News from Brazil

Business & Economy

In Brazil on February 11, 2011 at 9:39 am

ECONOMY

Brazil will cut 50 billion reais ($30 billion) from this year’s budget as President Dilma Rousseff seeks to help the central bank contain inflation and lower the highest real interest rates in the Group of 20 nations (Bloomberg Businessweek).

Brazilian inflation, a growing headache for the month-old presidency of President Dilma Rousseff, continued its sharp rise amid soaring global prices for food and bustling consumer demand. Brazil’s headline inflation index rose 5.99% in January compared with the previous year. In inflation-sensitive Brazil, many economists also monitor month-to-month changes in the index, which is calculated similarly to the U.S. consumer-price index and includes volatile items like food and energy (Wall Street Journal).

Brazil’s forex reserves surpassed the 300 billion US dollars mark for the first time ever this week according to the country’s central bank as a result of recent heavy foreign exchange inflows and accelerated US dollar buying by the institution (Mercopress).

Brazil’s central bank sold $855 million of reverse currency swap contracts, less than the amount on offer, in a sign that the effectiveness of government efforts to weaken the currency might be fading (Reuters).

AGRI-PECU

While a caipirinha is more likely to spring to mind when thinking of a Brazilian drink, do not rule out a glass of Brazilian produced wine, especially a sparkling one. Wine importers around the world are discovering Brazilian wines and exports from Brazil are rising rapidly, with sales of sparkling wines achieving a 12 percent growth in 2010 (The Rio Times).

Brazil could harvest a record crop of 70 million tons of soybeans in 2011 because of improved climate conditions and expansion of the area planted according to Oil World consultants (Mercopress).

Farm equipment makers in Brazil are gearing up for a year of “excellent” sales in 2011 as a key governmental financing program due to expire in late March will be extended (Reuters).

AVIATION

Delta Air Lines announced the start of codeshare service with GOL, one of Brazil’s largest airlines, immediately adding 15 new destinations to its South American network (Newswire).

Embraer received certification, last month, from Brazil’s National Civil Aviation Agency (Agência Nacional de Aviação Civil – ANAC) and the European Aviation Safety Agency (EASA), for the belted toilet of its entry level Phenom 100 executive jet. The feature comes to further improve the jet’s flexibility. Now, customers who select this option will be able to carry up to seven occupants (Embraer).

BANKING & FINANCE

The CEO of BM&F Bovespa, Edemir Pinto, said that around 150 SMEs in Brazil have the potential to operate in the stock exchange (India-Brazil Chamber).

SUGAR

When sugarcane bagasse is burned to produce bioelectricity, mounds of ash are left behind. Now, there are plans to use the ash as a replacement for sand in concrete production, creating, in effect, yet another product derived from sugarcane or its residues (Unica).

MINING & STEEL

Brazil’s booming mining sector will more than triple output of iron ore, copper and gold by 2030, but should boost local processing of minerals and be wary of excessive dependence on China, according to a government
plan (Reuters).

CSN , Brazil’s biggest steelmaking group, has raised its stake again in Riversdale Mining , bolstering its bargaining position in face of a $3.9 billion bid from global miner Rio Tinto for the Mozambique-focused coal miner (Reuters).

Vale has bought a massive area for the construction of a new port in the state of Para. The Porto do Espadarte is still a “strategic opportunity” being studied. The project would help reduce the distance between the Carajas mines and shipment (Reuters).

Russian billionaire Igor Zyuzin’s Mir Steel UK agreed to invest $5 billion in a steel complex in Brazil with Cia. Siderurgica do Para (Bloomberg).

Gerdau SA will invest $120 million to upgrade its Peruvian unit over the next three years (Bloomberg).

Billionaire Eike Batista’s EBX Group Ltd. said it’s considering new partnerships with SK Group after South Korea’s third-largest industrial group bought a stake in his mining unit for $700 million last year (Bloomberg).

OIL & GAS

Brazil’s antitrust agency ruled that Royal Dutch Shell would need to sell its aviation fuel assets Jacta that it bought from local sugar and ethanol giant Cosan in 2009 (Reuters).

Brazilian oil and gas start-up company OGX Petroleo e Gas Participacoes said its 9-OGX-26HP well, whose drilling was recently concluded, has a potential flow of 40,000 barrels per day (Reuters).

Petrobras said it has pulled out of talks with Italy’s Eni to buy its stake in Portugal’s Galp Energia (Reuters).

POWER

The government reckons demand for electricity will rise by 5% a year over the next decade. Officials plan to mobilise investment totalling some 214 billion reais ($128 billion), from both private and public sources, in order to meet it (The Economist).

Hundreds of indigenous Brazilians have been protesting in the capital, Brasilia, against the construction of what will be the world’s third biggest hydro-electric dam (BBC).

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