News from Brazil

Business & Economy

In Brazil on February 4, 2011 at 10:15 am

ECONOMY

In the late 1980s and early 1990s inflation in Brazil reached out-of-control levels and many people lost their savings, homes and jobs. One of the economic measures introduced to combat hyper inflation, price indexing, is still around today and many experts believe it a dangerous relic that should be scrapped (The Rio Times).

Brazil’s economy is booming. Prices for its commodities are stellar and unemployment is at record lows, but panelists at a Miami conference said there could be some clouds on the horizon (The Miami Herald).

Before the crisis, in 2007, the unemployment rate in Brazil was 8,2%. Today it is 5,7%. In 2007, the world had an unemployment of 5,6%. Today it reaches 6,2%. In the wealth countries, the rate is from 8,8% in 2010, while in 2007 this rate was of 5,8%. “Brazil is one of the rare cases where there is a contrary trend compared to what happens in the world”, says ILO. According to the government, 2,5 million  of jobs were created in 2010 (India-Brazil Chamber).

Competition with top trading partner China is costing Brazilian industry valuable market share, the National Confederation of Industry (CNI) said (Mercopress).

Brazil posted a lower-than-expected trade surplus in January, underscoring expectations of a surge in imports because of strength in the country’s currency (Reuters).

Brazilian Finance Minister Guido Mantega said the International Monetary Fund was wrong to worry about the country’s fiscal position, saying the public accounts were improving (Reuters).

AGRI-PECU

Brazil’s JBS, the world’s biggest beef producer, named Wesley Batista as its new chief executive officer as brother Joesley steps back to chair the board, after failing to win U.S. rival diversified food company Sara Lee Corp (Reuters).

AVIATION

Embraer and Dniproavia, a member of the Ukrainian Aviation Group Alliance, came to an arrangement, today, regarding the delivery of ten EMBRAER 190s, with options for another five jets (Embraer).

ECC Leasing Company Limited, a wholly owned subsidiary of Embraer, has arranged the lease of three ERJ 135 jets from the Air France subsidiary, Regional – Compagnie Aérienne Européenne, to Air Namibia, the Namibian national flag carrier (Embraer).

Mexican airport operator Asur is interested in bidding for the Natal airport in northeastern Brazil, a move that would give it prime access to thousands of travelers ahead of the soccer World Cup and Olympics (Reuters).

Brazil requested details from Chilean authorities on their decision to freeze the acquisition of Tam SA by Chile’s Lan Airlines SA and its antitrust regulator may ask the companies to agree on a possible plan to reverse the deal in the event that it isn’t approved (Bloomberg).

Embraer will wait to decide between building a new aircraft or re-engining its E-Jets until Boeing Co. makes that choice on its 737, Chief Executive Officer Frederico Curado said (Bloomberg).

BANKING

Brazilian billionaire Andre Esteves’ Banco BTG Pactual SA is buying a controlling stake in Banco Panamericano SA by assuming 3.8 billion reais ($2.3 billion) of debt to cover the bank’s losses, according to the nation’s deposit insurance fund (Bloomberg).

BIOFUELS

Vale acquired control of Biopalma da Amazônia S.A. Reflorestamento Indústria e Comércio, a company based in the state of Pará that produces palm oil, a raw material used to make biodiesel. US$ 173.5 million has been invested in the acquisition. Biopalma starts production in 2011 and expects to reach 500,000 tons of palm oil per year in 2019, when the trees reach maturity. Most of the oil will be used by Vale to make “B20” (a blend of 20% biodiesel and 80% regular diesel) to power its fleet of locomotives, heavy-duty machinery and equipment at the Brazilian operations (Vale).

Sweden, a global pioneer in the use of ethanol-powered buses for urban transportation, is adding another 158 such vehicles to the existing ethanol bus fleet in its capital, Stockholm, already the largest concentration of the low-carbon buses in the world.  Similar to the 600 buses already in operation, the new lot, to be introduced starting in August of 2011, will be produced by Scania. The company is also manufacturing in Brazil the first 50 ethanol buses to run in the streets of São Paulo starting in May (Unica).

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MINING

Brazilian billionaire Eike Batista may need to sweeten his hostile bid to buy Ventana Gold Corp, and not just for fear of a rival bidder (Reuters).

Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-largest steelmaker, said it will sell as much as 14.3 percent of rival Ternium SA to boost cash reserves (Bloomberg).

OIL & GAS

The “sub-salt” fields that Brazil is developing are thought to hold over 13 billion barrels of oil. By 2020 Petrobras will be pumping 4m b/d in Brazil, double today’s amount—if all continues to go well. That is a big “if”. The Economist takes a look at the chances of success for Brazil’s new oil boom.

Below the salt a new frontier in petroleum discovery exists, among the last of such frontiers on this planet. The realm of the unknown embraces problems of geology, technology, logistics, safety, finance, politics, human resources, corporate governance and strategies of economic development that still must be solved as Brazil grasps the opportunities of a new era. In this series of articles and in an international conference to follow,O Estado will address six issues (article in translation at the Brazil Portal).

Petrobras will begin sequestering carbon dioxide in the offshore Lula oil field in the coming months to boost production and lower the environmental impact of its deep water crude exploration campaign (Reuters).

Petrobras intends to raise as much as $40 billion in debt by 2014 as it prepares to develop “pre-salt” oilfields, according to Chief Executive Officer Jose Sergio Gabrielli, the Financial Times reported (Bloomberg).

Brazil is seeking proposals for natural gas power plants, two months after releasing an official energy plan that said the country wouldn’t build new electricity projects powered by fossil fuels (Bloomberg).

REAL ESTATE

Prime office rents in key Chinese and Brazilian cities will continue their economic growth-fuelled rise in 2011, a survey said, prompting global property investors to chase deals in those emerging markets (Reuters).

TWITTER & LINKEDIN

You can also follow Brazil Weekly on Twitter at brazilweekly.

Be very welcome to join the Brazil Weekly networking and discussion group on Linkedin: Click here.

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