Vale to open $573 mln steel mill in Brazil-report

SAO PAULO, Nov 30 (Reuters) - Brazilian mining company Vale (VALE5.SA)(VALE.N) plans to invest 1 billion reais ($573 million) in a steel rolling mill in Rio de Janeiro state, Folha de Sao Paulo newspaper reported Monday.
The mill will process steel from plate to sheet form and will be sited at a steel plant being built by Companhia Siderurgica do Atlantico (CSA), controlled by Germany's ThyssenKrupp (TKAG.DE). Vale has a 27 percent stake in it.

The newspaper cited Rio de Janeiro state's governor Sergio Cabral but Vale would not confirm the information when contacted by Reuters. The paper said the investment still needed the approval of Vale's board of governors.

The CSA plant, expected to open in the first half of 2010, will produce 5 million tonnes of steel slabs for export each year.

Vale has come under heavy political pressure from the government of President Luiz Inacio Lula da Silva to process more of the minerals it extracts at home to add value and create jobs, rather than exporting them in raw form.

The firm responded by announcing billions of dollars in new investments, quelling talk that Lula was seeking a management shake-up at the company. (Reporting by Peter Murphy; Editing by John Picinich)

China’s Wuhan Steel to Pay $400 Million for MMX Stake

Nov. 30 (Bloomberg) -- Wuhan Iron & Steel Group, China’s third-biggest steelmaker, agreed to pay $400 million for a stake in Brazil’s MMX Mineracao e Metalicos SA to broaden its supply of iron ore.

Wuhan Steel, based in Hubei province, will appoint two board members to MMX and become the second-biggest shareholder of the Brazilian company with a 21.52 percent stake, the Asian company said today in a statement. Rio de Janeiro-based MMX, controlled by billionaire Eike Batista, has a market value of 3.7 billion reais ($2.1 billion), according to Bloomberg data.

China, the world’s biggest steel producer, is investing in iron-ore projects globally to reduce dependence on Vale SA, Rio Tinto Group and BHP Billiton Ltd., which control three-quarters of seaborne supply. Wuhan Iron and EBX, MMX’s holding company, also signed an accord today to build a steel plant in Brazil, spokesman Bai Fang said in a phone interview from Wuhan, where the deal was signed.

“We are still studying the steel venture plan,” Bai said. “Approvals are also needed for the plan to go through.”

The mill, to be at the Acu port in Rio de Janeiro state in southeastern Brazil, will have a capacity to produce at least 5 million tons a year of steel products, with the possibility of “significant” future expansion, MMX said in a statement today.

Plant Financing

Wuhan and EBX expect to gain licenses by May 2010 to start building the plant, which may be financed by the China Development Bank and Brazil’s development bank BNDES, MMX said. Wuhan will hold 70 percent and EBX a 30 percent stake in the venture, MMX said, without disclosing the investment value.

Wuhan Steel rose 3.4 percent to close at 8.12 yuan today in Shanghai. The benchmark Shanghai Composite Index gained 3.2 percent. MMX gained 1.8 percent to 12.22 reais at 12:11 p.m. in Sao Paulo, while LLX Logistica SA, which is building Acu port, rose 2 percent to 8.25 reais.

Wuhan Steel originally offered to buy a stake in MMX and its Sudeste mining unit in June.

“There has been some changes in the deal,” said Xiao Jinfa, head of Wuhan Steel’s resource development department. “Now the investment is for the stake of the listed company only,” he said, without providing a reason.

Wuhan will acquire new shares to be issued by MMX in a private sale, MMX said. The $400 million raised will be used to develop MMX’s Sudeste’s mines system, it said.

Ore Expansion

MMX plans to increase its annual iron-ore output capacity to 33.6 million tons by 2014 from 10.7 million tons, Wuhan Steel said. MMX operates Sudeste mine and Corumba mine in Brazil and Minera mine in Chile.

MMX said it also signed a contract to supply at least 50 percent of the ore produced at Serra Azul to Wuhan for 20 years starting in April 2010. Serra Azul is part of the company’s Sudeste system. The accord may involve exports of more than 16 million tons a year of ore.

“MMX needed this to continue to grow,” Gilberto Cardoso, a Rio de Janeiro-based analyst with Banif Securities, said in a telephone interview. Adding a partner with capital plus the supply agreement “guarantees MMX’s future expansion and demand for its products.”

Cardoso’s rating of MMX is under review. He doesn’t own any of the stock.

--Helen Yuan, with assistance from Diana Kinch in Rio de Janeiro

Transocean starts 7-year drilling contract for BP

Transocean starts 7-year drilling contract for BP
(AP) – 1 day ago

NEW YORK — Offshore drilling contractor Transocean Ltd. on Wednesday said it has launched its new rig, the Development Driller III, in the U.S. Gulf of Mexico under a seven-year drilling contract for a subsidiary of BP PLC.

The Development Driller III is a newbuild ultra-deepwater semisubmersible rig, one of 23 ultra-deepwater floaters in the Transocean fleet. It features advanced offshore drilling technology which equips the rig for drilling in water depths up to 7,500 feet, and for drilling wells up to 35,000 feet total depth.

Financial terms of the contract weren't disclosed.

Brazil Volkswagen To Invest BRL6.2 Billion Between 2010-2014

SAO PAULO -(Dow Jones)- Volkswagen do Brasil said Thursday it will invest 6.2 billion Brazilian reals ($3.5 billion) in Brazil between 2010 and 2014 in an attempt to overtake Fiat (FIATY) as the country's number one car and truck retailer.

Volkswagen AG's (VOW.XE) local chief executive, Thomas Schmall, said that the money would come from European headquarters as well as the subsidiary offices in Brazil.

The 2010-2014 budget marks Volkswagen's largest investment ever in Brazil.

Brazil has become an important market for European car makers. While car sales have declined in Europe and the U.S., Brazil car sales continue to rise and will break a record 3 million vehicles in 2009.

Lower interest rates, tax breaks, and Volkswagen's introduction of its new Gol model helped push national sales higher despite a recession.

-By Kenneth Rapoza, Dow Jones Newswires

Petrobras Mexilhao platform jacket launched to the sea

24 Nov 2009

Petrobras - The first stage of the Mexilhão Platform (PMXL-1) installation was carried out this weekend. Late November 22nd, the jacket - the steel structure that serves as the base for the platform and is attached to the bottom of the sea - was launched to sea in the Santos Basin. The operation was carried out nearly 140 kilometers off the coast of Caraguatatuba (state of São Paulo), where the PMXL-1 will go on stream in 2010. Mexilhão will be Brazil’s biggest fixed gas platform, capable of producing up to 15 million cubic meters of gas per day - equivalent to half of the Brazil-Bolivia pipeline’s capacity.

The jacket is a steel structure with a square base measuring 70m x 70 m and an square top measuring 40m x 40m. It is built of tubes that weigh a total of 11,300 tons. Standing 182 meters tall, after installed, its top will be 10 meters above the water line. The platform’s total height, from the seabed to the tip of its modules will be 227 meters, equivalent to a 75-story building. Both the jacket and the modules were built in Niterói (state of Rio de Janeiro) in agreement with the minimum 70% national content requirement. Together, the two modules that will be placed on the jacket weigh in excess of 12,000 tons. The modules house the gas processing and utility facilities, including its 7-MW power generation capacity fueled by three gas-powered turbogenerators, in addition to lodging for up to 100 people, and a heliport.

The jacket was launched to the sea by the Saipem 600 barge. The barge has ballast control devices, and launched the jacket into the water by means of tracks and by sinking its stern. Flotation tanks control the jacket in order for it to remain in the vertical position in the water.

The modules are slated to be transported to the location and installed on the jacket late this year. After installed and welded, the modules will be interconnected and the PMXL-1 prepared to be connected to the wells and to the gas pipeline that will transport the gas from the Mexilhão field to Caraguatatuba, where the Monteiro Lobato Gas Treatment Unit is being built and to which the gas received from the Uruguá and Tambaú fields, in Rio de Janeiro, and from the Tupi Pilot project, in the Santos Basin’s Pre-Salt Pole will also flow.

