Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Stock Market More Correction Ahead? - 19th Nov 17
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17
The Bitcoin Bubble Explained in 4 Charts - 13th Nov 17
How the US Has Secretly Subsidized China to Produce Eco-Unfriendly Solar Panels - 13th Nov 17
The Increasingly Unstable Middle East Must Be On Every Investor’s Radar - 13th Nov 17
Stock Market Critical Supports are Being Challenged - 13th Nov 17
The One Chart All Investors Should See Before 2018 - 13th Nov 17
Short-Term Stock Market Uncertainty Following Recent Rally, Will Stocks Continue Higher? - 13th Nov 17
Is Hillary Just the “Fall Guy” for the Intel Agencies and their Moneybags Bosses? - 12th Nov 17
Stock Market Correction Phase - 12th Nov 17
Finally, The Fall Of The House Of Saud - 12th Nov 17

Market Oracle FREE Newsletter

Traders Workshop

Russia & Brazil’s Strategic Alliance Continue

Commodities / Metals & Mining Jul 05, 2012 - 08:28 AM GMT

By: Anthony_David

Commodities

Best Financial Markets Analysis ArticleRussia and Brazil, both major commodity nations, make a strategic pair with Russia ranking among the world’s top producers in the energy and metals sectors while Brazil is a strong exporter of agricultural products, cars, machinery and iron ore. Trade between the two countries grew five-fold in the period from 2002-2008. In 2010 Brazil and Russia entered into an agreement to boost trade between their countries and enter into strategic partnerships in the areas of energy, infrastructure and space exploration.


More significantly, in advance of global credit possibly drying up, the two countries along with the other BRICS nations of China, India and South Africa, are firming up agreements to trade in their own currencies instead of the U.S. dollar.

Since the fall of the Soviet Union, Russia has transitioned from a globally isolated economy to a more global market oriented economy. With the decks cleared for Russia’s entry to the World Trade Organization the country will open up to products and services from countries all around the world. With the exception of the energy and defense related sectors most of Russia’s industries were privatized in the 1990’s. However, the private sector is still subject to strong interference by the state. Since much of the country’s economy is based on commodity exports, it is subject to the wild swings of global commodity prices. Russia was hard hit by the 2008-09 global oil crisis and the Russian government spent billions of dollars of international reserves to slow down the run on the ruble. Since 2011, high oil prices brought the country’s economy back on an even keel. However, 2012’s falling oil prices have caused another run on the ruble. Russia’s over dependence on oil makes it very vulnerable to crude market shocks.

Russia belongs to the G8, G20 as well as BRICS. It has all the aspects of a developed economy as well as many aspects of a developing economy. With its as yet untapped, vast and significant mineral resources, and technological advancements Russia has the ability to become a global powerhouse. Russia is the world’s largest miner of diamonds accounting for 25% of global production. It also has large reserves of gold and silver and accounts for a significant percentage of global production. In 2011, Russia became the world’s leading oil producer. It is the second largest producer of natural gas and the third-largest producer of steel and aluminum. It has the world’s largest natural gas reserves, second largest coal reserves and the eighth largest oil reserves.

The Russian mining sector is unable to attract the kind of investments that it needs because of the country’s bureaucracy and restrictive laws for foreign investment and mining permits, especially in mineral categories deemed as critical or strategic by the Russian government.

Brazil is one of South America’s most influential countries and one of the world’s largest democracies. Similar to Russia, in Brazil also the state plays a very strong role in critical strategic sectors like energy, oil and banking. Since 2003, the country has steadily improved its overall macroeconomic stability. In 2008 global recession did not spare Brazil as the country’s commodity based exports were hit by falling global demand and lowered spending. With a series of government initiatives, in 2010 the country was one of the first emerging markets to post a recovery. High interest rates make Brazil a haven for foreign investors, and this has resulted in huge capital inflows that have contributed to the appreciation of the Brazilian real. When currency appreciation started hurting Brazilian manufacturers the government stepped in to contain the foreign exchange markets by imposing higher taxes on some of the foreign funds. The Brazilian government’s considerable influence in every facet of the country’s economy is visible in the slew of stimulus projects that it has set in motion to blunt the current slowdown.

Brazil is rich in Iron Ore, Tin, Pyrochlore (from which ferroniobium is extracted), Bauxite, Manganese, Tantalum, Gold, Gemstones and China clay. Most of this mineral wealth has only been partially exploited to date. Brazilian company Vale is the world’s second largest mining company and the world’s largest iron ore producer with 65% of its revenues coming from iron ore exports. The company has emerged as a global player with stakes in mines all over the world. Brazilian iron ore exports account for 78% of the country’s mining exports powered mainly by Chinese demand for steel. Brazil is the world’s second largest producer of manganese after South Africa. Though Vale accounts for 95% of Brazil’s manganese ore production, manganese accounts for only 2.2% of the company’s overall business.

Gold has become Brazil’s second important mineral export after iron ore. With 4.5% of the world’s gold reserves, the country has become the world’s 13th largest gold producer accounting for 2.5% of global gold production. Brazil has the fifth largest global Bauxite reserves and accounts for 14% of the world’s bauxite production. It is also home to a fifth of the world’s tin reserves, 3% of world’s zinc reserves, 6.6% of the world’s nickel reserves, 2% of the world’s copper reserves and 7% of global uranium reserves. Brazil has 90% of the world’s known niobium resources and dominates world niobium production. Despite its considerable phosphate and potassium reserves Brazil still depends on fertilizer imports for its agricultural industries.

Though Brazil is home to significant and abundant mineral resources, and has drawn in huge investments, lack of infrastructure and access to advanced technology is seen as a major stumbling block to achieve full scale development.

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2012 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife