Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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