Coffee Prices Rise to Records in Brazil on Demand, Cepea Says

Prices of arabica and robusta coffee consumed in top global producer Brazil’s domestic market rose to records on increased demand from local roasters, researcher Cepea said.

Low-quality arabica averaged 335.23 reais ($187.19) a bag from the start of the crop in July to November, up 40 percent from a year earlier, Cepea data show. Robusta averaged 227.49 reais, up 36 percent, according to the figures. Brazilian roasters usually purchase robusta and low-quality arabica, said Cepea, a University of Sao Paulo research group.

“The low supply of these coffee beans has been pushing up prices this season,” Cepea analyst Margarete Boteon said in a report yesterday. “Both coffee types have already hit the highest values, in nominal terms.”

Coffee usage in the country probably will rise 3.5 percent this year, according to the Brazilian Association of Coffee Industries. Demand climbed to a record 19.1 million bags last year, data from the group show. Brazil may overtake the U.S. as the world’s biggest consumer in five years, Rabobank International estimates.

Local coffee demand continues to be “heated,” Boteon said. Brazil will produce 43.1 million bags this season, according to the agriculture ministry’s crop-forecasting agency. Exports may total 25 million bags, according to agents surveyed by Cepea.

Source: Bloomberg

Brazil Foreign Direct Investment More Than Tripled In 5 Years

The total stock of foreign direct investment in Brazil more than tripled in the five years through the end of 2010 to $660.5 billion, the central bank said Thursday.

The figure is equal to 30.8% of gross domestic product, the central bank said in a survey that’s carried out every five years.

The total includes investments in businesses and inter-company loans. Business investments alone came to $579.6 billion and inter-company loans were $80.9 billion.

The central bank surveyed 13,700 companies and investment funds with non-Brazilian depositors for the report, and individual investors were not surveyed.

The U.S. is the biggest source of foreign direct investment in Brazil when measured by the location of the final investor, a criterion that eliminates distortions from the use of fiscal paradises.

U.S. investors owned $104.7 billion of the total stock of foreign direct investment in Brazil on Dec. 31, 2010, followed by Spain with $85.3 billion and Belgium with $50.4 billion.

The sector with the most foreign direct investment is financial services, with $98.1 billion, followed by beverage producers, with $52.2 billion, oil and gas extraction with $49.4 billion and telecommunications with $40.6 billion.

Source: The Wall Street Journal

Lan’s $3.2 Billion Tam Purchase Clears Final Regulatory Hurdle in Brazil

Lan Airlines SA (LAN)’s planned $3.2 billion acquisition of Tam SA (TAMM4) was approved by Brazil’s antitrust regulator, clearing the final regulatory hurdle for the formation of the world’s second-largest carrier.

The regulator, known as Cade, approved the transaction in a unanimous vote in Brasilia today. Approval is contingent on some limits for flights between Santiago and Sao Paulo.The regulator saw no need to restrict the Sao Paulo-to-Lima and Sao Paulo-to- Buenos Aires routes, said Cade member Olavo Chinaglia, who was in charge of preparing the final report on the deal.

Chile ’s antitrust tribunal approved the tie-up on Sept. 21, imposing conditions including capping Santiago-Sao Paulo fares until they exchange four daily slots in Sao Paulo ’s Guarulhos airport with other carriers. Cade’s conditions included giving up two pairs of slots in the Sao Paulo-Santiago route, Tam said in an e-mailed statement.

Brazil Prepares 3 Wireless Auctions Next Year as Demand Surges

Brazil is preparing three auctions of wireless airwaves for mobile-phone service in 2012 and is beginning work on a fourth sale to meet the growing demand for data downloads, the nation’s top phone regulator said.

Telefonica Brasil SA (TEF), a unit of Madrid-based Telefonica SA, and billionaire Carlos Slim’s America Movil SAB (AMXL) may participate in the contest for airwaves in the 2.5 gigahertz band used for so-called fourth-generation services, Joao Batista de Rezende said. That sale, along with an auction in the 450 megahertz band for rural coverage, will be in April, said the president of the National Telecommunications Agency, or Anatel.

“The Brazilian market will guarantee return on investment,” Rezende said in a Dec. 2 interview in Brasilia. “From the conversations I’m having, nobody is going to miss out on this kind of spectrum, because that would mean missing out on the fourth generation,” or 4G, which enables faster wireless Internet connections.

Telecom Italia SpA (TIT)’s local unit Tim Participacoes SA (TCSL4), Tele Norte Leste Participacoes SA, NII Holdings Inc. (NIHD) and Vivendi SA (VIV)’s Global Village Telecom Holding SA are likely to bid for 4G airwaves as well, Rezende said.

Anatel is also preparing an auction in the second half of 2012 for the 3.5 gigahertz band, which can be used for several applications including voice, data and video, Rezende said.

“It strengthens the data-transmission infrastructure of the big companies,” Rezende said.    “Mobile service is going to need more frequencies in the future.”

232 Million Subscribers

Brazil had 232 million wireless subscribers at the end of October, up 19 percent from a year earlier, according to government statistics. That was the fastest rate of growth since July 2009.