The Saipem 7000 crane barge will position the jacket on its proper location and attach it to the bottom of the sea using 116-meter-long piles that weigh 400 tons each. This operation is expected to be completed by the end of the month.

The modules are slated to be transported to the location and installed on the jacket late this year. After installed and welded, the modules will be interconnected and the PMXL-1 prepared to be connected to the wells and to the gas pipeline that will transport the gas from the Mexilhão field to Caraguatatuba, where the Monteiro Lobato Gas Treatment Unit is being built and to which the gas received from the Uruguá and Tambaú fields, in Rio de Janeiro, and from the Tupi Pilot project, in the Santos Basin’s Pre-Salt Pole will also flow.

Technip to provide engineering services for ASAB 3 Project

(Source: Datamonitor)French energy sector engineering company Technip has secured a lump sum turnkey engineering, procurement, and construction contract, worth approximately $415 million, from Abu Dhabi Gas Industries for the ASAB 3 Project.
The company has said that the project is a revamp of existing facilities to support an increase in oil production from the new Abu Dhabi Company for Onshore Oil Operations's facilities, and accommodate up to 150 million standard cubic feet per day of additional associated gas from the existing Asab, Shah and Sahil oil fields.

Technip is responsible for the installation of a new booster compression station, transfer lines, debottlenecking of existing ASAB 0 facilities and diverting feed flow from ASAB 0 to ASAB I/II by installing a new compressor, transfer lines and other associated facilities.

Technip has said that the project will be executed by its operating center in Abu Dhabi, United Arab Emirates. The first phase will be completed during the third quarter of 2012 and the remaining phase during the second quarter of 2013.

A service of YellowBrix, Inc.

In The Spotlight - Angola

Angola

27 years of civil war, 1.5 million dead and 4 million refugees after independence from Portugal in 1975, since 2002 Angola has had the peace needed to develop and explore its immense natural resources.

Having gained independence from its colonizing power, Portugal, in 1975, the three main Angolan parties – Popular Movement for the Liberation of Angola (MPLA), National Union for the Total Independence of Angola (UNITA) and the National Front for the Liberation of Angola (FNLA) fought a bloody civil war which ended only with the death of the UNITA leader, Jonas Savimbi.

Angola was also the stage for one of the bloodiest episodes of the cold war, with the United States supporting UNITA and the invasion of Angola by the South African army and the former Soviet Union supporting the MPLA and the sending of Cuban troops to the West African country.

Having received initial support from the Portuguese military to set up government in Luanda, the colonial capital, the MPLA declared itself the legitimate government of Angola and took power. As well as this the South African army was unable to successfully combat the Cubans and MPLA soldiers.

A large majority of Angola’s 11 million people live from subsistence agriculture on the 1,246,700 square kilometers of its territory and most foodstuffs have to be imported.

Average Angolan life expectancy is of just 36.5 years and the infant mortality rate is 190 deaths to every thousand births.

Oil production accounts for around half of the Gross National Product and more than half of all exports. Official data points to Angola having confirmed reserves of 23 billion barrels of oil and 80 billion cubic meters of gas.
Apart from oil, Angola exports oil derivatives, diamonds, some agricultural products such as coffee, wood and cotton, and fish.

Interestingly, its main export markets after the United States are Continental China and Taipei, with 30 and 8 percent of the total, respectively.

Angola has a total labor force of 5.1 million people. More than half of these are unemployed, although the primary sector accounts for 85 percent with the remaining 15 percent in the service industry, agriculture represents no more than 8 percent of the country’s GDP. Industry supports the Angolan GDP and represents more than 67 percent of it.

Fluor Forms Alliance With Chinese Oil Company

New Alliance to Pursue Large Projects in China & Australia


November 20, 2009 (FinancialWire) -- Fluor Corp. (NYSE: FLR | Quote | Chart | News | PowerRating) said it has entered into a formal alliance with Offshore Oil Engineering Corp. Ltd., a subsidiary of China National Offshore Oil Corp. Ltd., in the pursuit of large offshore oil & gas projects in the Asia-Pacific region including China and Australia.

COOEC and Fluor have developed a working relationship that began with cooperation in the early 1990s, according to Jiang Xizhao, president of COOEC. The alliance will focus on both shallow and deep water as well as fixed and floating facility projects in the region with the possibility of leveraging the alliance globally in other regions and industries on a case-by-case basis.

Texas-based Fluor provides capabilities in the fields of engineering, procurement, construction, commissioning, operations, maintenance and project management.

Votorantim And Grendene To Build Long Steel Mill

RIO DE JANEIRO (Dow Jones)--Votorantim Siderurgia, the steelmaking unit of Brazil＇s Grupo Votorantim, has formed a steelmaking joint-venture with Alexandre Grendene Bartelle, owner of apparel and footwear company Grupo Grendene.

The two parties will each hold 50% of the long steel mill Siderurgica Tres Lagoas, also known as Sitrel, Votorantim said in a statement.

The mill, estimated to cost $450 million, will be built at Tres Lagoas in Mato Grosso do Sul State in Brazil＇s midwestern region. Tres Lagoas is located on the Tiete-Parana waterway, which bisects Sao Paulo State, and is also on the Sao Paulo-Bolivia railroad line with a connection to Votorantim Siderurgia＇s new 1-million-ton-a-year steel mill at Resende, Rio de Janeiro State. The Sao Paulo-Bolivia railroad also connects Tres Lagoas to high grade iron ore and manganese mines operated by Vale SA (VALE, VALE5.BR) in the border area near Corumba.

The Sitrel mill will begin operation in 2012 and produce steel bars and girders using Votorantim Siderurgia-supplied crude steel.

The Estado newspaper said the mill would initially produce 300,000 metric tons a year and construction work would commence in January. Sitrel already holds the necessary environmental licenses.

Votorantim Siderurgia currently has steelmaking capacity of 1.45 million metric tons a year, and the new mill will add 1.05 million tons capacity.



-By John Kolodziejski, Dow Jones Newswires

Lula Says Brazil’s 3rd-Qtr GDP Grew at ‘Chinese Pace’

Lula Says Brazil’s 3rd-Qtr GDP Grew at ‘Chinese Pace’ (Update3)

Nov. 17 (Bloomberg) -- Brazil’s economy is expanding at a “Chinese pace” and quarter-on-quarter growth may have quickened to an annualized rate of about 9 percent in the July to September period, President Luiz Inacio Lula da Silva said.
Lula, in his weekly newspaper column, said the country’s $233 billion of international reserves have brought stability that guarantees funding for investment in social programs and infrastructure.
“Among several indicators that resulted from this highly favorable scenario, I can cite the surplus, in a year of crisis, of 1 million government-registered jobs and third-quarter gross domestic product, which should register growth at a Chinese pace of about 9 percent,” Lula wrote.
Brazil is scheduled to report third-quarter gross domestic product on Dec. 10.
Brazil’s economy emerged from its first recession since 2003 in the second quarter, expanding 1.9 percent from the previous three months, for an annualized pace of 7.6 percent. Brazil’s GDP contracted 1.2 percent in the second quarter compared with the same quarter in 2008, while China’s economy expanded 8.9 percent in the third quarter from the same period a year ago.
Growth in China has averaged 9.2 percent this decade, compared with a 3.6 percent annual average rate in Brazil. Finance Minister Guido Mantega said today the country’s economy may be able to achieve annual growth of between 6 percent and 6.5 percent through 2017.
A ‘Far Cry’
While Brazil’s recovery may gain momentum in the coming months, “it’s a far cry from Chinese growth rates,” said Douglas Smith, chief economist for the Americas at Standard Chartered Bank in New York.
Smith, who is forecasting 3.8 percent expansion next year, said if Chinese-like growth rates ever arose in Brazil it would provoke a return of inflation.
“There’s no way Lula could be talking about that kind of growth. It’s not sustainable,” in Brazil’s case, said Smith.
As the government and central bank pull back on fiscal and monetary stimulus measures, Brazil should grow 5 percent next year, compared with 0.2 percent for 2009, according to the latest median estimate among 100 economists surveyed by the central bank.
Managing Success
After leading an economic rebound in emerging markets, Latin America’s biggest economy has to “manage its own success” and plan its actions for a long-term horizon, central bank President Henrique Meirelles said yesterday.
To help pull the $1.6 trillion economy out of recession, policy makers this year cut the benchmark interest rate to a record low 8.75 percent, injected about 100 billion reais ($58 billion) into money markets and cut taxes on cars and consumer goods to help fuel demand.
The interest rate cuts are now influencing growth, helping to speed up Brazil’s economy, Zeina Latif, chief economist for Brazil at ING Bank in Sao Paulo, said in a phone interview.
“It will be healthy to raise rates next year, as the current level is leading to a more heated economy,” she said.
The central bank may have to start raising the so-called Selic rate as soon as April if Brazil’s recovery continues at a fast pace, Paulo Leme, Goldman Sachs Group Inc.’s chief economist for Latin America, said yesterday.
Companies such as AmBev, Latin America’s biggest brewer, and Portugal Telecom SGPS SA, co-owner of Brazil’s biggest mobile-phone company, have sought to capitalize on growth in Brazil by announcing new spending plans this year. State-owned oil company Petroleo Brasileiro SA is implementing a $174.4 billion spending plan that’s set to run until 2013.
The Finance Ministry forecasts that the country’s economy will expand 1 percent this year, while the central bank estimates 0.8 percent growth in 2009.
The real rose to 1.7117 per dollar from 1.7122 yesterday.

