NEWSLETTER OCTOBER 2025
10/01/2025
PLANNED TAX ON REAL ESTATE, AGRIBUSINESS CREDIT BILLS FACES PUSHBACK
Bill rapporteur Carlos Zarattini says 7.5% rate could be cut to 5% or scrapped entirely
Real estate credit bills (LCI) and agribusiness credit bills (LCA), popular fixed-income securities issued by banks in Brazil, may be removed from the list of financial instruments set to be taxed next year. Congressman Carlos Zarattini of the Workers’ Party (PT), who is the rapporteur for the bill that proposes an alternative to higher Financial Transactions Tax (IOF) rates, said talks with the agribusiness caucus are still ongoing and that eliminating the income tax on these securities is still on the table.
In his latest draft, Mr. Zarattini had proposed a 7.5% tax rate for these instruments, above the 5% originally proposed in the government’s provisional presidential decree (MP) in June. “We see that the most sensitive issue, the one involving the largest number of lawmakers, is precisely the one that affects agribusiness. So, the 7.5% tax on the LCA and LCI is a critical matter. We’re working to ensure we have majority support to pass the provisional decree,” he said.
“We’re considering going back to 5%, maybe even other rates, we’re not closing the door on the discussion. Reinstating this [the exemption] is a possibility,” he added.
The proposed end to the tax exemption has drawn criticism from both the agribusiness sector and organizations involved in real estate financing.
Agribusiness representatives argue that taxing these securities could discourage new issuances and curb private-sector financing at a time when the industry is already facing other challenges, such as cuts to the government’s annual agricultural credit plan. Last week, Congressman Pedro Lupion, president of the Agribusiness Parliamentary Front (FPA), said the new tax “condemns” these instruments and that “there’s no room for compromise.”
Meanwhile, the Brazilian Association of Real Estate Credit and Savings Entities (ABECIP) has warned repeatedly that ending the exemption could raise funding costs and lead to a drop in new issuances. “Ultimately, this would make it harder for thousands of Brazilian families to buy a home, slowing real estate activity, a key generator of jobs across the country,” the group said in a statement in September.
The government’s economic team has defended the tax, saying it could help level the playing field between bank-issued securities and government bonds, which could become more appealing. Finance Minister Fernando Haddad said last week that these instruments would remain attractive because they would still be taxed at lower rates than other investments. He noted that studies by the Finance Ministry show much of the benefit from tax exemptions gets absorbed along the way and doesn’t reach the final borrower.
Mr. Zarattini’s report also upholds the government’s proposal to apply a flat 17.5% income tax on returns from financial investments in Brazil starting in 2026. This would replace the current system of tiered rates—22.5% for investments held up to six months and 15% for those held for more than two years.
“We’re keeping the 17.5% because the flat rate is good for the market. In fact, the market itself asked for the removal of brackets and the adoption of a single rate. With 17.5%, investors can offset gains and losses across investments, which benefits thousands of people, especially small investors, who will pay less tax and have more room to invest,” Mr. Zarattini said.
Controversy over limits to brokerage trades
Another controversial provision in the bill is language that could restrict brokerages from selling large blocks of shares through internal matching, the so-called order internalization. The sector, represented by ANCORD (National Association of Brokerage Firms), has called for the removal of a clause that defines the over-the-counter (OTC) market as exclusively “organized and multilateral systems.”
ANCORD argues that if this language remains, only one infrastructure—Brazil’s stock exchange B3—would effectively be allowed to handle large-block transactions. Internalization refers to trades executed between clients of the same brokerage, outside the exchange environment but still within a regulated institution.
According to the brokers, the language contradicts Brazil’s Securities and Exchange Commission (CVM) Resolution 135, which allows for large-block trades in the OTC market as part of a “centralized and bilateral trading system.”
ANCORD’s general director, José David Martins Júnior, said the text only needs to be “harmonized with CVM Resolution 135.” One solution, he suggested, would be to remove the paragraph requiring a multilateral organized OTC system to avoid legal conflict.
Mr. Zarattini said he was unaware of the brokers’ concern. He noted that he had spoken with all sectors impacted by the bill but had not been approached by ANCORD. “I don’t recall that issue. Honestly, no one has brought it up with me,” he said.
A vote on the report is scheduled for Thursday, October 2.
