BARÃO DE COCAIS, Brazil—When Brazilian mining behemoth Vale SA closed an iron-ore mine here earlier this year, it turned this working-class town into a case study for a region whose traditional industry is starting to slip away.
For centuries mining has been the lifeblood of communities across Brazil’s southeastern state of Minas Gerais, home to colonial towns with baroque churches and ornate mansions built with mineral wealth. Even today, Minas Gerais remains one of Brazil’s more prosperous states, thanks in large part to the jobs and royalties generated by companies like Vale.
But a hollowing-out has begun, and concerns are growing that this region could one day resemble the U.S. Rust Belt or Appalachian coal country. A thousand miles north, meanwhile, in the Carajás mountains of the Amazon rain forest, Vale is putting the finishing touches on a $14-billion mining complex known as S11D.
Set to ramp up in the coming months, it will crank out as much as 90 million tons a year of the highest-quality, lowest-cost iron ore in the world.
By 2018, half of Vale’s production is expected to come from Carajás, up from 39% extracted last year from its existing mines in the region. That shift is beginning to be felt in towns like Barão de Cocais, where the closure of Vale’s Gongo Soco iron-ore mine in April caused royalty payments to virtually dry up.
For the rest of this article, click here: http://www.wsj.com/articles/a-geographic-shift-in-brazil-mining-leaves-a-storied-region-hurting-1482143417