Potential Public-Private Infrastructure Partnerships
Potential Private Corporate Investors in Brazil’s Infrastructure Development Project
November 17, 2015
Charlotte Provost – Primary Article Contributor
Tom Jones – Team Leader and Editor
Keywords: Brazil, Infrastructure, Investment, Foreign Direct Investment, FIAT, BG Group, Arcelor Mittal, Ocean Wilison, Bombardier
Brazil’s plan to spend $64 Billion on infrastructure over the next four years will attract many foreign investors. With many of the contracts and funds still up for grabs we will be highlighting some companies that might be interested.
FIAT S.p.A
The Fiat Group accounts for 24.8% of Brazil’s automobile industryThe group generates revenue of approximately 84 billion euros a year. 10% of its sales can be attributed to Brazil, Argentina, Uruguay and Paraguay.Not only would an increasingly developed infrastructure in Brazil allow the company to distribute its products more easily across Brazil and to other countries, it would also increase the sales of automobiles within the country. Better roads, bridges and highways would likely equate to an increased demand for vehicles.
BG Group
The BG Group is a British company gas company that owns 60% of Comgas, Brazil’s largest gas service. With oil prices on the rise, the BG Group looked to invest in greater drilling technology, such as deep-water oil exploration, which the BG Groups is now doing in conjunction with Petrobras one of Brazil’s largest energy corporation. Nevertheless, natural gas, the main product that BG Group offers, is not easily transported in its gas form and must be liquefied to be moved long distances. Thus the company would have a vested interest in refining Brazil’s infrastructure in order to better transport and deliver natural gas within and beyond the country’s borders. Furthermore, if deep-water oil exploration proves to be fruitful, BG will have a serious incentive to establish an extensive infrastructure that would connect the newfound oil reserves to land and trade routes.
Arcelor Mittal
Arcelor Mittal is a multinational steel-manufacturing corporation headquartered in Luxembourg.It currently owns a 70% share of Manchester Tubos e Perfilados a Brazilian steel company and a close partnership with Gonvarri Brasil. With an annual output of 200 million tons of steel, the company is looking to take advantage of emerging markets to distribute and create demand for its product.Given the inextricable relationship between steel and construction, the company will most likely seek to invest in building design, building fabrication, steel distribution and joint ventures of countries such as Brazil and China who are looking to expand their respective infrastructure.
Ocean Wilison
Ocean Wilison is a Bermuda based Investment Company, which operates maritime service in Brazil. It is the largest provider of towage services in Brazil, and the third largest container terminal operator in the country. This company might have a vested interest in the development of infrastructure around major ports and port cities, where trade and distribution of incoming products could be facilitated. A greater infrastructure would most likely mean greater FDI, which might lead to the creation of new ports.
Bombardier
Bombardier is a Canadian multinational aerospace and transportation company and one of the largest producers of aircraft, trains and trams in the world. In September of 2010, Bombardier sealed an $816 million dollar deal with Brazil to design a new monorail system in Sao Paulo. Naming Brazil one of the three key emerging countries of interest for the company, Bombardier will most likely continue to seek joint venture with Brazil in the future. Notably, with the commitment of building 8 ‘mega airports’ and several hundred other regional airports, it could be in Bombardier’s interest to invest in the development of these new spaces that will likely utilize some of Bombardiers products such as aircraft.
