China may invest over R$15 billion

Nine agreements for investments by Chinese companies in a total amount in excess of R$15 billion will be signed today in Shanghai, at the end of an economic seminar that featured the participation of Brazilian President Michel Temer. According to sources close to the discussions, the agreements involve the steel, power and agribusiness logistics sectors.

One of the investments is a service agreement worth US$3 billion between the state government of Maranhão and the Chinese company CBSTEEL. The plan is to boost investments in the state in sectors such as power and steel. Furthermore, the bank Haitong will announce the creation of a US$1 billion fund to support Brazil’s agribusiness logistics sector.

Meanwhile, Embraer closed an order for more four aircraft and received formal confirmation from the Chinese government for the purchase of 18 aircraft, which should be announced in the presence of President Temer, who will arrive in Shanghai today at 10 a.m., after flying on his presidential jet for 27 hours, which included stops on Sal Island in Cape Verde, Prague and Kazakhstan.

This week, Valor informed that the signing of some agreements already announced is also expected, which include the acquisition of a 23% interest in CPFL, Brazil’s largest power distributor, by the Chinese company State Grid. The deal was estimated at R$5.85 billion when it was announced earlier this year. Another agreement to be signed, by China Communication and Construction Company International (CCCC) and the WTorre Group, involves investments in the Port of São Luís in the Brazilian state of Maranhão. The Chinese will receive an interest in the Private Use Terminal in São Luís, a project of WPR, the infrastructure arm of the WTorre Group.

The scale of China’s interests in Brazil’s infrastructure became clearer last year. In November 2015, for example, China Three Gorges (CTG) won the contracts for Ilha Solteira and Jupiá, the most desired hydroelectric power plants among the 29 to be auctioned by the Brazilian government. With these two plants, the government will receive proceeds of R$13 billion of the R$17 billion in concession bonuses expected from the entire auction.

Data from the National Investment Information Network (Renai), an agency connected to the Ministry of Development, Industry and Foreign Trade, also demonstrates China’s interest in the country’s electric power infrastructure. According to the agency, in 2015, aggregate investment announced by the Chinese government amounted to US$2.08 billion, up 8.3% from the previous year.

Source: Valor Econômico