Source: Valor International
https://valorinternational.globo.com
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10/01/2025
NOVO NORDISK, EUROFARMA TO JOINTLY LAUNCH TWO DRUG BRANDS FOR WEIGHT LOSS, DIABETES
Companies expect products to hit the Brazilian market in October
Danish pharmaceutical company Novo Nordisk and Brazil’s Eurofarma announced on Wednesday (1) a partnership to launch two new brands of injectable biological semaglutide in Brazil for the treatment of obesity and diabetes. The companies said the medications are expected to reach the market as early as October.
Under the agreement, Eurofarma will be the exclusive distributor responsible for the commercialization and promotion of the two weekly injectable semaglutide brands. One will be Poviztra, indicated for the treatment of obesity and overweight with associated comorbidities. The other, Extensior, will target type 2 diabetes treatment.
“This partnership is a strategic step to ensure our innovation reaches even more people across Brazil,” said Allan Finkel, vice president of Novo Nordisk Latam and Brazil, in a joint statement with Eurofarma.
Eurofarma’s Brazil CEO, Renata Campos, said the company will leverage its sales expertise to expand the products’ reach. “A project that reflects a strong commitment to doctors and patients,” she said in the statement.
Source: Valor International
https://valorinternational.globo.com
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10/02/2025
MINERVA PIVOTS TO DELEVERAGING AS URUGUAY DEAL IS HALTED
Company channels R$750 m to reduce debt, keeps outlook upbeat on Brazil/Argentina/Chile plants
Minerva Foods is reworking its plans and intends to use the R$750 million that would have been allocated to purchase three Marfrig—now MBRF, following its merger with BRF—plants in Uruguay to pay down debt. The decision follows the deal’s blockage by Uruguay’s antitrust authority, the Comisión de Promoción y Defensa de la Competencia (Coprodec).
At the same time, the company sees a promising outlook for the other units bought from its rival in Brazil, Argentina, and Chile, citing firm international demand for beef. That should underpin positive results in 2025 and organic growth of 10% next year.
“We will use the funds to reduce leverage and support the company’s deleveraging process,” said Edison Ticle, Minerva’s chief financial officer, speaking to reporters on Monday during Minerva Day, a meeting with analysts and investors.
After previously blocking the closure of the deal in Uruguay several times, Coprodec issued yet another negative decision last week.
CEO Fernando Queiroz said the company might appeal the ruling but is still considering it. The planned purchase of the Uruguayan plants in San José, Salto, and Colonia was part of a larger deal in which Minerva acquired 13 Marfrig plants across South America. The plants already acquired have been under Minerva’s control since October 2024, when that part of the deal was finalized.
Mr. Ticle mentioned that by the end of September, Minerva had already reached 100% of the expected synergies from the acquired units—a quarter earlier than initially forecasted. This indicates that the plants’ operational and commercial processes are now aligned with Minerva’s standards, he said. “This will allow us to run the fourth quarter with capacity utilization above 75%,” he added.
The executive estimated the units are delivering between R$350 million and R$400 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) per quarter. As a result, the annual EBITDA of the new plants could approach R$1.5 billion—even without the three in Uruguay.
“The performance numbers of the acquired plants are significantly better than what we announced at the time of the deal. We will probably revisit these figures next year,” Mr. Ticle said. The purchase agreement was announced to the market in August 2023.
Also at the event, Alexandre Mendonça de Barros, a partner at consultancy MB Agro and a Minerva board member, estimated the world could produce 1.5 million to 2 million tonnes less beef next year.
According to Mr. Ticle, beef prices are currently, on average, 15% higher in dollar terms than a year ago. “Beef prices have risen, and consumption hasn’t fallen. That probably signals a shift in the global price level,” added Minerva’s institutional relations director, João Sampaio.
Stressing that it was not new guidance, Mr. Ticle said Minerva’s 2025 EBITDA could range from around R$4.75 billion to R$5.2 billion for the entire company. Net revenue for the year is expected to reach between R$50 billion and R$58 billion. “We should end up very close to the top of the range,” he said.
Investors well received the outlook presented at the event, and Minerva’s shares on B3 posted the benchmark stock index Ibovespa’s most significant gain on Tuesday, up 3.21%.
Source: Valor International
https://valorinternational.globo.com
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10/03/2025
SPENDING CUTS, SLOWDOWN PUSH RETAILERS TO LAY OFF WORKERS IN BRAZIL
Large retail groups reduced headcount starting in Q2, citing high interest rates, restructuring
Large retail groups reported layoffs in the second quarter—or “corporate restructurings,” according to discreet mentions in earnings releases—and the headcount reductions extended into the third quarter at market leaders.
