News from Brazil

Brazil Business & Economy News

In Brazil on August 12, 2011 at 10:40 am

ECONOMY

Is Latin America’s recovery threatened? “This is the second time crisis affects the world, and for the second time Brazil isn’t trembling,” declared Dilma Rousseff, its president. “We are in a much stronger position to confront this crisis than we were at the beginning of 2009 and the end of 2008.” The Economist analyses if this is true.

Reinaldo Goncalves, economics professor at Rio de Janeiro Federal University, said Brazil could be hit hard in case of a new global crisis, mainly because of the country’s heavy dependence on external financing and current account deficit (MercoPress).

Brazil, as in 2008, will boost domestic market to cushion impact of global crisis.  President Dilma Rousseff said the country was prepared for the global financial turbulence, but said a strengthened domestic market was crucial to overcome the tough times ahead (MercoPress).

Finance Minister Guido Mantega admitted that if the international crisis in the EU and US markets persists, Brazil would have to lower its growth estimate. Mantega described the problems in the developed countries as ‘chronic’ and said the ‘crisis situation’ would extend for the ‘coming years’. And if global consumption drops, “the world will be heading for a major recession” (MercoPress).

The Institute of International Finance, the world’s most influential lobby group for banks, said that a growing number of its members are unhappy with recent policy actions in Brazil and blame the decisions for hampering markets, according to a newspaper report (Reuters).

BUSINESS

German automaker BMW said it would probably build its first assembly plant in Brazil after strong demand for luxury cars generated stellar earnings for the global leader (Mercopress).

Eike Batista, 54, who ranked eighth on Forbes’ annual list of the world’s wealthiest this year with a $30 billion net worth, watched as his mining, oil and other companies lost 16.5% of their market value in dollars –the equivalent to $6.6 billion. And almost 60% of that lost market cap represented Batista’s personal paper losses. The tycoon’s response? A steady string of tweets to reassure the world that, in his words, he “navigates better in rough seas” (Wall Street Journal).

Brazilian utility Light announced that it acquired an interest in the plant that China’s Zongshen group is building in Brazil to produce electric motorcycles. Light, which distributes energy in the state of Rio de Janeiro, announced in a regulatory filing that it will pay 120,000 reais ($75,950) for 20 percent of the common shares of CR Zongshen E-Power (Latin American Herald Tribune).

Wal-Mart Stores Inc has hired UBS AG as an adviser as it weighs a potential purchase of Carrefour SA’s Brazilian unit (Reuters).

ANNOUNCEMENT

The Dutch Brazilian Chamber of Commerce is hosting another technical seminar: Distribution in Brazil: Logistics and Fiscal Challenges. When considering investments in Brazil of any kind, logistics soon appear as one of the biggest challenges. The sheer size of the country, being bigger than the European Union as a whole, would already be a challenge in itself. On top of that, however, infrastructural shortcomings and fiscal complexities add up to considerable additional complexity. Factors that have to be taken into account when making feasibility studies and calculating price-setting. This subject is relevant not only for professionals in logistics, but for any entrepreneur and executive dealing with business in Brazil, be it for mere exports to- or investments in, the latter being through fully owned subsidiaries or joint-venture constructions. The basic understanding of the issues involving distribution in Brazil may help to understand partners and colleagues dealing with the matter, avoid financial losses, and ultimately influence strategic decision making. The seminar takes place on August 31st at the KPMG offices in Rotterdam. For more details contact Mrs Celina Fortes or contact Dutcham.

AGRI ETC

The Brazilian Sugarcane Industry Association (UNICA), in partnership with the Sugarcane Technology Center (CTC), other unions and associations of the South-Central region of Brazil, revised the crushing estimates for the 2011/2012 harvest released on July 2011. The new forecast estimates a crushing of 510.24 million tons, a reduction of 4.36% in comparison to the last revision (533.50 million tons) and a total reduction of 8.39% over the final value of the 2010/2011 harvest (556.95 million tons) (UNICA).

