1. BRAZIL
on
Tokyo Forum 2010
mkurcgant@arcweb
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2. Brazil in South America
South America is composed by 13 countries, totalling
17,8 million square kilometers. Total population of
South America is about 400 million people.
From these countries, Brazil is the largest size one,
with area of 8,5 million square kilometers (47,7%) and
the largest in population, close to 200 million people.
Brazil is the fifth largest area size country in the world
(behind Russia, Canada, China and USA) and the fifth
largest in world population (following China, India,
USA and Indonesia).
Brazil language is Portuguese. All the remaining
South American countries are Spanish speaking.
Brazil GDP is 1,574,039 Million US Dollars, the eigth in
the rank worldwide. The recent world crisis in 2009
caused a small negative impact of 0.2% in GDP. This
year the economy is having a fast recovery and is
estimated to grow 7.3%. Job postions lost at the
crisis period have already been recovered. Ind strial
ha e alread reco ered Industrial
production is now at the same level it was prior to the
economic turmoil.
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3. Brazilian Regions
The country is formed by 26 states, plus a Federal
District, are divided in five regions with specific
characteristics:
North Area (green) generates 6.0% of GDP is driven
mainly by the Amazon forest, has few industrial
activities living mainly from kettle and some
agriculture.
Northeast Area (brown) generates 9.3% of GDP used
to heavily depend in tourism, but is slowly growing
its industrial strengths, with new projects being
launched.
Central-West Area (yellow), 4.1% of GDP, developed
strong kettle and agricultural activities, and is now
4.32 km
strongly expanding its agro-industry business such
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as pulp and paper, and ethanol plants.
paper plants
Southeast Area (red) with 60.7% of GDP, and South
4.328 km Area (blue) with 19.9% of GDP are the most powerful
industry and business areas, strong in all main
vertical markets. About 90% of whole GDP is
i l k Ab f h l i
produced within the dotted line limits. Just São Paulo
state is responsible for 40% of whole GDP.
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4. Brazil Vertical Markets (1)
Agro-Business
Due to country size, fresh water availability and solar radiation, country produces a large variety of
agriculture and animal origin products: Coffee, soya-bean, sugar-cane, pine and eucalyptus wood,
corn, vegetables, fruits plus kettle, pork, chicken meat and raw materials for pulp (eucalyptus),
alcohol and sugar (sugar cane), orange juice, etc.
l h l d ( ) j i t
Alcohol became an important topic in the energetic grid. There are now over 400 sugar/alcohol
plants in operation. Originally this was a family type of business. Now, multinational companies
such as Shell, British Petroleum and Shree Renuka from India, have been getting into this business.
Ethanol pipelines are under design by several mills together with Petrobras and Mitsui.
pp g y g
Food and beverages are manufactured and export companies are spread all over the country.
Automobile, Trucks and Tractors
The main automobile companies have local production facilities: Ford, General Motors, Fiat,
VolksWagen, Toyota, Hiunday, Honda, Renault Pegeout Citroen etc
VolksWagen Toyota Hiunday Honda Renault, Pegeout-Citroen, etc. A large percentage of
production is exported.
One important development done in Brazil reflects the importance of sustainability issues.
When you buy “Gasoline” for your car in Brazil, in fact you get a blend of gasoline and 20 to 25%
of ethanol. But in all gas stations, besides gasoline, you can fill the tank with Alcool, which is
pure ethanol. The automobile industry developed the so called FLEX cars. On those you can
choose to use any of the two fuels (Gasoline or Alcool) or any combination of them, depending
on the then current prices. The FLEX engine automatically sets the engine compression
according to the used fuel selection. Today Alcohol consumption is higher than Gasoline.
Total production of light cars exceeded 2 3 million units in 2009 Brazil is now Nr 5 in the rank
2.3 2009. Nr. rank.
There is a huge amount opportunies to supply parts and production equipment to this vertical.
Robots are used intensivelly. Investments for the next 4 years are estimated to be 32 Billion US$.