Cuts in operating expenses to dilute costs, weaker sales—which made store closures and layoffs more urgent—heavier debt service due to high interest rates, and business reorganizations tied to mergers all led to job reductions.
Demand for labor in parts of the retail sector, given today’s high turnover, may help absorb some of these workers.
One particular issue has drawn attention from the companies consulted: rising cost inflation, even as consumer spending shows signs of cooling. “We are dealing with wage inflation from collective bargaining agreements, energy costs are rising again, and the sales curve is heading downward or, at best, flat. There is not much room to maneuver,” said the CEO of a home improvement chain that has already closed stores this year.
Economists note that groups already in a fragile situation—burdened with years of high leverage or lacking competitiveness—have been hit harder than others that took measures to improve efficiency.
“We have become a country addicted to high interest rates to finance a deficit-ridden State, and companies are the ones paying the bill,” said Fabio Bentes, chief economist at CNC, the national retail and services confederation.
Valor compiled the cases based on an analysis of 2025 quarterly earnings reports, filings with the Securities and Exchange Commission of Brazil (CVM), official announcements of closures, and company sources.
Broadly, starting in the second quarter, a wave of cuts extended into the second half of the year in certain segments and companies, both listed and privately held.
From April to June, RD Saúde (Raia Drogasil), Casas Bahia, and Westwing reduced staff. In recent months, after July, GPA (owner of Pão de Açúcar supermarkets), Telhanorte, Azzas 2154, and Grupo Multi also announced cuts, according to official statements and Valor’s reporting.
Fast Shop, which is under investigation by São Paulo prosecutors for corruption, also cut jobs and plans further reductions.
In the view of Luiz Guanais, retail analyst at BTG Pactual, other similar moves remain possible but are likely to be more targeted among large groups. “I believe chains are adapting to a ‘new normal,’ with more indebted customers and inflation stabilizing at a high level. That said, today retailers are better prepared to deal with a slowdown and 15% annual interest rates than they were three or four years ago.”
Specialists emphasize that decisions on workforce reviews vary, and even well-structured, low-leverage businesses have faced pressures. That was the case with RD, which cut costs after a weak start to the year in its more mature stores. According to sources, the company dismissed about 700 people in April, including coordinators and managers with up to 47 years at the company.
Its last filing with the stock exchange B3 showed 64,200 employees at the end of 2024. The retailer declined to comment. A person close to the chain noted that it still projects 350 store openings this year, with new hires.
In its earnings release, the company said it carried out a corporate restructuring in April to reduce overhead and administrative expenses, part of “cost containment efforts” launched in 2024. In total, RD spent R$50 million on the reorganization, which eliminated overlapping roles and expanded autonomy. After that, the chain temporarily stopped hiring in the first half of the year, according to a former company coordinator.
In consumer durables, Westwing shut down two logistics warehouses—in Rio de Janeiro in June and Belo Horizonte in April—while keeping the one in Brasília. Its three stores and distribution center in Jundiaí (São Paulo) remain open. Sources said 60 to 70 people were laid off. At the end of 2024, the company had 405 employees.
“The idea was to make the company leaner, especially as online demand was losing steam this year,” said a furniture supplier to the chain. In its earnings release, the retailer said it carried out an “additional adjustment in its cost structure” in a context of declining gross merchandise volume (GMV) and market performance, “in line with the strategy of improving profitability.”
In a statement, Westwing said the reduction in “hubs” helped improve operating performance. The company said it aims to seize opportunities from a potential economic recovery, with a focus on profitability.
In recent weeks, GPA informed the CVM it had cut around 730 jobs in just over two and a half months—between July 1 and September 16, days before its September 18 disclosure. The company did not say whether further cuts are planned or which areas were affected. GPA declined to comment beyond its filing. The company had 39,000 employees in December 2024.
In the document, GPA said it has been “making efforts to reduce leverage,” and for this reason, it has a headcount reduction program underway. Its financial leverage—measured by the ratio of net debt to EBITDA—reached 3.0x in June 2025, up from 2.7x a year earlier.
Telhanorte and Tumelero, Brazil’s second-largest home improvement group, have been hit directly by higher and scarcer credit lines this year. The group has reduced its workforce by 40% to 45% since the end of 2024, according to a source. It had 2,700 employees in December.
At Telhanorte, the drop was around 25%, Valor has learned. Recent staff cuts followed business plan revisions that culminated in Tumelero shutting down 11 stores last month.
Additionally, as announced on Wednesday (2), all 16 Tumelero units were sold to Grupo GG10, which sells tires and machinery, as part of an effort to streamline operations. A major operational restructuring has been underway since 2024, led by general manager Manuel Corrêa, who has focused on the process.