By Helder Marinho and Iuri Dantas

Technip scores ENI contract for Appaloosa

Technip scores ENI contract for Appaloosa

(UPI) -- France-based engineering company Technip announced Monday a contract to develop the Appaloosa project in the Gulf of Mexico.
Technip announced Italian energy giant ENI awarded an engineering contract for onshore and offshore work on the Appaloosa development.
ENI owns a stake in more than 400 blocks in the Gulf of Mexico with a daily average net production in excess of 100,000 barrels of oil equivalent.
Appaloosa lies 145 miles off the coast of Alabama. Production is scheduled for 2010.
The work for Technip includes the engineering, fabrication and installation of a 21-mile production flowline and other equipment.
Much of the onshore work will take place at Technip's facilities in Mobile, Ala. Offshore installation is scheduled for completion by the end of the year. All contract work for Technip is expected to be finished by April 2010.

Petrobras, Sonangol Find Oil Field In Angola

SAO PAULO (Dow Jones)--Brazilian state-run energy company Petroleo Brasileiro SA (PBR, PETR4.BR) and Angola's national oil company Sonangol have found a new oil field off the coast of Angola, Angola's state-run Angop news agency said on Tuesday.

According to Angop, the new oil well was discovered at Block 18/06, in deep waters 200 kilometres north of Luanda.

Drilled under 1,500 meters of water, the Magnesium-01 well showed the existence of "petroleum of excellent quality" under 82 meters in sand at a site called Miocene Epoch, Angop said.

The find was confirmed in a joint statement by the two companies.

Sonangol is the main concessionary of Block 18/06.
Petrobras is the operator of the block with a 30% share, while Sonangol Sinopec International Ltd. holds 40%. Sonangol P&P has a 20% stake in the bloc. Others hold the remaining 10% stake.

Petrobras, which has been active in Angola since 1979, plans to invest $900 million in the country from 2008 to 2012. Angola represents Petrobras' largest exploratory drilling program outside of Brazil.


-By Rogerio Jelmayer, Dow Jones Newswires

OGX Starts Drilling 3rd Well in Brazil’s Campos Basin

OGX Starts Drilling 3rd Well

Nov. 17 (Bloomberg) -- OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, started drilling a third well in Brazil’s Campos Basin yesterday.
The 1-OGX-3-RJS well in the BM-C-41 block is about 77 kilometers (48 miles) off the coast of the Brazilian state of Rio de Janeiro and is fully owned by OGX, the company said today in a regulatory filing. OGX said it expects to finish drilling within 60 days.
The Rio de Janeiro-based company announced yesterday it found an estimated 400 million to 500 million barrels of recoverable oil in the 1-OGX-2A-RJS well in the same block. Another block, BM-C-43, may hold 500 million to 1.5 billion barrels, the company said last month.
Chief Financial Officer Marcelo Torres said earlier this month that the company will drill more wells than previously announced after it raised its reserve estimates. OGX plans to drill 79 wells in the five years through 2013, he said. The company has potential crude resources of 6.7 billion barrels.

By Helder Marinho and Laura Price

Petrobras signs up multiple PSVs

State operator Petrobras is pushing ahead with developments off Brazil and has signed multiple new platform supply vessel contracts with shipowners.

Oslo-listed Solstad Offshore said today that is has been awarded two new contracts from Petrobras for two of PSVs, worth around Nkr270 million ($48.4 million).

The contracts are for the PSVs Normand Vibran and Normand Trym for work off Brazil.

The contracts are both for three years each and will start during the first quarter of next year, Solstad said in a statement.

Solstad was not immediately available for comment, but if the contracts value is equally split between the two vessels, then this would equate to a dayrate of around Nkr123,288.

Meanwhile, Oslo-listed Havila Shipping said it has entered into a contract with Petrobras for the charter of the PSV Havila Princess, also for three years.

The charter will also start in the first quarter of next year and is valued at around Nkr135 million.

This equates to a daryrate of around Nkr123,853.

Petrobras is also believed to have signed up Ultrapetrol PSVs Up Rubi, Up Agua-Marinha, Up Diamante, Up Safira and the Up Esmeralda as well as Dof Management’s Skandi Stolmen and Skandi Olympia PSVs.

All of the above contracts are also for three year periods.

A special report on business and finance in Brazil

Arrivals and departures

Foreigners are investing in Brazil, Brazilian companies are going shopping abroad


TRADING with Brazilians has not always been easy. Jean Lery, who visited the country in the 1550s, wrote an account of the trading practices of the Ouetaca people, who liked to exchange goods by placing them on a rock 200 paces away and then retreating. The trading partner did the same, and the dance was repeated as each group got what it wanted. “As soon as each one has returned with his object of exchange, and gone past the boundaries of the place where he had first come to present himself,” wrote Mr Lery, “the truce is broken, and it is then a question of which one can catch the other and take back from him what he was carrying away.”

That would have rung a bell with some of Brazil’s foreign investors in more recent times, from Daniel K. Ludwig, who repeated Henry Ford’s jungle folly a few decades later, to the Japanese banks that tried to enter the market, to US Steel, which discovered Carajás, the world’s largest iron-ore deposit, before being forced into a joint venture with a government company and then selling out of a mine that is still going strong 30 years later. Lots of other foreign investors have done well, however, and Brazil is enjoying a new wave of trust and optimism as the world pours in money (see chart 3). It has become the second-largest destination for FDI flows into developing countries after China.

Foreign investment in Brazil has a long history. British investors built railways at the end of the 19th century to get commodities to ships and then to market. GE first entered this emerging market in 1919. Its local CEO, João Geraldo Ferreira, likes to point out that GE’s light bulbs illuminated Rio’s famous statue of Christ the Redeemer when it was put up in the 1930s. A wave of foreign investment arrived in the 1950s, when China and India were closed and the Korean peninsula was at war. The car companies that have been in Brazil for a while, such as Fiat, GM and Volkswagen, have done particularly well recently: for the past two years Brazil has been the world’s fastest-growing car market.

Earlier this year the Brazilian and Chinese governments announced that China Development Bank and Sinopec, a Chinese oil company, will lend Brazil’s Petrobras, a state-controlled but publicly traded oil company, $10 billion in return for up to 200,000 barrels a day of crude oil from the country’s new oil fields for ten years. Given China’s hunger for commodities and Brazil’s openness to investment, more of this sort of thing is expected.

Investments in Brazil that have failed tend to have one feature in common. Foreign companies arrive in Brazil full of optimism, pay too much for a local firm and then leave when things turn sour, often selling the same company back to a Brazilian firm for a small fraction of what they gave for it. One example is Molson, a Canadian beer company that bought Kaiser, a Brazilian brand, in hopes of refreshing Brazil’s hordes of beer drinkers (though the company ended up selling to a Mexican firm rather than a Brazilian one). Goldman Sachs, the investment bank that invented the term “BRICs”, has been in and out of Brazil a couple of times. UBS bought Pactual, a Brazilian investment bank, before selling it back to André Esteves, a former boss of the bank, earlier this year.

