News from Brazil

Brazil Weekly, March 14th

In Uncategorized on March 14, 2010 at 11:46 am

POLITICS

Of all the peoples that make up Brazil, the quilombolas have perhaps the most remarkable story. Like the Saramaka in Suriname or Jamaica’s Maroons, they claim to be descended from groups of runaway slaves who founded settlements, or quilombos, deep in the forests. In the 1988 constitution, drawn up after the end of Brazil’s military dictatorship (exactly a century after slavery was abolished), the quilombolas were granted special guarantees to the title on their land, in recognition of their ancestors’ suffering (The Economist).

Brazil’s central bank President Henrique Meirelles is being investigated by the country’s top prosecutor for possible tax crimes, according to a document released by the Supreme Court (Reuters).

In response to illegal U.S. subsidies granted to domestic cotton farmers, Brazil announced this week a list of American products that would be subject to higher rates of import tax by way of retaliation, and economists have warned of a possible trade war between the two countries (Rio Times).

Brazil’s government published a list of U.S. goods subject to import tariffs that will go into effect in 30 days unless both countries reach agreement to solve a long-standing dispute over U.S. cotton subsidies (Reuters).

How serious is the decision by Brazil’s government, announced on Tuesday March 8th, to raise duties on a number of American-made imports? The increases are sizeable for goods such as cosmetics (tariffs will double, to 36%) and many household wares (tariffs will also double, to 40%). And the timing is significant: the news came as America’s commerce secretary, Gary Locke, was due to arrive in Brasilia to promote an export-promotion initiative in America’s 10th-largest export market (The Economist).

Brazilian President Luiz Inacio Lula da Silva said the government will only decide on the purchase of jet fighters after a final assessment by the Defense Ministry and the country’s National Defense Council (Bloomberg).

ECONOMY

Buoyant Brazilian consumers helped Latin America’s biggest economy speed up its recovery in late 2009, lifting expectations the central bank will raise interest rates as early as next week (Reuters).

Brazil’s economy grew in line with expectations in the last three months of 2009, underscoring the country’s steady recovery, government data showed (Reuters).

Brazil’s Planning Minister Paulo Bernardo said the country’s economy will grow close to 6 percent in 2010 after stagnating last year. But he said the government was keeping its forecast for 5.2 percent growth in the budget (Reuters).

Recent comments by Brazilian Finance Minister Guido Mantega that Brazil must prepare its currency for international circulation revived the debate on how to reform the country’s foreign exchange regulations (Reuters).

BUSINESS

OSX Brasil, a Brazilian shipbuilding and oil services company owned by billionaire Eike Batista, doesn’t look like much on paper. Yet if all goes as planned, OSX’s initial public offering could raise up to 9.92 billion reais ($5.6 billion) in the second-biggest ever IPO in Brazil, and one of the largest in the world over the past year (Reuters).

Brazilian energy entrepreneur Eike Batista, who made the biggest leap up Forbes’ list of the world’s richest people this year, is anything but shy about his rapid ascent into the big billionaires club (Reuters).

Brazilian junior miner MMX sees iron exports from Brazilian mines soaring more than fifteen-fold to 32 million tons within six years and expects strong iron prices for at least five years (Reuters).

Brazil’s Justice Ministry has fined Fiat SpA 3 million reais ($1.5 million) for failing to recall thousands of Stilo cars built after 2004 despite an alleged rear-wheel hub problem (Reuters).

Gol Linhas Aereas, Brazil’s second-largest airline, returned to profit in the fourth quarter as revenue rose faster than costs and it made use of tax credits (Reuters).

JBS SA, the world’s largest beef processor, filed to sell shares to Brazilian and foreign investors, according to a securities filing (Reuters).

Canada’s Research in Motionwill start producing BlackBerry smartphones in Brazil underscoring the demand for quicker and more sophisticated handsets (Reuters).

CSN, Brazil’s biggest diversified steelmaking group, will start a gradual spin-off of its main business divisions with an initial public offering of its iron ore unit in a bid to increase the value of the group’s assets (Reuters).

Vale, the largest iron ore producer, told Chinese steelmakers it plans to drop a 40-year tradition of setting annual prices in favor of shorter contracts (Bloomberg).

Vale SA will invest $12.9 billion on projects in 2010, the company’s Marcelo Matos, general manager marketing and business development, said. The company will spend $85 billion on its commodity project pipeline over the next five years (Bloomberg).

OIL

Petrobras said it will invest 79.5 billion reais ($44 billion) this year as it seeks to tap deep-sea offshore crude reserves that could turn Brazil into a major energy exporter (Reuters).

Petrobras said it will appeal a U.S. federal judge ruling ordering it to pay about $639 million to Astra Oil for the 2006 purchase of a refinery (Reuters).

BP is one of the last of the oil majors to enter Brazil’s subsalt boom, but it may have found some value in Devon’s Campos concessions that it announced it bought  in a deal worth $7 billion (Reuters).

Petrobras said it found light oil in its exploratory block in the Llanos basin in Colombia (Reuters).

Renowned for its massive upstream oil potential and pioneering use of ethanol refined from sugar cane, Brazil last month surprised products traders with rare imports of gasoline (Reuters).

Petrobras now owns 100 percent of the 100,000 barrel-per-day (bpd) Pasadena Refining System Inc refinery in Texas (Reuters).

As Petrobras faces something of a funding crisis having already blown the vast majority of its US$174 billion budget forecast up to 2013, the control of Brazil’s ‘goldmine’ of pre-salt oil is beginning to show signs of cracking (Rio Times).

REAL ESTATE

Brazilian real estate developer Even Incorporadora and a key shareholder filed to sell shares, in a transaction that could fetch about 632.5 million reais ($354 million), according to a regulatory filing (Reuters).

Gafisa SA, Brazil’s second-largest homebuilder, said it plans to sell 74 million new shares in Brazil (Bloomberg).

PORTS

LLX Logistica, the port company controlled by Brazilian billionaire Eike Batista, said it will invest 1.85 billion reais ($1.04 billion) in 2010 as it develops two port projects. About 1.1 billion reais will be spent on the Superporto do Acu project and 741 million reais on the Porto Sudeste project, both in Rio de Janeiro state (Bloomberg).

HIGH SPEED

Brazil’s transportation regulator said a South Korean-led group may have the best grasp of the South American country’s bidding process and technological needs among six contenders seeking to build and operate a 34.6 billion reais ($19.3 billion) bullet train system (Bloomberg).

RIO

For one year the project to build walls around the favelas of Rio has been underway, yet many continue to question what exactly is the government’s motive for constructing the so called “eco barriers” (Rio Times).

With its stunning views, colonial era mansions, thriving cultural scene and small town feel incongruous with its city center location, Santa Teresa is one of Rio’s oldest and most charming areas. Sitting atop the hill overlooking Centro and Lapa on one side and Botafogo bay on the other, Santa Teresa is antique Rio with a creative character (Rio Times).

Rio State Treasurer Levy reported that 2009 saw significant growth in state tax receipts (8.6%), mainly due to the recovery of the economy and targeted actions to enhance tax collection and supervision. Importantly, the good behavior of revenues helped investment spending grow by R$1.2 billion, which represents a 76% increase from 2008. This growth is largely related to the Programa de Aceleração de Crescimento (PAC), although important outlays in local roads and in health care are also noteworthy. The State Treasury financed 48% of 2008-2009 PAC resources, totaling R$380 million for the two years, with R$292 million in 2009. The year also saw 73% investment growth in transportation, 47% growth in health, 50% growth in education, 38% growth in security and 86% growth in environment conservancy (Brazil Weekly).

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