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5. Brazil Vertical Markets (2)
Aerospace
One of the most successfull companies in Brazil is Embraer that is today the third largest airplane
company in the world, just behind Boeing and Airbus.
Embraer started 40 years ago developing and building small comuter planes, for 18 passenges
and from then on grew in volume and in airplane sizes offering today jets for 120 passengers,
df th i l di i l i ff i t d j t f
training airplanes, military airplanes, etc. They have already shipped more than 5000 planes, used
in 88 countries. Embraer has a partnership in China with Avic for a plant in Harbin.
There is an interesting market for the suppliers for parts, services and equipment to them.
Current business of Embraer are around 20 Billion US Dollars per year.
p y
Oil and Gas
Petrobras, the government oil & gas company, is by far the largest company in Brazil.
And now, in 2010, it is among the largest energy companies worldwide.
Total oil production today is over 2 million barrels a day, mainly of heavy oil extracted by offshore
day
platforms. Petrobras has a high degree of knowledge in working with deep oil extraction, with
water depths of 1000 to 2000 meters. New reservoirs found under the pre-salt layers will allow
more than double extraction capacity, but at 5000 meters of soil at bottom of water layers, formed
by rocks, sand and salt.
Petrobras has 17 refineries, 11 in Brazil and 6 abroad. In Brazil current refining capacity is of 2.0
f f f
million barrels a day. Two new refineries are under construction, and two other are being
designed.
Petrobras is heavily involved with Gas and with other energy issues, becoming associated with
some Ethanol producers, besides other developments in Bio Energy, Bio Diesel, etc. Total
investment recently announced by Petrobras is 224 Billion US Dollars in next 4 years and 700
Billion Dollars in next 20 years.
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6. Brazil Vertical Markets (3)
Petrochemicals & Chemicals
The petrochemical industry in Brazil started on the 70´s with implementation of three Basic Raw
Material plants, in 3 different locations in South, Southeast and Northeast. Around these 3 locations
a series of downstream polymer plants were constructed. The model consisted, in general, of
companies owned 1/3 by Petrobras, 1/3 by a technology supplier company and 1/3 by a local
company. On the recent years a series of merges and acquisitions ended up in a giant petrochem
complex called Braskem, that has dozens of plants in Brazil and partnerships in other countries.
One of the exciting Braskem projects is the one for “green polyethylene” obtained from ethanol.
In order to not let Braskem as a monopoly, Petrobras is implementing a project called COMPERJ in
Rio de Janeiro, for which they are looking for partnerships in the downstream plants.
On the chemical area major foreign companies have their plants: Rhone-Poulenc, Solvay, Dow,
DuPont and others. Investments for the next 4 years are estimated in 34 Billion US$.
Metals d Mi i
M t l and Mining
Brazil is rich in minerals.
VALE is a company that started as governmental and has been privatized later on. They have
diversified mineral activities in iron ore (mining to pelletizing plants, and participation in steel
mills), aluminum, nickel, copper etc., both in Brazil as on other countries like Canada, Guinea,
), , , pp , , ,
Oman, etc. VALE produces 300 million Ton/yr iron ore and plans to spend 90 Billion US Dollars in
four years to raise capacity to 450 million Ton/yr.
Regarding metal industries there are 27 steel mills in the country from which 12 are integrated
(producing from iron ore) and 15 are semi-integrated (using pig iron or scrap), 13 companies
owned by 8 major groups, with total installed capacity of 42 million tons of steel per year Major
groups year.
owner groups are ArcelorMittal, Gerdau, CSN, ThyssenKrupp, Votorantim, Usiminas.
Investments for the next 4 years are estimated to be 51 Billion US$ in steel mills.
