of a vehicle or a pipeline. There is no substitute at anything like the price, and demand is therefore almost perfectly inelastic.
Supply is one operation at Araxá with a second, much smaller producer at Catalão. That is a concentration ratio no antitrust regime would permit in a manufactured good, and it exists because the deposit is a geological freak rather than because anyone engineered it.
Commercially the consequence is that niobium does not trade like a commodity. There is no exchange contract, no published index of consequence, and price is set in bilateral negotiation with a producer that has never needed to defend share.
Metals desk →| Operation | Product | Owner and location |
|---|---|---|
| Araxá | Ferroniobium | CBMM, Minas Gerais — the overwhelming majority of world niobium supply |
| Catalão | Ferroniobium | CMOC, Goiás — the only second source of scale |
| Azul | Manganese ore | Vale, Pará |
| Barro Alto and Niquelândia | Ferronickel | Anglo American, Goiás |
| Onça Puma | Ferronickel | Vale, Pará |
Metals desk
The rest of the Brazilian book.
Salobo and Sossego put Brazil among the meaningful copper producers, and Salobo carries a gold stream large enough that the by-product economics are a material part of the mine's value.
Bauxite from Trombetas and Juruti feeds Alunorte, one of the largest alumina refineries in the world, and then Brazilian aluminium smelters running on hydro power. Unlike Guinea, this is an integrated domestic chain rather than an export ore trade.
Metals desk →| Operation | Product | Owner and note |
|---|---|---|
| Salobo | Copper concentrate with gold | Vale, Pará — gold stream sold separately |
| Sossego | Copper concentrate | Vale, Pará |
| Trombetas | Bauxite | MRN, Pará — barged down the Amazon |
| Juruti | Bauxite | Alcoa, Pará |
| Alunorte | Alumina refinery | Hydro, Barcarena — among the largest refineries in the world |
| Paracatu | Gold | Kinross, Minas Gerais — very large tonnage at very low grade |
Minerals desk
Argentine brine, and the copper that has never been mined.
Argentine salars sit in the same lithium triangle as Atacama and produce by the same evaporation route, but under a materially different regime. Concessions are granted and administered by the provinces, there is no compulsory state partner, and that is why the last decade of new brine capital went here rather than to Chile.
The risk in Argentina has historically been monetary rather than geological — currency controls, export duties and restrictions on repatriating proceeds have done more damage to project economics than any orebody problem. Recent incentive regimes are aimed squarely at that, and any long-dated position here is partly a view on whether they hold.
The stranger fact is copper. Argentina shares the Andean porphyry belt with Chile and holds several deposits of world scale, and it currently has no producing copper mine at all. That is an infrastructure and regime problem rather than a geological one, and it is the single largest latent supply story on the continent.
Minerals desk →| Asset | Product | Owner and province |
|---|---|---|
| Salar de Olaroz | Lithium brine | Arcadium, Jujuy |
| Fénix, Hombre Muerto | Lithium brine | Arcadium, Catamarca — the longest-running Argentine operation |
| Cauchari-Olaroz | Lithium brine | Ganfeng and Lithium Americas, Jujuy |
| Centenario-Ratones | Lithium brine | Eramet, Salta — direct extraction rather than pure evaporation |
| Josemaría, Los Azules, Taca Taca | Copper, undeveloped | San Juan, Mendoza and Salta — world-scale deposits with no production |
| Veladero | Gold | Barrick and Shandong Gold, San Juan |
Regulation
What sits between the orebody and the invoice.
Two very different jurisdictions. Brazil's constraints are environmental and licensing; Argentina's have been monetary. Both are checked before a term position is taken.
- 01Brazil — tailings and dam safety
- Upstream tailings dams are prohibited and are being decommissioned. Capacity removed on safety grounds has not returned, and a producer's dam register and decommissioning schedule are read as supply information rather than as disclosure.
- 02Brazil — CFEM royalty
- A financial compensation charge is levied on gross revenue at rates set by mineral, with iron ore at the higher end. It is stable and published, and it sits in the delivered cost of a long-term offtake.
- 03Brazil — environmental licensing
- Operating licences are issued and renewed by federal and state agencies and have been suspended in practice. Licence expiry dates on a supplier's operations are diarised the same way a laycan is.
- 04Argentina — provincial concessions
- Mineral rights are granted and administered by the province, not the federal government. Counterparty and title diligence is done at provincial level, and the provinces differ materially in how they administer them.
- 05Argentina — currency and export rules
- Export duties, foreign exchange access and rules on repatriating proceeds have changed repeatedly and have been the binding constraint on Argentine projects. Payment mechanics are agreed explicitly rather than assumed to work.
- 06Grade differentials
- Brazilian ore is sold against the 65% Fe reference while most of the market is written on 62%. Which index, which differential series and which averaging window apply are settled at contract, because that spread is the trade.
Execution
Long haul, and a wet season.
- Loading at Ponta da Madeira, Tubarão and Açu on Capesize, Newcastlemax and Valemax tonnage
- The long-haul freight leg from Brazil to North Asia is priced with the cargo, not bolted on afterwards — it is a third of the delivered cost conversation
- Rainy season in Pará and Minas Gerais from December to March affects pit access and raises stockpile moisture
- Iron ore fines are an IMSBC Group A cargo — transportable moisture limit certification before loading
- Argentine lithium moves in containers out of Antofagasta or Buenos Aires depending on which salar and which side of the Andes the road runs
- Independent draft survey and sampling at load, with the umpire laboratory named in the contract
Origination
Brazilian and Argentine producers can reach the minerals and metals desks through our New York trading office.