Since its sales boom during the pandemic, the sector has struggled to regain momentum. The sharp rise in interest rates in 2021, which raised the cost of capital, and again in 2024, along with heavy competition, unsuccessful strategies, and product inflation, have all eroded competitiveness.
Under current plans, Tumelero ceased operations at 11 loss-making stores in Rio Grande do Sul in September, including two in Porto Alegre, the company confirmed in a statement. In July, it closed large-format stores in Aricanduva and Osasco, both in greater São Paulo. Valor learned that Atacadão is expected to take over the first location.
Telhanorte currently has 27 stores nationwide, down from nearly 70 in 2023.
At the end of 2024, competitor Casa&Construção (C&C), hit harder by the tough economic environment, shut down in Brazil and dismissed the remaining staff in its stores, such as one on Marginal Tietê in São Paulo, Valor found. The chain was sold in 2023 by the Faria family, the owners of Grupo Alfa, to AGI Partners. The asset manager wound down operations a year later. AGI declined to comment.
In the same segment, Sodimac reduced its workforce in Brazil from 2,900 to 2,500. Parent company Falabella did not comment.
Also this week, Azzas 2154—formed by fashion brands Soma and Arezzo—announced the closure of Arezzo’s women’s shoe factory in Parobé (Rio Grande do Sul) and the dismissal of 135 workers, tied to business integration.
Another retailer, Grupo Multi—a manufacturer and marketer of electronics—has been undergoing a more extensive restructuring since the second quarter. Measures include cutting expenses to improve efficiency, with a 5% to 10% reduction in its 4,500-employee workforce, according to a retail partner. The group did not comment.
Surce: Valor International
https://valorinternational.globo.com
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10/03/2025
SUGARCANE PROCESSOR COLORADO MAKES OFFER FOR RAÍZEN MILL IN SÃO PAULO
Raízen, owned by Cosan and Shell, is also negotiating sale of three other units
Brazilian sugarcane processing company Grupo Colorado, the owner of two mills in Brazil’s Center-South region, has made an offer for Raízen’s Usina Continental, two sources familiar with the matter told Valor. The sources requested anonymity. Raízen declined to comment. Valor reached out to Colorado but did not receive a response before publication.
Located in Colômbia, a city in the far north of São Paulo near the Triângulo Mineiro region, the Continental mill has the capacity to process more than 2.5 million tonnes of sugarcane per harvest.
According to the sources, this is the deal closest to being finalized among the Raízen mills currently under negotiation. One source added that the company, owned by Cosan and Shell, has also begun discussions to sell its mills in Jataí (Goiás), Lagoa da Prata (Minas Gerais), and Igarapava (São Paulo). Another source said that the Jataí mill had received a proposal from Atvos, which was not accepted. Atvos declined to comment.
Continental has been on the market at least since June, as Valor previously reported. At that time, Raízen was still negotiating the sale of assets from Santa Elisa, in Sertãozinho (São Paulo), as well as Rio Brilhante and Passatempo, in Mato Grosso do Sul, which were eventually sold.
If confirmed, the sale of Continental would be the fourth unit Raízen acquired from Biosev in 2021 to be divested under its current asset disposal plan. In the case of the Santa Elisa mill, only the sugarcane fields were sold to a group of six industry companies, while the processing facility was put into hibernation. The mills in Mato Grosso do Sul were sold to Cocal.
The sale of these three assets has generated R$1.345 billion for Raízen. In the Santa Elisa fields transaction, sugarcane production capacity was sold at a multiple of $46 per tonne of raw material. In the sale of the mills located in Mato Grosso do Sul to Cocal—which included both industrial assets and crops—the multiple was $40 per tonne.
Selling mills has proven to be a more immediate way for Raízen to raise cash and reduce debt while its corporate restructuring remains unresolved. Pressured by high leverage, Raízen’s shares have fallen sharply, closing the Thursday (2) session at a record low of R$1.01. Cosan has already indicated it is willing to be diluted in the business.
The company reportedly discussed a potential capital increase in Raízen with Shell, but there were no developments. A source close to Shell said the recent decline in interest from major oil companies in clean energy reduces the likelihood of such a capital injection.
In its most recent financial statement, Raízen disclosed that its two partners were also exploring alternatives with a third investor. Bloomberg reported talks with Japanese firms Mitsui and Mitsubishi, while Valor’s business website Pipeline revealed interest from BTG Pactual and Itaúsa.
