Minas-Rio Impairment Considerations and Project Delivery
BUT BRAZIL IS A DEVELOPING COUNTRY
12
Evolving regulatory environment -
a challenge for many projects
in Brazil
Cost pressures and skill shortages in Brazil
are real
Project
Capex
escalation
Delay
(months)
(%)
Serra Sul (Vale, Iron ore)
72
54
310
280
250
220
Brazilian components escalation (index 2006 =100)
Onça Puma (Vale, Nickel)
158
27
27
Salobo (Vale, Copper)
179
30
Ferrovia Norte-Sul (Government
127
55
infrastructure - railroad expansion)
Transposicao do Rio Sao
Francisco (Government
56
55
59
infrastructure - river for irrigation)
Source: Company information, broker notes, MEG, UBS
190
160
130
10
10
8
Brazilian unemployment rate (%)
9
+
2
100
0
2006
2007 2008 2009
2010 2011 2012
Labour costs
CPI
Cement
Unemployment rate
FGV: IBRE - Instituto Brasileiro de Economia, EIU Countrydata, UBS, Anglo American
Source:
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