Let’s do the jeitinho
Now that Brazil has become more predictable, fewer foreign investors will fall into this particular trap, but there are others. Because of the unsatisfactory legal system, commercial disputes with other companies are best avoided. This makes personal ties especially important. And once the boss’s children are safely married to the offspring of the firm’s business partners, any company wanting to succeed in Brazil will still have to learn the art of the jeitinho—a Brazilian knack for getting around obstacles to doing business which would make European or American compliance departments shudder.

Even as foreigners have been piling into Brazil, a number of Brazilian firms have been entering markets overseas. For the first time Brazil has a crop of companies that can be described as multinationals. Some of them are already well known outside Brazil: Petrobras; Vale, one of the world’s largest mining companies; and Embraer, the world’s third-largest maker of passenger jets.

Others may be familiar only to those who follow these sectors closely: Gerdau and CSN, two steelmakers; Marco Polo, a bus builder; Perdigão and Sadia (soon to merge into Brasil Foods) and JBS-Friboi, all food companies; WEG, which makes electrical components; Odebrecht and Camargo Corrêa, two construction firms; Natura, a cosmetics-maker; Votorantim, an industrial conglomerate; and Coteminas, a textile firm.

In the most recent list of 100 companies from emerging markets that are evolving into multinationals compiled by the Boston Consulting Group, 14 are based in Brazil. At the last count, the Fundação Dom Cabral, a business school, reckoned there were more than 40 large Brazilian firms undertaking value-adding activities in different parts of the world. Many of these companies began their expansion into foreign markets decades ago. Most turned first to markets in neighbouring countries that were fairly familiar. Their main motive seems to have been to hedge against Brazil’s ups and downs, rather than excitement at the potential for growth beyond their borders.

The latest wave of expansion is different: both more ambitious in geographic terms (Vale alone has a presence on five continents) and more self-confident. Most of the companies concerned feel that, much like Brazil’s banks, they have survived and prospered through difficult decades in a harsh business environment and are ready to operate in risky markets.



Iron rations at CarajásSome of the success stories have benefited from privatisation, or at least part-privatisation. One of the puzzles about Brazil is why politicians should feel unable to talk about privatisation despite so many successes. In the most recent presidential election, in 2006, Lula accused his main rival, Geraldo Alckmin, of wanting to privatise anything that whirred or beeped, and Mr Alckmin promised that he would never sell off anything.

A private treasure

Embraer is a good example of what privatisation can achieve. Like many of Brazil’s industrial giants, it was created by the government. In a joint venture with Italy’s Alenia Aermacchi that gave Brazil access to jet technology for the first time, it produced the AMX fighter jet in the 1980s. But by the 1990s the company was struggling, producing models that nobody wanted to buy. Since privatisation in December 1994 Embraer has turned itself into the world’s biggest manufacturer of mid-range passenger jets. In the company’s factory in São Jose dos Campos, where sheets of aluminium are fed into one warehouse and 100-seater aircraft come out of another some months later, planes are waiting for delivery to commercial airlines in China, India, Poland and Britain. Some 96% of the company’s revenue now comes from exports.

Although Brazil’s main domestic carriers use aircraft built by Boeing and Airbus, Embraer’s machines have proved popular with American carriers for short-haul flights—so much so that the company is probably more exposed to the fluctuations of America’s economy than of Brazil’s. It also has a good business making military planes and private jets and even produces a small propeller plane for crop-spraying, the Ipanema, that runs on ethanol.

CSN, a large steelmaker, was founded by the Brazilian government in 1941, privatised in the early 1990s and has flourished since. Petrobras has also done well since part of its stock was floated. But perhaps the best example of privatisation and international expansion is Vale, which started off private but was nationalised during the second world war to help America’s war effort by supplying iron ore.

It took its first steps abroad in the 1980s and 1990s before being privatised in 1997 (though as with Embraer, the Brazilian government still holds a golden share that would probably prevent it from being taken over). At the beginning of this decade Vale was a medium-sized mining company with a strong iron-ore business in Brazil and some interests in forestry and other bits and pieces. Now it is one of the world’s four biggest mining companies.

Reuters

Aircraft-maker to the world
Thanks to the commodities boom, Vale would have grown almost whatever it did. But it is doubtful whether it would have come so far, so fast, had it remained in public hands. Under Roger Agnelli, who had previously been an investment banker, Vale has sold off its peripheral businesses and is now concentrating on metals, with a sideline in electricity generation and, in Brazil, railways. Vale’s $19 billion acquisition of Inco, a large nickel producer based in Canada, allows the company to provide all the raw materials that steelmakers need. In 2005 Vale was able to raise prices for its iron ore by 71.5% in tough negotiations. It is hard to imagine the old state mining company pulling that off.

If Brazil’s current government seems hostile to the notion that privatisation tends to improve companies, it does like the idea of having a number of national champions succeeding abroad. BNDES has backed up the government’s rhetorical support by lending $8 billion so far this year to help the expansion of Brazilian multinationals. This is a big change from 15 years ago. Carlos Arruda of the Fundação Dom Cabral recalls that shortly after he began compiling an economic-competitiveness survey for the World Economic Forum in 1996, he received a letter from a government minister informing him that it was not in the government’s interest to have Brazilian companies expand abroad: capital was scarce and jobs had to be created at home. This view was reinforced by laws that made it impossible to send profits from foreign subsidiaries back to Brazil or to recognise losses made abroad in company accounts.

This change in attitude has helped, but Brazilian multinationals are not immune to the kind of problems that have sometimes caught out foreign investors in Brazil. Petrobras has had some of its Bolivian assets nationalised by that country’s president, Evo Morales. Odebrecht has had a similar experience in Ecuador. These, however, are relatively trivial compared with Embraer’s current difficulties in China. The company opened a factory in Harbin in 2002 where it has a joint venture with the snazzily named China Aviation Industry Corporation II (the only way of gaining access to this big new market). Embraer had planned to make only older models in China for fear of losing control of its intellectual property. But the Chinese company is insisting that Embraer produce its newest models there, and there is now a chance that Embraer will withdraw from making aircraft in China altogether.

No doubt many of Brazil’s new multinationals will encounter similar problems as they venture abroad. But even if they do, companies that are essentially commodity producers, consumers or traders (which make up a majority of the new multinationals) can rest assured that their built-in comparative advantage is unlikely to be eclipsed soon.

From The Economist - Printed Edition - Nov 12th 2009

Repsol Estimates Brazil Carioca Find Reserves AT 765M BOE

RIO DE JANEIRO (Dow Jones)--Spanish oil firm Repsol YPF SA (REP) estimates that the Carioca discovery in Brazil holds 765 million barrels of oil equivalent, or BOE, in recoverable oil reserves, Repsol's Exploration and Production Director Nemesio Cuesta said over the weekend. (continue here)
Repsol and its partners in BM-S-9 block in the promising subsalt region of Brazil's Santos Basin had discovered Carioca in September 2007.

Oil in Brazil's subsalt region lies at water depths of about 2,000 meters, and several thousand meters further under the sea bed below layers of rock, sand and salt, making production challenging.

Jason Kenney, oil analyst at ING said 765 million BOE is "a big find. It is not giant, but it is big and most oil majors would be very happy with that kind of discovery."

Brazilian state-run oil company Petroleo Brasileiro SA (PBR), or Petrobras, holds a 45% operating stake in the block, while Repsol holds 25%, and BG Group PLC (BG.LN) another 30%.

The consortium has made three other discoveries in the BM-S-9 block, one of them the giant Guara field, which is estimated to hold up to 2 billion BOE in recoverable reserves, the companies have said in September.

Guara is actually a better find than the even larger nearby Tupi field, Cuesta said, as it has shown a superior productivity in production tests.

"There is a lot of value in these [Brazilian] discoveries," Repsol Chairman Antonio Brufau said over the weekend.

