A Financial Times special report entitled Brazil Infrastructure was released today, with 23 stories about infrastructure and investment.
I did just one story this time around, about steel and the link is here.
I spent a day at the Brazilian Steel Conference in April and was impressed at the huge turnout. Even Lakshmi Mittal, perhaps the best known steel magnate in the world, was there.
Mittal praised Brazil but warned that high taxes, antiquated labour laws and ridiculous layers of bureaucracy are holding Brazil back. Brazil needs to invest in infrastructure if it is to move forward, Mittal said.
“The level of consumption is well below the country’s potential, it also indicates a lack of infrastructure in the last two decades,” the CEO of ArcelorMittal, told conference delegates. “ An economy aiming to be the fifth largest in the world should perhaps have done and be doing more to prepare itself for that position.”
There were three specific statistics that jumped out at me during the conference. One made it into my story and confirmed Mittal’s view that Brazil hasn’t invested enough in infrastructure. It is this: Brazilian steel consumption has remained static since 1980, while China’s has grown tenfold. Today, China uses three times more steel per person per year than Brazil does. Spain uses five times more and South Korea 12 times more.
The second statistic is this, and comes from Marco Polo de Mello Lopes, executive president of the Brazil Steel Institute: Around 80 percent of Brazil’s steel production goes to just three areas: construction, machinery, and car and car parts production.
That obviously includes oil and gas and bring me to the third detail, from Paulo Godoy, president of the ABDIB. Godoy said approximately half of all investment in Brazilian infrastructure is done through Petrobras, the country’s state-controlled oil firm.
I knew Petrobras, which was recently named one of the 10 biggest companies in the world, was the main driver of Brazil’s economy. But I didn’t know how much…