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7. Brazil Vertical Markets (4)
Pulp and Paper
Due to the incredible fast growing eucalyptus trees, modified through genetic development (in
certain areas the tree grows 1 centimeter/day), they can be cut in 5 and a half year, and reused 3
times, pulp business expanded and Brazil has today huge pulp plants as Fibria, International Paper,
Cenibra, S
C Suzano, Klabin and other plants under construction, mainly f pulp exports. These plants
for
are mainly for short fiber and have been using the latest technology in automation, reaching
unpaired low production costs. Current production exceeds 13.4 million Tons/yr, from which 8.2
million are exported. The existing companies, and some new ones are planning to invest more than
20 Billion Dollars in the next 4 years.
Energy
Brazil is rich in water resources for hydro-electric power generation. Until some years ago hydro
represented more than 95% of our energy grid. Itaipu is the second largest Hydro plant
worldwide.
worldwide More recently, with the needs to expand energy availability alternative sources have
recently
been considered. There are 2 Nuclear plants running, and a third being designed. A series of
thermoelectric plants were implemented using fossil fuel. Today, many thermoelectric are
running with sugar cane bagasse, and other diversified bio products such as bark and other
biomass, etc. In the Northeast area, where winds are always present from the ocean, and where
sunny days are usual, eolic and solar cells are being implemented. A new huge hydrelectric
power plant is under design on the Amazon area.
In the next 20 years Brazil energy demand will move it from the current 11th in the rank to the 7th,
advancing over Korea, United Kingdom, France and Germany, with a 3.3% per year growth,
against the worldwide average of 2.6%.
In the next 20 years, 750 Billion US Dollar investments will be needed to raise the offer of Oil &
Gas, and electric energy generation, correspondig to 3,8% of worldwide energy investiments.
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8. Automation , Information and Opportunities
The main Automation and Information Technology global manufacturers are operating in Brazil.
Some companies have their own offices and operational divisions, others operate through local
representatives. The large customers normally declare a preference for a local operation.
On the Automation area usual supplier names are ABB, Emerson, GE, Honeywell, Invensys,
Rockwell, Schneider, Siemens, Yokogawa. Certain vertical markets have specific preferences, for
exemple: Oil & Gas prefers ABB, Emerson, Yokogawa; Pulp & Paper prefers Invensys, Yokogawa
Mining prefers ABB, Rockwell, Siemens; Steel industries prefer Rockwell, Siemens and Yokogawa.
Trend is to integrate IT with Automation. On the IT arena, there is a general preference for SAP.
Since the local market is heavilly loaded with opportunities, many of which remained in hold during
the critical period of 2009, there are several niches for companies to enter in this business providing
not only goods, but also application engineering knowledge, detail egineering, integration services,
installation supervision, training, start-up assistance, through partnering ventures with local
companies.
companies
As a recente exemple, a multi million contract was signed in April 2010, between Petrobras on one
side and a company formed by the association of Mitsui (Japan), Sembcorp (Singapore) and UTC
(Brazil), for the construction and operation to supply the electric energy, steam, water, hydrogen and
the sewage treatment for COMPERJ refinining and petrochemical plant in Rio de Janeiro.
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9. The Future
After several critical years with huge inflationary levels, the economy has been having a
good behaviour.
Inflation has been set under control, in the range of 4 to 5% per year.
Even low, in the range of 8500 US$ / th GDP per capita h b
E l i th f /yr, the it has been steadily growing.
t dil i
Population is growing, at lower rates when compared to previous decades.
Unemployment levels have been kept decreasing.
Brazilian main bottlenecks are still due to the need of:
More public investments in Education, in Health and in Security.
Taxes than we currently have are high compared to other developing countries, 38%.
On the next couple of years:
2014 – World Soccer Cup will happen in Brazil
2016 – Olympic Games will happen in Brazil
Both these events will push huge amounts of public and private investmens in:
Airports, Ports, Mass Transportation (subways and fast trains)
Hotels, Stadiums and as a consequence:
Energy, Water and Sewage, Telecommunications, etc.
Future seems to be bright. We are all excited with it.
bright it
Thank you mkurcgant@arcweb Mauricio Kurcgant +55 11 8673 6273
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