Guara is slated to enter commercial production in January 2013, with an initial output of 120,000 BOE a day, Repsol's Cuesta said. Before that, during five months in the second and the fourth quarter of 2010, the companies plan to carry out a long-term production test at Guara.

The companies plan a long-term production test at Carioca between the fourth quarter of 2010 and the first quarter of 2011.

Cuesta couldn't give a reserve estimate for the Iguacu and Abare West discoveries that were also made in the BM-S-9 block. But he added that the four discoveries in the block are now believed to be separate structures, not one linked oil field as had been suspected earlier on.

In February, Cuesta had said the entire BM-S-9 block may hold between 2 billion and 6 billion BOE, but that estimate hasn't yet been confirmed by operator Petrobras.

Carioca lies at a water depth of 2,140 meters, and 273 kilometers from the coast of Sao Paulo state.

Company Web site: http://www.repsol.com

ThyssenKrupp steel projects continue in U.S., Brazil

New plant startups will be stretched out into 2011

Germany's biggest steel maker, ThyssenKrupp, is continuing to build carbon and stainless steelmaking and processing facilities in the U.S. and Brazil, "but is responding flexibly to the changed economic conditions" by stretching out construction.

ThyssenKrupp admits in its 2008-2009 fiscal year financial report that it "has cancelled or postponed numerous modernization and capacity expansion projects" worldwide-but not the ones in the Americas.

Construction of the new steelmaking and processing plant near Mobile, Ala., "is largely on schedule" and production will start in the second quarter of 2010. Still, capacities are being ramped up over an extended period and are being flexibly adapted to steel demand, the company says. So, until the second quarter of 2011, the slabs to be processed will come from Germany.
A flexible approach also is being taken to the startup of the new U.S. stainless steel mill, also in Mobile, expected to begin production in October 2010. The plant will open with a reduced annual cold-rolling capacity of around 110,231 net tons. The other processing units for stainless steel products will be started up over an extended period, and the melt shop, which was planned for early 2012, "can now be delayed by up to 24 months."

The new steel mill in Sepetiba Bay in the state of Rio de Janeiro in Brazil eventually will have annual steelmaking capacity of five million tons but the ramp-up "has been adapted in line with lower demand expectations." The first production line will start operation with one blast furnace and one steel converter in mid-2010 with the second blast furnace and the second converter being ramped up in 2011. ThyssenKrupp also says it negotiated with Brazilian iron ore producer Vale to increase its share to 27% in Siderurgica do Atlántico (Atlantic Steel).

The America's steel business will "most likely" show a loss again in fiscal 2009-2010 from the costs of building these new steel plants, says Executive Board Chairman Ekkehard Schulz in a statement.

ThyssenKrupp reported a record overall loss of 2.36 billion euros ($3.5 billion) in its 2008-2009 fiscal year, which was attributed to collapsing steel and nonferrous metals demand worldwide, a far cry from the boom in the global metals market of recent years. In addition to steel, the Düsseldorf-based group manufactures elevators and escalators, military and merchant ships, submarines and yachts, wind turbine engines and poser plants, forgings and automotive parts-and steel and nonferrous metals processing and distribution in a newly revamped Materials Services business area.

Commenting on the 2009-2010 fiscal year, Schulz says the emerging economic recovery is fragile, but expects sales to at least stabilize. "Earnings are expected to improve significantly and return to profit, thanks in no small part to the cost-cutting programs we have introduced," he adds. A major part of that has been ThyssenKrupp's global cutback in 11,879 jobs, a 6% reduction in the workforce.

Brazil Commercial Guide - Foreign Capital

1.1 Restrictions on Foreign Investment
1.2 Registration of Foreign Capital
1.3 Currency Investments
1.4 Investment by Conversion of Foreign Credits
1.5 Investment by Import of Goods without Exchange Cover

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1. - FOREIGN CAPITAL IN BRAZIL

Foreign capital in Brazil is governed by Laws Nos. 4131 (the Foreign Capital Law) and 4390 of September 3, 1962 and August 29, 1964, respectively. Both laws are regulated by Decree No. 55762 of February 17, 1965, and have been amended.

According to Law 4131/62, "foreign capital is considered to be any goods, machinery and equipment that enter Brazil with no initial disbursement of foreign exchange, and are intended for the production of goods and services, as well as any funds brought into the country to be used in economic activities, provided that they belong to individuals or legal entities resident or headquartered abroad."

There are two official exchange markets in Brazil, both of which are subject to Central Bank regulation, and operate at floating exchange rates:

(a) the free commercial/financial exchange rate market, which is reserved basically for (i)trade-related transactions (import and export); (ii) foreign currency investments in Brazil;(iii) foreign currency loans to residents in Brazil; and (iv) other transactions involving remittances abroad that are subject to preliminary approval from the Brazilian monetary authorities; and (b) the tourism exchange rate market, which was initially developed for the tourism industry, and was later expanded to cover certain other transactions. Applicable regulations indicate the types of transactions that qualify for this market.
While both markets operate at floating rates negotiated between the parties, the key distinction between them is that (i) the commercial/financial exchange market is restricted to transactions that in certain cases require preliminary approval from the Central Bank of Brazil; and (ii) the tourism exchange market is open to transactions that do not require such approval.

Exchange operations are effected by means of exchange contracts, and may be divided into transactions entailing the entry of foreign capital, and transactions entailing an outflow of foreign exchange.

Effective from February 1, 1999, the exchange positions on the free and floating exchange rate markets were unified for financial institutions, according to Central Bank Resolution No. 2588 of January 25, 1999. Resolution 2588/99 may be viewed as the first step taken by the Central Bank of Brazil towards unification of the free and floating exchange rate markets.

1.1 Restrictions on Foreign Investment

Participation of foreign capital in the following activities is prohibited:
• nuclear energy;
• health services;
• the ownership and management of newspapers, magazines and other publications, and of television and radio networks;
• the ownership of property in rural areas and of businesses abutting on international borders;
• post office and telegraph services;
• domestic airline concessions; and
• the aerospace industry.


There are still certain restrictions on participation of foreign capital in financial institutions, which can however be circumvented if in the national interest. Supplementary legislation must still be enacted to regulate this matter, including for insurance companies.

As a result of the constitutional reform mentioned below, Brazilian companies, even when controlled by aliens, can acquire, commercially exploit and lease rural land.

Effective from March 31, 2000, foreign investments in the domestic securities market are channeled through one single fixed or floating income investment vehicle, by which foreign funds brought into Brazil by a non-resident investor may be invested in securities and equities that were only available to resident investors until then.

The 1995 constitutional reform had the following main effects in relation to the economic sector:

(a) it eliminated the concept of a Brazilian company with domestic capital, and reestablished the traditional concept of a Brazilian company as a company that is organized pursuant to Brazilian law, and headquartered and managed in Brazil; (b) it allowed private telecommunications companies to commercially offer sound or sound/image broadcasting services either directly or through concession, authorization or licensing; (c) it eased the government monopoly, allowing
private capital to be contracted to prospect for, research, refine, trade or transport petroleum and explore gas pipelines; (d) the various Brazilian states were allowed to directly or via concession offer commercial piped gas services; and (e) constitutional restrictions on offshore companies' engaging in cabotage (coastal navigation) services were lifted. Ordinary law must now be enacted to regulate these various areas.


Brazilian companies may request and obtain a permit to operate in the mining sector, even when controlled by a foreign company.


Law 9074/95 provided that the Concessions Law (Law 8987/95) applies to the participation of private companies in the generation and transmission of electric power and commercial running of customs posts and terminals, highways and barriers.


1.2 Registration of Foreign Capital


Foreign capital should be registered with the Central Bank of Brazil, through the Electronic Registration System – Foreign Direct Investments (Registro Declaratório Eletrônico – Investimento Externo Direto – RDE-IED).

1 A Constitutional Amendment bill is under way at the Federal Senate to approve foreign ownership interests of up to 30% in the capital of newspapers and radio broadcasting companies (Constitutional Amendment Bill 455/97).

