Market opportunities in Minas Gerais state, Brazil

Quick facts

•    Inland state of southeastern Brazil, that in Portuguese means “General Mines”
•    It is the 4th largest state and 2nd largest population: 21 million inhabitants (about 10% of the Brazilian population). Nearly 85% live in the urban areas of the 853 municipalities of the state
•    Larger than France or Spain in territorial extension: state area 586,528 km2
•    Belo Horizonte is the capital and largest city: 2.5 million inhabitants  
•    Border with the states of Goiás, Bahia, Espírito Santo, Rio de Janeiro, São Paulo and Mato Grosso do Sul
•    Responsible for 53% of the Brazilian GDP: state’s GDP is comparable to countries such as Hungary (€ 134 bn), Qatar (€ 158 bn) or Algeria (€ 158 bn)
•    Country’s storehouse of mineral riches, supplies more than half the mineral production of Brazil
•    In addition to iron and steel, principal industries include food processing, textiles, chemicals, and furniture and other consumer and capital goods
•    The largest source of wealth is mining, but the largest source of employment is agriculture, and the greater part of the area is used for pasture of cattle. Leading producer of rice, beans, corn, and cheese

Minas Gerais is located in the Southeast Region of Brazil (the most developed region in the country), with easy access to consumer markets and a privileged location. Neighbor to states such as São Paulo and Rio de Janeiro and the Center-West and Northeast Regions, the state of Minas Gerais is an important business corridor in Brazil. It has the second largest consumer market in Brazil, with a 10.2% share, only behind the state of São Paulo. 

The largest part of state’s GDP comes from the service sector, which accounts for more than 68% of the total production. The share of industry is around 25%. Considering only extractive and transformation industry, metallic minerals extraction, food production and metallurgy are the most relevant sectors. In agriculture and livestock, the production of grains (such as coffee, soy, corn and beans), sugar cane and milk, as well as the raising of poultry and cattle, are the main activities.

There is a strong presence of the metallic minerals extraction sector in Minas Gerais’ industry, as well is the food sector, metallurgy and automotive vehicles, representing 61.6% of the industrial transformation in the state. Almost 60,000 industrial companies are installed in Minas Gerais and more than 40% of the industrial employees work for large companies (those which employ over 250 people).

Minas Gerais is the largest national producer of iron ore, gold, zinc, phosphate, graphite and lithium. The world’s largest producer of niobium and one of the main national producers of limestone. There are more than 300 mines operating in the state, being responsible for 53% of metallic minerals’ production of Brazil and 29% of overall national minerals’ production. The state has 40% of the Brazilian biggest mines and 67% of the national mines producing over 3 million tons/year.

Minas Gerais has the most important steel industry in Latin America (largest Brazilian steel, pig iron and ferroalloys producer) and counts with some of the main companies operating in Brazil. There are also important equipment suppliers, besides excellent education institutions. This production chain is also responsible for a substantial amount of tax collection and job creation in different regions of the state. 

Foreign Trade

In 2021, Minas Gerais exports achieved the best result in the last ten years. It was registered a record of 45.1% growth compared to 2020, reaching an all-time high of € 36 billion, consolidated itself as the second main exporter in the country. Minas Gerais imports increased 58.2% in the same period. 

Among the main products exported are iron ores and their concentrates, coffee, soybeans, raw cast iron and specular iron, chemical wood pulp, rare gases and other non-toxic elements, metals, sugar, meat from bovine animals and gold (including platinum gold). Exports from manufacturing subsectors also recorded growth in 2021 compared to 2020, led by inorganic chemicals (43.6%); motor vehicles, tractors, other land vehicles and their parts (42.1%), and engines, boilers, machines, and mechanical instruments and their parts (15.9%).

The main trading partners were China (41.3%), importing ore, soy and aeronautical material, followed by the United States (6.6%), which purchased considerable amounts of aeronautical material, in addition to machinery and equipment, meat, iron, steel and cellulose. Furthermore, Germany (3.4%) stood out for ore, machinery and precious stones; Argentina for iron, steel, vehicles, machinery, household appliances, chemical products and footwear; and Japan and the Netherlands (4.0%) for ore, iron, steel, chemicals and meat and Bahrain (4.7%) acquired steel inputs.

In the case of imports, Minas Gerais imported € 12.4 billion, making it the 6th largest importer out of the 27 states in Brazil. It represents a growth of 58.2% compared to the € 7.78 billion imported in 2020. The main product is fertilizer, a product on which Brazil and Minas Gerais are still highly dependent on foreign purchases, machinery and equipment, in addition to electrical and electronic products, vehicles, auto parts, chemical products and fuels. 

Imported products come mostly from China (25.2%), the United States (12.5%), Argentina (7.2%), Russia (5.5 %) and Italy (5.4%). Top imports were Bituminous coal (€ 580M), Potassium chloride (€ 464M), Small Sized Cars (€ 359M), Urea (€ 317M), and Monoammonium phosphate (€ 220M).

Trade with Finland - Total Period/2021

Minas Gerais and Finland have a substantial business relationship. In the last year, the trade flow between the parties (exports + imports) reached the value of € 118 million:
Exports: Value FOB € 55.8 Million
Imports: Value FOB € 62.4 Million

Data from 2020 shows that in general, exports from Minas Gerais to Finland are led by coffee, followed by beef and other products on a smaller scale. Minas Gerais purchases from Finland are more diversified and have products with greater technological intensity, among which the following stand out: leveling and excavation machinery and equipment; centrifuges; equipment and instruments for medicine, surgery, dentistry and veterinary medicine.

Sources:
http://comexstat.mdic.gov.br/pt/comex-vis(Linkki toiselle verkkosivustolle)  
https://oec.world/en/profile/subnational_bra_state/minas-gerais(Linkki toiselle verkkosivustolle)   http://www.desenvolvimento.mg.gov.br/assets/projetos/1084/860792091899640270590407a2a50e49.pdf(Linkki toiselle verkkosivustolle)