Mining Cities in Minas Gerais Set Record for Revenue and Job Creation, Experiencing a Completely Different Scenario from the Rest of the Country

Driven By The Rise In Iron Ore Prices, Mining Cities In Minas Gerais Had Job Creation 8 Times Higher Than Brazil In 2020

Compared to the rest of the country, municipalities that have mineral exploitation as their main activity in Minas Gerais are generating more and more jobs and collecting more and more due to the rise in iron ore prices and the increase of the dollar. The mining cities have a job creation rate 8 times higher compared to Brazil in the last 12 months, according to an estimate by IBGE.

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Job Creation In The Mining Cities Of Minas Gerais

The city of Itabirito, located in the central region of Minas Gerais, opened about 4,000 job opportunities in 2020, according to the mayor of the municipality, Orlando Caldeira. According to data from Caged (General Register of Employed and Unemployed), the municipality had a positive variation in job creation of 16.10%, while Brazil had 2.18% in the same period.

Meanwhile, the city of Conceição do Mato Dentro, in Minas Gerais, which is home to one of the world’s largest mining plans, the Minas-Rio pipeline by the English miner Anglo American, saw a job variation of 13.7% in the last 12 months.

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Increase In Iron Ore Prices And The Rise Of The Dollar Affect The Mining Cities

In April of this year, the ton of ore with 62% iron content rose 4.3%, reaching US$ 189.61 (the highest level since February 2011). In the accumulated year, iron ore gains reach 18.2%. The price of ore with 65% purity rose US$ 6.50 to US$ 222.80 per ton.

The municipalities in Minas Gerais, which have mineral exploitation as their main activity, receive 60% of the Financial Compensation For The Exploitation Of Mineral Resources (Cfem) from mining companies, influenced by the price of iron ore. The other 40% of Cfem is distributed to the state and federal government.

The Financial Compensation For The Exploitation Of Mineral Resources (Cfem) cannot be used for payroll, but is essential for the funding that will be directed to education, health, and infrastructure in these mining cities of Minas Gerais.

Minas Gerais And The Dependency On Cfem

Zé Maria, mayor of Conceição do Mato Dentro and president of the Association of Mining Municipalities of Minas Gerais (Amig), said that with the heating of the iron ore market and the return of demand from China, there has been an increase in the collection of Financial Compensation For The Exploitation Of Mineral Resources (Cfem), generating an increase in job opportunities in the city, especially in the mining and construction sectors.

The heavy dependency of the mining cities on Cfem is significant. Many municipalities do not have other activities that can compete with mining in terms of financial return. Even though it is a finite resource, few municipalities have prepared for the end of Cfem.

The city of Itabira, in Minas Gerais, the first site exploited by miner Vale and the largest producer of iron ore in the world, is already counting down to the end of exploration in the area, where mineral exhaustion is expected to occur by 2031. Mayor Marco Antônio Lage states that the municipality’s expectation is to use Cfem resources to prepare by investing in other segments that will be able to sustain the municipality, given the dependence on iron ore.