APLA ’23: Brazil caustic soda anticipates potential new demand through upcoming investments in mining

SAO PAULO (ICIS)–Brazil’s natural resources
project can attract investments in mining worth
US$ 50.4bn, or more, in 10 years, according to
industry plans for the mineral sector between
2023 and 2027, which could rapidly increase the
need for caustic soda in the medium term.

Sector executives predict that investments
could yield US$ 100bn over five years heading
into this year’s annual meeting of the Latin
American Petrochemical and Chemical Association
(APLA).

Caustic Soda, also referred to as NaOH, is a
versatile and influential chemical compound
with a wide range of applications in a variety
of industries. It is a key component of the
mining industry, offering a variety of
advantages in terms of extraction, refinement
and environmental stewardship.

The cost of caustic soda in Brazil experienced
an increase in the final month of October,
which was attributed to market input. Players
in Brazil had to increase their prices in
response to some price volatility in the United
States Gulf offers during October.

The competition for the Brazilian caustic soda
market is still intense, with both domestic and
foreign players operating at relatively close
prices, although discount prices are still
available depending on the market niche and the
quantities negotiated.

US Gulf offers highly influence prices in
Brazil, due to a strong competition for market
share.

In November, the US Gulf export spot for
caustic soda remained largely unchanged from
the previous week, with prices ranging from
$270 to $380. Contracts for October were
negotiated at a steady pace, in line with the
previous months, and the export prices of the
month varied significantly between grades.

According to the ICIS Supply and Demand
database, Latin America imports of caustic soda
in Q3 showed some stability in Mexico and
Colombia markets, and a decline in Brazil
compared to the last three months – seen
in the graphic below.

According to the ICIS Supply and Demand data
base, Brazil imported a total of 908,720 tonnes
of caustic soda in until August of 2023.
Comparing with the same period in 2022, Brazil
imports decreased 9.60% year on year.

Market participants confirmed that the spot
availability for caustic soda from both
domestic and international sources continues
ample, and inventory levels in Brazil start to
gradually reduce in Q4.

In 2023, Brazil’s demand for caustic soda is
expected to remain low; however, the mining
industry may be able to influence this
development. High production costs have hurt
the prices of the caustic soda industry and are
continuing to reduce margins this year.
Brazil’s output of soap, detergents, pulp and
paper has decreased somewhat, which has had an
impact on market dynamics and raised domestic
inventories.

Caustic soda employs an important role in
mining and by 2025, the demand for strategic
minerals will be 20-25 times higher than that
of nickel (nickel), cobalt (cobalt) and
graphite (graphene), alone. The IEA projects
that the demand for lithium alone will need to
grow at a rate of more than 40% over the next
five years.

Caustic soda is used to adjust the pH levels at
various stages of the mining process. The
mineral precipitation can block filters,
pipelines and other equipment, so the
prevention of mineral precipitation in
pipelines and other equipment is done by
caustic soda with pH regulation through the
process chain.

In 2022, Brazil produced 35m tons of strategic
minerals overall. Producing niobium, aluminum,
vanadium, graphite, lithium and nickel places
the nation among the world’s top users of
caustic soda for mineral beneficiation.

A significant component in the production of
aluminum is caustic soda. It is employed in the
process of refining alumina, which is created
when bauxite is extracted from alumina ore. The
process of digestion breaks down bauxite in the
Bayer process, producing sodium aluminate as
the end product. For bauxite to dissolve, both
sodium aluminate and sodium aluminate are
required, and aluminum precipitates with sodium
aluminate.

Large amounts of wastewater are produced by the
mining sector, and these effluents may contain
a variety of contaminants. To neutralise acidic
effluents and lessen their negative
environmental effects, caustic soda is
frequently used in wastewater treatment. In
addition to minimising damage to aquatic
ecosystems, this guarantees adherence to
environmental regulations.

The cost of selling caustic soda varies
periodically, especially in Brazil where low
sales all year long are the result of a
competitive market share and high stock levels.
Caustic soda prices in Brazil remain somewhat
unpredictable as long as the country’s economy
continues struggling, with investors delaying a
lot of projects because of the uncertainty from
the political and economic landscape in 2023.

Although the consumption of caustic soda has
somewhat declined in certain Brazilian
industries, such as pulp and paper, in others,
the demand for caustic soda has gone up due to
the positive outcomes of sugar and ethanol as
well as aluminum used in lightweight cars in
Q4.

The ICIS Supply and Demand database shows that
South and Central America imported a total of
2.705m tonnes of in 2023, being the North
America the main hub of exports to the region
with a total of 1.935m tonnes. The US Gulf is
the benchmark to the region with basically
71.5% of all imports to South and Central
America.

Caustic soda has considerable potential in the
mining industry due to its cost-effectiveness
for a variety of applications, which can reduce
operational costs. It also contributes to
environmental sustainability, as it can be used
to treat wastewater and suppress dust, thus
promoting compliance with environmental
regulations and ethical mining practices.

Freight rates were significantly impacted by
the COVID-19 pandemic’s long-lasting effects on
the chemical industry; however, the current
quarter has seen a slight fluctuation in
freight rates due to inflation and fuel prices,
which the market believes not be able to have a
significant influence in new prices hikes until
the end of the year.

In Brazil, there are several projects to expand
the production of chlorine. One of these is the
Unipar project, which is set to double its
production capacity from 10,000 to 20,000 tons
per year in 2024, with a total investment of R
$94m.

The ICIS supply and demand database shows that
there is currently 1.330m tonnes of chloride
capacity in Brazil.

In conclusion, caustic soda has proven to be an
extremely valuable and helpful chemical in the
mining industry. Its uses range from ore
extraction to environmental management, making
it indispensable to the improvement of mineral
recovery, mining operations and compliance with
environmental regulations. The mining sector
will probably continue to play a crucial role
in the effective and long-term management of
mining operations as it develops.