The registration of foreign capital is required when the commercial/financial exchange rate is to be used for the remittance of profits abroad, the repatriation of capital, and the registration of the reinvestments.


Investments will always be registered in the foreign currency in which they are actually made, or in Brazilian currency, when they originate from a non-resident account duly maintained in Brazil.


1.3 Currency Investments


No preliminary official authorization is required for investment in currency. The investment to subscribe for capital or to buy a stake in an existing Brazilian company will be remitted to Brazil through any banking establishment authorized to deal in foreign exchange. However, the closing of currency exchange is conditional on registration of the foreign investor-Brazilian investee code at RDE-IED.
Registration of the investments is carried out by way of statements made by the representative of the Brazilian investee and/or by the representative of the foreign investor, through RDE-IED, within thirty days after the respective event.


For foreign investments originated from a non-resident account duly maintained in Brazil, the respective registration will be made in Brazilian currency. Any changes in the investment status must be effected via the respective non-resident account, and registration of said investment must be updated at the RDE-IED.

1.4 Investment by Conversion of Foreign Credits

If the foreign credits to be converted into investments are duly registered at RDE, no preliminary from the Central Bank of Brazil is required. After receipt by the investee of the credit characteristics, and of a statement from the creditor consenting to the conversion, then a token exchange transaction must be performed, representing the purchase and sale of the foreign currency.
As for the credits not entered at RDE, a preliminary authorization from the Central Bank of Brazil is required for their conversion into investment.


1.5 Investment by Import of Goods without Exchange Cover


Investment by import of goods without exchange cover (to pay up corporate capital) does not require a preliminary approval from the Central Bank of Brazil.

The goods, machinery and equipment must be intended for production of goods or rendering of services. In the cases of both imports of used goods and imports backed by tax incentives, such goods must have no Brazilian counterpart. Second-hand goods must be used in projects fostering the economic development of Brazil.


Once the imported tangible goods have been cleared by customs, the Brazilian company has 90 days to make the respective investment registration at RDE-IED.
As for intangible goods, the respective foreign direct investment will be conditioned to the Central Bank preliminary approval.

1.6 Remittance of Profits and Treaties to Avoid Double Taxation

There are usually no restrictions on the distribution and remittance of profits abroad. Profits and dividends posted and distributed as from 1996 are exempt from income tax.

Brazil has signed double-taxation avoidance treaties with the following countries: Germany, Argentina, Austria, Belgium, Canada, China, South Korea, Denmark, Ecuador, Spain, the Philippines, Finland, France, the Netherlands, Hungary, India, Italy, Japan, Luxembourg, Norway, Portugal, the Czech Republic, Slovakia and Sweden.


1.7 Reinvestment of Profits


According to the Foreign Capital Law, reinvestments are profits "made by companies established in Brazil and assigned to persons or companies resident or domiciled abroad, which have been reinvested in the company that produced them or in another sector of the domestic economy."
Should the foreign investor decide to reinvest rather than remit profits, such profits are eligible for registration as foreign capital along with the original investment, through the RDE-IED system.


1.8 Repatriation

Foreign capital registered with the Central Bank may be repatriated to its country of origin at any time without authorization. Remittances in excess of the registered amount will be considered capital gains for the foreign investor, and are thus subject to 15% withholding income tax.

1.9 Remittances Abroad

Remittance of funds abroad in foreign currency using the commercial/financial exchange rate is restricted when such funds are not registered with the Central Bank, since the remittance of profits, repatriation of capital, and registration of reinvestment are all based on the amount of foreign investment registered.

The international transfer of funds in Brazilian currency between residents (including subsidiaries of foreign companies) and nonresidents, provided that the transactions are carried out through banks authorized to deal in foreign exchange in Brazil, is expressly free and does not require prior approval.

Local currency transferred abroad is converted into foreign currency through a number of mechanisms, one of them being interbank transactions on the tourism exchange market.
The remittance of foreign currency abroad for investment purposes (up to US$ 5 million per year) is entirely free. Transactions in excess of such value require preliminary approval from the Central Bank of Brazil. In any event, it is required that the remittances be made on the tourism exchange market, and carried out through banks authorized to deal in foreign exchange in Brazil.


1.10 Transfer Abroad of Investments in Brazil

The equity interest owned in a Brazilian company by a foreign investor may be sold abroad, with no tax implications in Brazil, irrespective of the price paid. The foreign purchaser will be entitled to register foreign capital in the same amount as the registration previously held by the selling company, regardless of the price paid for the investment abroad. In this case, the foreign purchaser—through its representative resident in Brazil—must enroll at RDE-IED and then enter its purchase. At the same time, the foreign seller must update its registration at the Central Bank of Brazil, also through RDE-IED, so as to account for cancellation of the values referring to the portion then disposed of. This registration is necessary for the new investor to remit/reinvest profits and to repatriate capital based on the commercial/financial exchange rate.

1.11 Offshore Loans

Pursuant to Central Bank Resolution No. 2770 of August 30, 2000, the financial conditions underling an offshore loan transaction between Brazilian-based and foreign-based persons must be submitted to and registered with the Central Bank within 10 business days after settlement of the respective currency exchange transaction. The Central Bank will review the respective application through FIRCE, and will then issue a certificate of registration for the corresponding transaction.


Such registration will enable the borrower to make remittances of loan principal and charges.
A certificate of registration issued by FIRCE is valid for up to 120 calendar days counted from each maturity date stated on the respective certificate. After such deadline, no payment may be made under such certificate, whether for closing of currency exchange transactions or for payment in Brazilian currency. The parties interested in making any payment after such period (or in changing the terms and conditions originally agreed on) must apply to FIRCE for revalidation of such certificate.


Next Chapter : Types of Business

Brazil Petrobras Tupi Well Confirms Subsalt Potential

RIO DE JANEIRO (Dow Jones)--Brazilian state-run oil company Petroleo Brasileiro (PBR), or Petrobras, said the results of the fourth well sunk in the Tupi field in the subsalt layer confirmed the potential of 5 to 8 billion barrels of oil and gas.
In a statement late Thursday, Petrobras said the fourth well 3-BRSA-755A-RJS, was located in a water depth of 2,115 meters, 265 kilometers off the coast of Rio de Janeiro and 18 kilometers northeast of the initial Tupi well, which discovered oil in the area, 1-RJS-628 (click here to continue)

Petrobras said the fourth well was drilled in a thin layer, around 250 meters thick, of light oil-bearing reservoirs found at a depth of 4,900 meters. Petrobras said it would now go ahead with well productivity tests over the next few weeks. Petrobras is lead operator in the exploration bloc, BM-S-11, with 65%, and is partnering BG Group (BRGYY, BG.LN) with 25% and Galp with 10%.


By John Kolodziejski, Dow Jones Newswires

In the spotlight - Braskem

Braskem S.A.

Braskem S.A. (BM&F Bovespa: BRKM3, BRKM5, BRKM3 / NYSE: BAK /: Latibex XBRK) is a Brazilian petrochemical company headquartered in São Paulo. As of 2008, Braskem is the largest petrochemical company in Latin America and the third largest in the Americas, after ExxonMobil and Dow Chemical

Products

Braskem operates 13 chemicals plants with a production capacity of over 5 million tons per year of chemical and petrochemical products.

Basic Petrochemicals

Braskem controls the two largest petrochemicals complexes in Brazil which are located in the cities of Camaçari (Bahia) and Triunfo (Rio Grande do Sul). Its basic petrochemicals units are responsible to provide ethylene and propylene to their polymers units that are located nearby. Also, the company produces other chemical products such as benzene, butadiene, toluene, xylene and isoprene. These compounds are mostly sold to other chemical companies located in the complexes, such as Innova, Elekeiroz and Dow Chemical. Although its main feedstock is naphtha, the company is constructing what its been called a "green ethylene" plant which will produce ethylene using ethanol from sugarcane as feedstock. This plant, located in Triunfo, is projected to start on August 2010.

Polymers

Braskem is the main producer of polyethylene and polypropylene in Brazil. Besides their plants located in both petrochemical complexes, Braskem started on April 2008 a 300,000 tons polypropylene plant in the city of Paulínia (São Paulo).