The country had 195 million people as of 2010, according to the World Bank. Some phone users buy subscriptions from multiple carriers to make cheaper calls, and some buy data subscriptions, such as laptop cards, in addition to their phone services.

Subscriptions to high-speed Internet over fixed or mobile lines rose 22 percent to 16 million at the end of the third quarter from a year earlier, according to Anatel.

By the end of 2012, Brazil will have offered 764 megahertz of airwaves to mobile-phone companies. The country will need to reach 980 megahertz by 2015 to keep up with demand, according to estimates from the International Telecommunications Union, a United Nations agency.

Source: Bloomberg


Anglo American Names Castellari CEO of Brazil Iron-Ore Unit

Anglo American Plc, the mining company investing $14 billion in projects inBrazil, named Paulo Castellari as chief executive officer of its iron-ore unit in the country to replace Stephan Weber.

Castellari is commercial director at the Brazil operation, running strategy, business development, sales and marketing and the supply chain, London-based Anglo said in a statement today. Weber, who held the position for about two years, will explore other opportunities, Anglo said, without saying if he resigned.

Castellari will oversee construction of Anglo’s largest project, the Minas Rio iron-ore site, which has suffered delays and cost overruns since it was bought in 2008. The project will have initial annual capacity of 26.5 million metric tons and the company expects its first shipment in the second half of 2013.

Under Weber, “we have achieved significant progress with the Minas-Rio project and the operational turnaround of Amapa,” Anglo CEO Cynthia Carroll said in the statement.

Minas Rio includes a mine, processing plant and 326-mile (525-kilometer) pipeline toAcuPortinRio de Janeirostate. The company is studying expanding the project to produce about 80 million tons a year, Weber said in Brasilia on Nov. 23.

Anglo faced delays in getting permits and project design changes that boosted the cost of developing Minas Rio from an estimated investment of $3.8 billion in February 2010. The company also pushed back the start date to 2013 from 2010.

Anglo fell 0.5 percent to 2,481.5 pence inLondonat 1:23 p.m., taking this year’s decline to 25 percent.

Elsewhere in Brazil

InBrazil, Anglo also operates the $1.9 billion Barro Alto nickel project, which began production in March and expects to reach 41,000 tons of annual output in 2013 after attaining full capacity in the second half of next year. The miner also has phosphate and niobium businesses after reversing a decision to sell its Copebras SA and Mineracao Catalao units.

Castellari was trained in administration at the Getulio Vargas Foundation and strategic planning at the London Business Schooland has held several positions within Anglo since 1996.

He was appointed commercial director of the Brazilian iron- ore unit this year, according to Anglo’s website.

Source: Bloomberg

Natura eyes expansion through foreign tie-ups

Natura, Brazil‘s biggest cosmetics group by sales, is planning to set up joint ventures in countries such as the UK, the US and Russia as part of a revamped expansion plan, the company‘s head has told the Financial Times, using its booming domestic market as a springboard for international growth.

The São Paulo-based company, which sources many of its ingredients from the Amazon rainforest, has had its revenues soar in Brazil, which is set to overtake Japan by 2013 to become the world‘s second-biggest beauty and personal care market after the US, according to Euromonitor.

Alessandro Carlucci, Natura‘s chief executive, said the company had scrapped its original plan to set up its own operations outside Latin America and was now looking for partner businesses, especially in markets where its strategy of direct selling has proved popular.

We realised that there are things we don‘t know about the culture of other countries, how to do business there he said. ―Russia, for example, is a promising market where direct selling is popular but we don‘t understand anything about logistics in Russia, about regulations, the language.

He added that the company was more likely to target smaller businesses in these regions, rather than forge links with other cosmetics giants such as L‘Oréal of France.

The bigger the company is, the more diverse, the less chance there is that they will be able to or want to adhere to our values, he said.

After overtaking US rival Avon in terms of sales in Brazil in 2005, Natura has built a 14.4 per cent share of the Brazilian market, which Euromonitor estimates will be worth about $48.4bn in 2013, almost 30 per cent more than in 2010.

From weekly manicures to an obsession with plastic surgery, Brazilian women take their appearance very seriously. They are estimated to spend over five times more of their annual salary on beauty products than women in the UK, for example.

Natura is also one of the biggest direct sellers in Latin America, with more than 1.3m consultants‖ who sell door to door across the region, marketing everything from açaí body oil to shampoo made from andiroba seeds harvested from trees in the Amazon.

Direct selling has not always proved popular in every market, however, leading the company in 2005 to open a shop instead in Paris – its only experiment so far with operations outside Latin America.

Any potential partner would have to share the company‘s stance on sustainability and preserving the environment, Mr Carlucci added.

The company, which recorded net sales of R$3.9bn ($2.2bn) in the first nine months of this year, has built its brand on using ingredients directly from co-operatives, scientists and farmers in the Amazon, receiving support from the federal government, which is keen to diversify the region‘s economy away from illegal logging.

Source: The Financial Times