News from Brazil

Business & Economy

In Brazil on January 21, 2011 at 10:38 am

ECONOMY

Brazil’s central bank has raised its key interest rate to 11.25% in a bid to cool inflation in one of the world’s fastest growing economies (BBC).

President Dilma Rousseff will probably announce a freeze in government expenses before Feb. 28, as she seeks to fulfill pledges of fiscal discipline, a cabinet minister told Reuters.

Brazil’s tax collection rose sharply in December from a year earlier on the back of strong economic activity, the federal tax authority said. Tax revenues in December, adjusted for inflation, jumped to 90.9 billion reais ($54.4 billion), a 16 percent increase from December 2009 and a 36 percent rise from November 2010 (Reuters).

AGRI

A growing consumer class in Brazil is spurring strong growth for multinational food companies. Read more on Brazil’s food business boom at the Latin Business Chronicle.

Brazil imported from the United States 427,000 tons (mt) of wheat, valued at $98 million between January and October 2010, according to the USDA Foreign Agricultural Service (The Cropsite).

China’s state-controlled Chongqing Grain Group plans to invest $879 million to produce soybean oil in Brazil (Bloomberg).

AUTOMOTIVE

Mitsubishi Motors plans to spend an estimated 20-30 billion yen ($241.5 million) to obtain a stake of at least 50 percent in MMC Automotores do Brasil SA, a firm that currently handles its production in Brazil. The Brazilian firm’s plants will be expanded in fiscal 2011, with annual production capacity of four-wheel-drive vehicles and other cars to be doubled to at least 100,000 units (Reuters).

AVIATION

Embraer delivered 246 jets in 2010. The firm order backlog, at the end of the year, came to US$ 15.6 billion, which is 2% higher than the amount recorded on September 30, 2010 (BW). Read Embraer’s 20-year market forecast for commercial jets here (pdf).

Chile’s flagship airline LAN expects to complete a merger with Brazil’s TAM within six to nine months, after inking a deal with final terms and conditions (Reuters).

Steven Udvar-Hazy’s Air Lease Corp. completed its first regional-aircraft leasing accord in Brazil. Trip Linhas Aereas SA, Brazil’s largest regional carrier, will operate five Embraer E-190 jets and five ATR-72-600 turboprops (Bloomberg).

Trip Linhas Aereas SA has enough credit to remain private until 2012 and won’t have an initial public offering this year, Director Decio Chieppe said in Campinas (Bloomberg).

BANKING

Banco do Brasil, Latin America’s largest bank by assets, cut its forecast for consumer lending growth this year after central bank measures restrained credit more than previously thought, Chief Executive Officer Aldemir Bendine said. A U.S. takeover is to be unveiled “very soon,” the Banco do Brasil CEO added (Reuters).

BIOFUELS

Brazil’s cane sector is plowing capital investments into sugar production, ending the trend of favoring ethanol capacity expansion, Paulo Roberto da Souza, chief executive of the country’s biggest sugar and ethanol trader Copersucar, said (Reuters). Copersucar is also considering an initial public stock offering to raise cash for investments in logistics and marketing, Chief Executive Officer Paulo Roberto da Souza said.

Petrobras is seeking a long-term contract to buy ethanol from a Sao Martinho SA partnership, said the biofuel unit’s chief executive officer (Bloomberg).

MINING

Mining giant Vale SA said it expects total iron ore production to rise 50 percent by 2015.  Vale Minerals China Co President Luiz Meriz said Vale was making large investments to increase iron ore production to satisfy growing Chinese demand (BW).

Vale International is expected to start building a 9 billion-14 billion ringgit ($2.95 billion-$4.57 billion) iron-ore complex in Malaysia by July or August (Reuters).

OIL

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist (Businessweek).

Petroleo Brasileiro SA’s record $6 billion international debt offering is sparking the biggest slide in the state-run Brazilian oil company’s bonds in 10 weeks as it creates a supply glut (Bloomberg).

Paulo Gouvea, a senior executive for Brazilian oil and mining holding company EBX for about 13 years, quit to pursue other professional interests, the company said (Reuters).

POWER

Iberdrola, the Spanish energy giant, said that it had agreed to buy Elektro Eletricidade e Servicos of Brazil for $2.4 billion. Iberdrola, which already owns 39 percent of the Brazilian company Neoenergia, will be one of the largest energy providers in the country. The company said Brazil was “key to its international growth strategy” (New York Times).

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PORTS

Brazilian shipbuilders will spend 12 billion reais ($7.1 billion) to build 17 new shipyards as oil companies includingPetrobras boost orders for offshore production platforms and ships, O Globo reported, citing the Abnav and Sinaval national shipbuilders’ associations (Bloomberg).

STOCK EXCHANGE

ICO2 was the best-performing total index in the Stock Exchange between September and December 2010. BNDES has selected BlackRock Brasil as the manager of a new index fund comprising stocks belonging to companies which make up the Efficient Carbon Index (ICO2) (BNDES).

Stock sales in Brazil are rebounding after three years in the dumps, with three companies alone filing to raise nearly 4.11 billion reais ($2.5 billion) to fund takeovers and expansion (Reuters).

TELECOMS

Anatel, Brazils telecom regulator, released wireless figures for December. About 29 million lines were added in 2010, a 24 percent jump from 2009. Brazils overall mobile phone market now has 17 percent more lines, at 202.9 million, meaning that the penetration rate already surpassed 100 percent (Reuters).

Portugal Telecom  signed a contract to seal its purchase of a stake in Brazilian phone carrier Oi (Reuters).

Telebras will have to rely on funds from Brazil’s Treasury for the next three years for investments in its national broadband Internet plan, Chief Executive Officer Rogerio Santanna said (Bloomberg).

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