History

The company was formed in 2002 as part of a major restructuring of the Brazilian petrochemical industry. At that time, Copene merged with other petrochemicals companies owned by Odebrecht and Mariani Group, such as Trikem, OPP, Proppet, Polialden and Nitrocarbono to create Braskem. The company was born already being the largest petrochemical company in Latin America.

In 2006, Braskem bought the third largest polyethylene producer in Brazil, Politeno. On the next year, the company joined Petrobras and Ultrapar in the biggest business operation in Brazilian history, when those three companies acquired Grupo Ipiranga for US$ 4 billion ^[2]. While Petrobras and Ultrapar shared the fuel distribution operations, Braskem took Ipiranga Petroquímica, former petrochemical company of Grupo Ipiranga.

Braskem S.A

Type	Public (BM&F Bovespa: BRKM3, BRKM5 NYSE: BAK Latibex: XBRK)
Founded	(2002)
Headquarters	São Paulo, Brazil
Key people	Bernardo Gradin (CEO)
Industry	Petrochemical
Products	Chemicals
Revenue	▲ US$ 9.2 billion (2008)
Employees	4,500

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GE wins $250 million offshore drilling contract in Brazil

GE Oil & Gas has a big subsea drilling win under its belt with the news today that its drilling & production business has been awarded a three-year agreement valued at more than $250 million to supply 250 VetcoGray subsea wellhead systems to Petrobras of Brazil. In terms of the number of wellheads, it’s the largest contract awarded to date in the industry.


GE sells subsea wellheads by the Brazilian seashore: With this contract, GE Oil & Gas..continue here continues to expand its presence across Latin America’s oil and gas sector, with more than 1,000 gas turbines and compressors installed throughout the region. In addition, the company has inspected more than 50,000 kilometers of oil, gas, water and refined product pipelines in Latin America.

As offshore drilling pushes past 10,000-foot water depths and 30,000-foot wells, pressure increases exponentially – and not only below the surface. The extreme operating conditions create extreme technological pressures too, which is why the subsea wellhead system must be reliable if the operation is to succeed. GE’s wellhead system – which is what today’s deal is for — is used to suspend so-called “casing strings,” which are the long sections of connected pipes used in the drilling. The wellheads also help seal the oil wells. Taken as a whole, the wellhead system effectively is the upper ending point of the well and provides a mounting position for the equipment that controls the flow of oil up to the surface.

The advanced wellheads will be manufactured in the GE Oil & Gas Jandira plant in the state of Sao Paulo, Brazil, with the first unit due for delivery in July 2009.

“This agreement reinforces our strong presence in Brazil, where more than 1,200 of our subsea wellhead systems and 180 of our subsea trees have been produced and installed over the past 30 years,” said Fernando Martins, vice president, Latin America Region, GE Oil & Gas.
GE is currently negotiating with Petrobras, which is also known as Petroleo Brasileiro S.A., for a separate contract to provide services for the equipment. Based in Rio de Janeiro, Petrobras is one of the largest companies in Latin America and controls significant oil and energy assets in 18 countries worldwide. GE’s systems are part of Petrobras’ drilling campaign to reach 3.3 million barrels of oil equivalent per day by 2013.

Brazil MMX's Wuhan Steel Mill Joint-Venture On Schedule

RIO DE JANEIRO -(Dow Jones)- Brazilian mining company MMX Mineracao e Metalicos SA (MMXM3.BR) said discussions were on track for a steel mill joint-venture with China's Wuhan Iron & Steel Co. (600005.SH).
"Discussions are progressing and we're confident they are moving on schedule," MMX CEO Roger Downey said during a third quarter earnings conference call Thursday.
MMX announced May 19 the signing of a memorandum of understanding with the Chinese company to create a potential partnership to explore mining and steel projects in Brazil.
Under the accord, Wuhan would invest jointly with both MMX and MMX's sister logistics company LLX Logistica S/A (LLXL3.BR).
The companies could also build a steel unit with a capacity of 5 million metric tons a year, MMX and LLX said in a joint statement in May.
The mill is expected to be built at LLX's new port of Acu in northern Rio de Janeiro State.
MMX and LLX didn't say how much the Chinese company would invest.


-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;

India OKs ONGC Unit To Invest $70 Mln More In Brazil

NEW DELHI (Dow Jones)--The Indian government Thursday approved a proposal from state-owned Oil & Natural Gas Corp.'s (500312.BY) unit to invest an additional $70 million in an oil project in Brazil.

With this, ONGC Videsh Ltd.'s total investment in the BC-10 offshore block in Brazil will...continue here

go up to $383 million, Union Home Minister P. Chidambaram told reporters, explaining the Cabinet's decision.

ONGC Videsh, which invests in assets overseas, had acquired a 15% participatory interest in the block in 2006. The block is operated by Royal Dutch Shell PLC.

The Cabinet has also set up a committee to look into a proposal to invest another $17.5 million in the project if its capital-expenditure target is raised or in case of a cash shortfall, he added.

India, which imports three-quarters of its crude oil requirement, is facing falling output at its fields. It is seeking to cover the shortfall in domestic production by acquiring stakes in oil and gas blocks overseas.

ONGC Videsh aims to acquire assets to produce 20 million tons a year of oil or oil equivalents by 2020. It currently produces 170,000 barrels a day, or 8.75 million tons a year, at its fields in Sudan, Vietnam, Venezuela, Russia and Syria.

"The additional investment is expected to provide higher reserve accretion of hydrocarbon and more production from the project" to ONGC Videsh, Chidambaram said.

ONGC Videsh Managing Director R.S. Butola had said in September production had started at the BC-10 block in July and that the company expected the total output to be ramped up to 40,000 barrels a day by December.

The peak output at BC-10 is expected to be 100,000 barrels of oil equivalent a day, according to Shell's Web site.

-By Rajesh Roy and Sunil Raghu; Dow Jones

Banco do Brasil may issue shares in U.S. in 2009

SAO PAULO, Nov 12 (Reuters) - Banco do Brasil, Latin America's largest bank by assets, has received approval from the U.S. Securities and Exchange Commission to issue American Depositary Receipts, Chief Executive Aldemir Bendine said on Thursday.

The state-controlled bank may issue that type of stock as soon as 2009, he added. (Reporting by Aluisio Alves)

Brazil's Best Asset and Business Protocol

For a long time now, Brazil’s natural beauty and Carnival rendered it international fame, attracting thousands of tourists all year long. But there is a very special attraction that you only discover when you are there: the Brazilian people. Much beyond the breathtaking scenery, the way these people live surprises everyone with its simplicity, willingness, hope, hospitality and happiness.



Studies carried out by Embratur indicate that 75% of the tourists who seek Brazil as their vacation destination do so first of all because of the natural beauty. But once they arrive here, they find such hospitality that they soon become enchanted with the mixture of colors, races and cultures of the people as well.

According to surveys, when foreign tourists are questioned about Brazil, they indicate happiness as the main characteristic of our people. Happiness that can be perceived in every moment they stay in the country – whether in our music, the warmth of our northeastern beaches, the lively Rio de Janeiro nightlife or the exuberant Amazon.

Now...a little about Business Etiquette and Protocol in Brazil

Relationships & Communication

. Brazilians need to know who they are doing business with before they can work effectively.
. Brazilians prefer face-to-face meetings to written communication as it allows them to know the person with whom they are doing business.
. The individual they deal with is more important than the company.
. Since this is a group culture, it is important that you do not do anything to embarrass a Brazilian. (continue here)


Business Etiquette and Protocol in Brazil

Relationships & Communication

. Brazilians need to know who they are doing business with before they can work effectively.. Brazilians prefer face-to-face meetings to written communication as it allows them to know the person with whom they are doing business.
. The individual they deal with is more important than the company.
. Since this is a group culture, it is important that you do not do anything to embarrass a Brazilian.
. Criticizing an individual causes that person to lose face with the others in the meeting.
. The person making the criticism also loses face, as they have disobeyed the unwritten rule.
. Communication is often informal and does not rely on strict rules of protocol. Anyone who feels they have something to say will generally add their opinion.
. It is considered acceptable to interrupt someone who is speaking.
. Face-to-face, oral communication is preferred over written communication. At the same time, when it comes to business agreements, Brazilians insist on drawing up detailed legal contracts.

