SAO PAULO, Nov 4 (Reuters) - A $14.4 billion mining project in the Amazon will probably make Brazil’s northern region grow more than twice as fast as the rest of the country next year, a private study said on Friday.
Vale SA’s SD11 iron ore project at the massive Carajas complex, set to start operating by the end of 2016, could drive 2017 economic growth in the northern region by up to 3.9 percent, compared with estimates for a national GDP growth of 1.5 percent, Tendencias Consultorias said.
Brazil’s economy has shrunk for two consecutive years, leaving 12 million people unemployed in its worst recession in at least eight decades. Economists are forecasting a slow return to growth in 2017 as the central bank cuts interest rates.
An uptick in industrial output at the free trade zone of Manaus, one of the most severely affected by the recession, should also contribute to a faster economic recovery in the North as compared with the rest of the country, Tendencias said.
“The northern region has some investments nearing completion and its economy is more sensitive to economic cycles,” Tendencias economist Adriano Pitoli said.
The SD11 mine, Vale’s biggest ever, is expected to produce up to 90 million tonnes of high-grade ore a year, more than a quarter of the company’s current output.
Vale and its two main rivals, Australia’s Rio Tinto Ltd and BHP Billiton Ltd, have ramped up output -even in the midst of falling prices - to boost market share and drive out smaller, higher-cost producers.
Tendencias estimates economic growth of 1.4 percent in 2017 in the Southeast, Brazil’s economic powerhouse. (Reporting by Luiz Guilherme Gerbelli; Writing by Silvio Cascione; Editing by Steve Orlofsky)