News from Brazil

Brazil Business & Economy News

In Brazil on July 22, 2011 at 9:37 am

ECONOMY

Jobs, no workers. Record low unemployment, competition for labor from a booming construction industry and inflation at a six-year high have put the squeeze on these businesses. Companies scraping the bottom of the employment barrel are finding themselves teaching employees the basics of grammar and arithmetic (Reuters).

China will invest this year US$ 9 billion (R$ 14 billion) in Brazil. Half of this amount will be in the high-tech industry, according to the executive secretary of the Ministry of Development, Industry and Foreign Trade, Alessandro Teixeira (India-Brazil Chamber).

Brazil’s unemployment rate fell to its lowest since January in spite of efforts by policy makers to cool growth and inflation in Latin America’s biggest economy. The jobless rate fell to 6.2% in June, from 6.4% in May and 7% a year earlier, the national statistics agency said (MercoPress).

The Brazilian Treasury has raised US$ 500 million from North American and European investors at an interest rate of 4.188% a year – the lowest in history for international loans. The money was raised through the issue on July 7 of foreign debt bonds maturing in January 2021 (Portal Brasil).

Dow Chemical Co and Mitsui & Co Ltd have formed a Brazilian venture to turn sugar cane into ethanol and plastic, in an area widely considered the future of the chemical industry. The move directly challenges Braskem SA , Brazil’s largest chemical company, which last fall opened its own plant to turn sugar cane into plastic (Reuters).

Brazil’s tax collection surged in June from the year-earlier month, the federal tax authority said, as a number of companies paid their taxes ahead of time (Reuters).

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AVIATION

Embraer and Minsheng Financial Leasing Co., Ltd., a subsidiary of China Minsheng Banking Co., Ltd., and one of the largest financial institutions providing executive jets leasing services in China, signed a Memorandum of Understanding (MoU). According to the MoU, Minsheng Financial Leasing intends to purchase up to 20 of Embraer’s full line of executive jets. They are expected to be fully converted into firm orders in the next five years and deliveries may commence in 2011 (Embraer).

Embraer sees Africa as a major growth market and targets doubling the number of its jets operating on the continent (Reuters).

BIOFUELS

Brazil will reduce the ethanol content in gasoline in another effort to contain inflation since sugar (and ethanol) prices because of a poor crop have been soaring (MercoPress).

MERGERS

Last week a deal that looked set to alter the face of the Brazilian retail sector for good floundered. The proposed merger between Brazilian supermarket chain Pão de Açucar and French retail group Carrefour collapsed amidst a storm of controversy. Carrefour, however, seems determined to have a slice of Brazil’s ever-increasing pie and is reported to be considering a merger with U.S. retail giant Walmart instead (The Rio Times).

MINING & STEEL

Vale Brasil, the world’s largest ore carrier, arrived in Italy for its first discharge operation. The vessel safely and successfully berthed at Pier 4 at the Port of Taranto and discharged its 400,000 tons cargo of Carajas Sinter Feed to be consumed at steelmaker Ilva SpA, a four-decade long client and partner of Vale. Commissioned at shipyard Daewoo Shipbuilding & Marine Engineering Co in South Korea, Vale Brasil has a capacity of 400,000 tons, 362 meters of length and 65 meters of width – and is the first of seven ore carriers ordered from the South Korean shipyard, totaling an investment of US$748 million (Vale).

OIL & GAS

Central Resources Inc, a Denver-based independent oil and gas production and operation company, has recently announced its acquisition of six “concessions” in Brazil. The Potiguar Basin, which lies on the border of Rio Grande do Norte and Ceara, provides the location for four of these concessions whilst the remaining two sit within the Espirito Santos Basin, much closer to Rio de Janeiro (The Rio Times).

Petrobras’ oil and natural gas output in Brazil was 2,407,366 barrels of oil equivalent per day (boed) in June, 4% more than the 2,315,117 barrels produced a year earlier and a 2% increase over May 2011. Domestic natural gas production was 57.317 million cubic meters per day in June. This was 6.9% more than the same month in 2010, and 0.7% above last May (BW).

Russian oil producer TNK-BP has agreed to buy a 45 percent stake in Amazon oil exploration blocks from Brazil’s Petra Energia (Reuters).

TOURISM

The Brazil Tourism Board (Embratur) named Flavio Dino, a former federal congressman for the Communist Party of Brazil, as its new president, succeeding Mário Moysés (MercoPress).

After growing 20% annually over the past ten years and reaching a level of 800,000 tourists annually, the pace of cruise expansion in Brazil is expected to encounter a sharp slowdown in the 2011-2012 season. The main reason is the infrastructure deficiencies of Brazilian ports, which have no more room for receiving large vessels (MercoPress).

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