Business Negotiation

. Expect questions about your company since Brazilians are more comfortable doing business with people and companies they know.
. Wait for your Brazilian colleagues to raise the business subject. Never rush the relationship- building time.
. Brazilians take time when negotiating. Do not rush them or appear impatient.
. Expect a great deal of time to be spent reviewing details.
. Often the people you negotiate with will not have decision-making authority.
. It is advisable to hire a translator if your Portuguese is not fluent.
. Use local lawyers and accountants for negotiations. Brazilians resent an outside legal presence.
. Brazilian business is hierarchical. Decisions are made by the highest-ranking person.
. Brazilians negotiate with people not companies. Do not change your negotiating team or you may have to start over from the beginning.

Business Meeting Etiquette

. Business appointments are required and can often be scheduled on short notice; however, it is best to make them 2 to 3 weeks in advance.
. Confirm the meeting in writing. It is not uncommon for appointments to be cancelled or changed at the last minute.
. In Sao Paulo and Brasilia it is important to arrive on time for meetings. In Rio de Janeiro and other cities it is acceptable to arrive a few minutes late for a meeting.
. Do not appear impatient if you are kept waiting. Brazilians see time as something outside their control and the demands of relationships takes precedence over adhering to a strict schedule.
. Meetings are generally rather informal.
. Expect to be interrupted while you are speaking or making a presentation.. Avoid confrontations. Do not appear frustrated with your Brazilian colleagues.

Dress Etiquette

. Brazilians pride themselves on dressing well.
. Men should wear conservative, dark coloured business suits. Three-piece suits typically indicate that someone is an executive.
. Women should wear suits or dresses that are elegant and feminine with good quality accessories. Manicures are expected.

Business Cards

. Business cards are exchanged during introductions with everyone at a meeting.
. It is advisable, although not required, to have the other side of your business card translated into Portuguese.
. Present your business card with the Portuguese side facing the recipient.

Useful information and links about Brazil

* Currency - the currency of Brazil is known as the Real (BRL). Use the free currency converter to compare to dollars, GBP or Euro.
* Weather - visit Yahoo!'s up to date Weather for Brazil.
* Dialling Code - the international dialling code for Brazil is +55.
* Time - Brazil is -3 hours GMT. Get the time in Brazil now.

Petrobras Announces New Oil Discovery in Angola

Brazil Petrobras Announces Oil Discovery Offshore Angola

Of DOW JONES NEWSWIRES NOv 11

RIO DE JANEIRO (Dow Jones)--Petroleo Brasileiro (PBR), or Petrobras, said Wednesday it has discovered oil in a deepwater region off the coast of Angola.

The Brazilian state-run energy company said oil was discovered in the Cabaca Norte-1 well in Angola's deepwater 15/06 block. The well is about 350 kilometers off the coast north of Luanda.

The well produced 6,500 barrels of oil per day during production tests, Petrobras said. The Cabaca Norte-1 well was drilled in 500 meters of water to a total depth of 2,830 meters.

Cabaca Norte-1 was the second oil discovery in the 15/06 block. In October 2008, oil was found at the N'Goma-1 well.

Petrobras holds a 5% stake in the block. Eni Angola operates the block with a 35% stake, while Sonangol P&P has a 15% share, SSI Fifteen Ltd. 20%, Total SA (TOT, FP.FR) 15%, Falcon Oil Holding Angola AS 5% and Statoil Angola Block 15/06 AS 5%.

The latest find was at shallower depths than N'Goma-1, which drilled to a water depth of 1,421 meters and a total depth of 3,383 meters. Oil from N'Goma-1 measured at 22.5 degrees on the American Petroleum Institute's grading scale.

Petrobras, which has been active in Angola since 1979, plans to invest $900 million in Angola from 2008 to 2012. Angola represents Petrobras' largest exploratory drilling program outside of Brazil.

Brazilian Votorantim Metails LME-Priced Cobalt Contract

Brazilian miner, Votorantim Metais, has signed a long-term sales contract with LN Metals International, Mondovisione reports. The contract is priced on the basis of the London Metal Exchange’s first long-term physical cobalt contract, which begins trading on Feb. 22, 2010.

The Votorantim contracts accounts for a major proportion of the company’s Tocantins brand cobalt metal. The Brazilian company is one of a number of producers that has applied to list its cobalt brand, along with Jinchaun Group, Sumitomo Metal Mining and Vale.

Mondovisione Article

The LME is pleased to announce that the first long-term physical cobalt contract has been finalised incorporating an LME pricing formula.

Votorantim Metais Brazil has agreed a long-term sales contract with LN Metals International Ltd for deliveries in 2010 for a significant proportion of the company’s Tocantins brand export tonnage in cobalt metal.

For any new terminal market contract to gain traction physical material has to be priced basis the exchange formula. Votorantim’s decision is a significant development and reflects keen interest in the physical industry to take advantage of LME pricing and the Exchange’s other services.

The Brazilian company is one of a number of producers that has applied to list its cobalt brand. Others include Jinchaun Group, Sumitomo Metal Mining Co and Vale Inco.

The LME cobalt futures contract begins trading on February 22nd, 2010.

Brazil Miner Seeks $2.7 Billion in Debt, Share Sale

Nov. 11 (Bloomberg) -- Ferrous Resources do Brasil Ltda., a mining company seeking to fund an iron ore complex, wants to raise $2.7 billion through a combination of debt, an initial public offering and investment from a strategic partner. Ferrous intends to borrow about $1.3 billion, Bob Graham, a director of the closely held, Belo Horizonte, Brazil-based ... (continue here)

company, said in an interview. Ferrous is talking to companies about investment in the Viga and Serrinha projects in Minas Gerais state in return for iron ore supplies, he said.

“We’re talking to a number of potential strategic investors and we’re looking at coming to the public market at some point,” Graham said.

Ferrous plans to join Rio de Janeiro-based Vale SA, the world’s largest iron ore supplier, in mining the steelmaking material from Brazil as prices climb. London-based Anglo American Plc is developing the $3.6 billion Minas-Rio project in Minas Gerais, for which it has said it may seek partners.

Ferrous will use some of the funds it plans to raise to build a port and a 400-kilometer (249-mile) pipeline, which will carry raw material contained in a slurry from the mining complex to the coast, Graham said Nov. 9 by telephone from his home in Yorkshire, England. Graham was previously head of Rio Tinto Group’s Brazilian unit.

Ferrous planned an IPO in London last year, Graham said, before commodity prices slumped amid the global economic slowdown. The company has retained JPMorgan Cazenove Ltd. as an adviser, he said.

Private Placements

“It’s likely to be a mix of 50-50 debt and equity, but how much of the equity comes from the IPO and how much from the strategic investor is still being decided,” Graham said. He said no schedule has been set for the IPO and declined to identify the companies Ferrous is talking to.

The company was established in 2007 and raised $1.26 billion via private placements between June 2007 and August 2008, according to its Web site. The largest investor in Ferrous is Harbinger Capital Partners, the New York-based hedge fund firm run by Philip Falcone, Graham said. Ferrous has enough funds for feasibility and engineering studies, he added.

Viga and Serrinha will produce 25 million metric tons a year of iron ore. Construction of phase one of the complex is scheduled to begin in 2011 with first production due before the end of 2013, Graham said. The location of the port has space for an iron-ore pellet plant and steel mill, for which permits are being sought, he added. A second phase could double output to 50 million tons.

Demand Rebound

Ferrous is seeking government approval for its infrastructure projects, Graham said.

Iron ore demand is rebounding after the financial crisis and sales are expected to expand next year, Vale Chief Executive Officer Roger Agnelli said last week. Vale, Rio and BHP Billiton Ltd., the three-largest producers, are boosting shipments from mines in Brazil and Australia as steel mills in Asia, Europe and the U.S. restart furnaces to meet demand from automakers and builders.

Contract prices may jump 14 percent next year to the second-highest on record, according to a Bloomberg News survey of analysts last month.

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