Fibria Celulose SA, the world’s largest pulp producer, said it may sell its Piracicaba plant in Brazil to OJI Paper Co. for $313 million. OJI, based in Tokyo, has been granted exclusive acquisition rights until Sept. 29, Sao Paulo-based Fibria said (Bloomberg).

Corn growers in Brazil, the world’s third-biggest producer, will harvest less grain this year than previously forecast after frost damaged winter crops, according to the Brazilian Ministry of Agriculture. The harvest will be 56.3 million metric tons, down from a July 6 estimate of 57.1 million tons, the Ministry’s Conab crop- forecasting agency said (Bloomberg).

About 15 thousand Brazilian families will start to receive the “Green Grant” (“Bolsa Verde”) next September. Part of the “Brazil without Extreme Poverty” plan (“Brasil sem Miséria”), the grant is an income transfer program targeted specifically for families in extreme poverty that promote environmental conservation in areas where they live and work (Portal Brasil).

AVIATION

Embraer delivered the first EMBRAER 190 jet to China’s CDB Leasing Co., Ltd. (CLC). The aircraft will be operated by China Southern Air Holding Xinjiang Company, a branch of China Southern Airlines, which is the largest airline in China and the third in the world, in terms of traffic volume. As announced earlier this year, CLC has ordered a total of 30 EMBRAER 190s, including 20 firm orders and ten options, all of which for China Southern Airlines (Embraer).

Embraer will participate in the eighth Latin American Business Conference and Exhibition (LABACE), August 11-13, at Congonhas Airport (CGH), in the city of São Paulo, Brazil. The Company will show the midsize Legacy 500 mockup with a near-production interior, alongside the entry level Phenom 100, light Phenom 300, and large Legacy 650 executive jets (Embraer).

The antitrust unit of Brazil’s finance ministry recommended the approval of a plan by Chilean airline LAN to buy rival Brazilian rival TAM Linhas Aereas, saying the deal will not harm competition in the country’s civil aviation market (Reuters).

SPLIT SECOND POLL

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MINING & STEEL

Vale said that it delivered its first coal by train from its Mozambican Moatize project to the port of Beira and expects to export the coal in August. The first train carried 2,200 metric tons of coal from Vale’s Moatize coal mine in the massive, coal-rich Tete basin in north west Mozambique to the costal port of Beira via the Sena railway line (Vale).

Japan’s JFE Steel Corp said it may join a steel mill project in Brazil planned by Vale and two South Korean steelmakers as it aims to tap growing markets in Latin America and the United States (Reuters).

OIL & GAS

The BNDES approved the creation of the Support Program for the Development of the Supply Chain for Oil & Gas sector-related Goods and Services (BNDES P&G). The program offers the BNDES new ways to support the supply chain of oil & gas goods and services, narrowing the relationship existing between the Bank and the sector (BNDES).

SBM Offshore N.V. of Rotterdam announced that one of its Affiliates and Queiroz Galvão Óleo e Gás S.A. , have received two Letters Of Intent, one from GUARA BV and one from BM-S-9 Consortium, established by the companies PETROLEO BRASILEIRO S.A. – PETROBRAS (Operator, 45%), BG E&P BRASIL LTDA (30%), and REPSOL SINOPEC BRASIL S.A. (25%) for a twenty year charter and operation of an FPSO for the Guará Norte development in the pre-salt area, offshore Brazil (Reuters).

Brazil’s leading shipyard Sete Brasil said government expectations about national content requirements for building the rigs, platforms and ships needed to develop its massive offshore oil reserves were unrealistic. Company Chief Executive Joao Carlos Ferraz said requirements that 60 percent of the rigs his company is building for state oil company Petrobras be produced locally were out of line with international industry norms (Reuters).

Petrobras said it may yet build floating factories to liquefy natural gas after rejecting the untried technology for two of its largest offshore fields (Reuters).

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