Author: Antonio Guerrero

NEW OIL FIELDS TO ATTRACT BIG INVESTMENT

By Antonio Guerrero

Brazilian authorities remain optimistic that they will be able to sign an agreement with Taiwanese manufacturer Foxconn Technology, the world’s largest contract electronics producer, for a $12 billion investment plan to produce Apple iPads, iPhones and components in Brazil.

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A top four oil producer

The plan, first announced in April, hit some obstacles as Foxconn executives continue to negotiate with the government over incentives, including loans from state-owned development bank BNDES; and tax breaks. According to Aloizio Mercadante, Brazil’s science and technology minister, six Brazilian states have offered incentive packages and he is confident that the deal will be signed before year end. Foxconn executives, however, are reportedly concerned about other issues, including a lack of skilled labor, with the new plant expected to employ as many as 3,000 workers. Mercadente said that BNDES may want a stake in the plant.

A study by consultancy Ernst & Young Terco and the Getulio Vargas Foundation suggests Brazil’s recently-discovered offshore oil fields will attract $250 billion in investments through 2020. The pre-salt basin is estimated to hold as much as 50 billion barrels of oil, which will make Brazil one of the world’s top four oil producers and one of the top 10 exporters. The study notes oil exports are expected to hit 600,000 barrels a day, producing nearly $28 billion in annual revenues, by 2020. The country’s oil exports totaled $16.1 billion last year. According to central bank forecasts, Brazil will have $70 billion in foreign direct investment in 2011, up from a previous estimate of $55 billion. FDI last year was $48.5 billion.

US firm Deere & Company announced plans to invest $124 million to build two plants in Brazil to manufacture construction equipment. One factory will produce backhoe loaders and four-wheel drive loaders, while a second plant, involving a partnership with Japan’s Hitachi Construction Machinery, will produce excavators. Hitachi and Deere already produce excavators through another partnership in the US. Deere, which has four Brazilian plants that manufacture agriculture and forestry equipment, says the new investment responds to increased demand in South America for construction equipment.