News from Brazil

Business & Economy

In Brazil on November 12, 2010 at 11:34 am

ECONOMY

With it’s thriving economy and growing middle class, Brazil is becoming more attractive to foreign investment. To do business in Brazil however, it is essential to set up a registered company, and while new options exist it is not a process free of legal hurdles. The Rio Times looks at the options.

Fears among some analysts of an impending Brazilian real estate ‘bubble’ that could burst with familiar results appear to be intensifying as foreign capital continues to pour into the country. This bubble is seen as affecting not just realty circles, but the wider Brazilian economic environment (The Rio Times).

Global investors are pumping so much money into Latin America the region could enter a new boom and bust cycle, with policymakers from Brazil to Mexico on the lookout for bubbles in their markets and economies (Reuters).

The Brazilian Confederation of Industry, CNI, is strongly lobbying president-elect Dilma Rousseff who takes office next January first to adopt additional measures to help contain the strong appreciation of the Real vis-à-vis the US dollar. In fact Brazilian exporters ask Rousseff for a US dollar between 2 and 2.2 Real (MercoPress).

AGRI

Brazil’s state development bank BNDES said it opened a fund worth 1 billion reais ($588 million) that will finance projects to reduce deforestation associated with the nation’s booming agricultural sector (Reuters).

AVIATION

Embraer, the world’s largest maker of regional aircraft, is building a business jet assembly facility in Melbourne, Florida, the company’s first manufacturing plant in the United States (Reuters).

Embraer has won a competition held by the Indonesian Ministry of Defense to supply eight Super Tucano light attack turboprops for the Indonesian Air Force. The deal includes ground support stations and an integrated logistics package, and represents the debut of the Super Tucano in the Asia Pacific region. Deliveries will begin in 2012 (Embraer pdf).

BANKING

Banco PanAmericano’s rescue package is unlikely to spark a rout in Brazilian financial markets as the event is seen as an isolated case of corporate governance flaws (Reuters).

Banco Bradesco, Brazil’s second-largest private-sector bank, plans to open brokerage offices in Hong Kong and Tokyo, looking to offer new services and lure more business in the region (Reuters).

INFRA

The Board Directors of the Brazilian Development Bank (BNDES) approved the financing conditions to be offered in the High-Speed Train (TAV) project, which will make the connection between the cities of Rio de Janeiro, São Paulo and Campinas. The maximum share of public resources for funding will amount to R$ 19.977 billion (BNDES).

SPLIT SECOND POLL

BIOFUELS

Major oil companies like BP and Royal Dutch Shell detailed plans to continue investing signifcantly in the Brazilian sugarcane ethanol industry during the World Ethanol Conference. According to the head of strategy at BP Biofuels, James Primrose, the company “intends to increase its presence in the Brazilian market due to sugarcane’s great potential to form material and cost competitive sources of supply” (UNICA).

OIL

With the recent Libra oil field discovery promising reserves of up to fifteen billion barrels of oil and Sinochem and BP coughing up billions for space in the Campos Basin, there is little doubt that Brazil is the place to be for the upstream oil giants. But the Brazilian oil market is intimidating for newcomers. Industrial tariffs, bureaucracy, a dominant national oil company and tightening regulations on foreign participation can make setting up shop and getting contracts nearly impossible (The Rio Times).

Petrobras has jumped from sixth to fourth place in the ranking of the 250 biggest global energy companies, published by the Platts agency, a world leader in energy and commodities information.  Petrobras  is the only Latin-American company listed in the top ten (Brazil Weekly).

Petrobras said it had signed deals worth $3.46 billion for the construction of eight platform hulls to tap its huge offshore oil fields. Petrobras said it and partners BG Group, GALP Energia and Repsol had signed two contracts for the platforms with Brazilian infrastructure firm Engevix Engenharia SA for use in the first phase of production in the deepwater Santos Basin subsalt area (Reuters).

Petrobras will raise $32 billion by 2014, CEO Jose Sergio Gabrielli said, as part of a five-year investment plan focused on developing offshore crude reserves (Reuters).

MINING

Vale announces that Valepar, its controlling shareholder, has nominated Ricardo José da Costa Flores for the chairmanship of Vale’s Board of Directors. As a consequence, Mr. Flores’ name will be submitted to Board approval in its next meeting that will take place on November 25, 2010 (Vale).

Brazil’s incoming government is unlikely to raise mining royalties, the chief executive of mining company Vale said, playing down market talk about a possible royality hike (Reuters).

POWER

Eletrobras, Brazil’s biggest power holding utility, will invest at least 45 billion reais ($27 billion) between 2010 and 2014 as it seeks to improve the nation’s aging electricity grid and expand overseas (Reuters).

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