Source: Valor International
https://valorinternational.globo.com
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10/06/2025
TARIFFS, STRONG REAL AND RISING COSTS SLASH EXPORTERS’ MARGINS
Brazil’s export profitability drops 7.7% in August as 2025 outlook turns negative
A stronger real against the dollar, new U.S. tariffs, falling average export prices, and rising production costs, especially wages and services, dealt a broad blow to Brazilian exporters’ profit margins in August. The hit spanned across industry, extractive sectors, and agribusiness.
Brazil’s overall export profitability dropped 7.7% from August 2024, according to the Foreign Trade Studies Foundation (Funcex). While year-to-date profitability remains slightly positive at 0.9%, it is slowing sharply. In the year through July, the increase stood at 2.2%. Funcex now expects the cumulative margin to flip into negative territory and close 2025 with a 1% loss compared to 2024.
The drop in August was widespread, affecting 24 of the 29 sectors tracked by Funcex.
Daiane Santos, economist at Funcex and professor at the Rio de Janeiro State University (UERJ), said the margin decline reflected a combination of three pressures: a nominal 1.9% appreciation of the real, a 3.3% drop in average export prices, and a 2.7% increase in production costs.
Services and wages were the main contributors to higher production costs, rising 5.2% in August year over year. Domestic inputs rose 1.9%, while imported inputs dropped 2.6%, but not enough to offset the broader cost increases.
The rea’’s appreciation already impacted margins in July, though to a lesser degree. That month, the real rose 0.2% compared to July 2024, contributing to a 4.4% margin drop.
Ms. Santos said the appreciation trend continued in September, likely further squeezing profitability. By the end of September, she projects margins could be flat year to date. From October onward, the cumulative figure is expected to turn negative, ending 2025 down about 1%.
The real’s strength hurts profit margins across all export segments. Sectors with the steepest margin declines in August included fishing and aquaculture; pulp, paper, and paper products; and oil and gas extraction.
Of the 29 segments tracked by Funcex, 15 still posted year-to-date margin gains but saw drops in August compared to a year earlier. These include food products, textiles, wood products, furniture, metallurgy, electrical machinery, and motor vehicles.
Pharmaceuticals and chemicals, computer equipment, and other transportation equipment were among the few with gains both in August and year-to-date. Aircraft, which fall under “other transport equipment,” were exempted from the new tariffs.
Commodities and global trade headwinds
The exchange rate isn’t the only factor weighing on margins. Export prices also show no sign of recovering, said José Augusto de Castro, head of the Brazilian Foreign Trade Association. “Commodity prices are likely to hold steady or fall a bit further. I see no drivers for an increase right now,” he said.
Mr. Castro expects average prices for soybeans, oil, and iron ore in 2025 to be lower than in 2024. As many commodities are used as inputs for manufactured goods, falling prices also drag down prices for industrial products.
He also pointed to weaker global trade, driven in part by uncertainty surrounding tariff policies under U.S. President Donald Trump.
The World Trade Organization now forecasts global goods trade to grow just 0.9% in 2025, down from the 2.7% previously projected before the recent wave of tariff hikes. In 2024, goods trade grew 2.9%.
Mr. Castro said uncertainty will likely persist, especially around Mr. Trump. He noted that the U.S. president signed a new executive order last week imposing 10% tariffs on wood products and 25% on some types of furniture.
Lower prices
Funcex data show that the pace of decline in average export prices accelerated in August, down by 1.5 percentage points compared to July, year over year. Ms. Santos attributed the sharper fall in part to President Trump’s tariffs, which pushed Brazilian exporters to renegotiate prices with U.S. buyers.
The footwear sector was one of the hardest hit, said Priscila Linck, economist and market intelligence coordinator at Abicalçados, Brazil’s footwear industry association.
From January to August, export profitability for footwear, travel goods, leather, and related products dropped 3.9% compared to the same period in 2024. In August alone, the margin fell 11%, driven by a 6.1% drop in average export prices.
Ms. Linck noted that leather and footwear have different market dynamics, but both are being impacted by international trends and U.S. tariffs. “When the real appreciates, companies have less room to offer discounts in dollars without compromising profitability. But sometimes dollar discounts are the only way to maintain volume in international markets,” she said.
She described the current global landscape as uncertain, with intensifying competition—particularly from Asia in key markets for Brazilian footwear. “There was a significant export loss in August due to the tariffs,” she said.
Footwear shipments to the U.S. fell in August, contributing to a 0.5% drop in Brazil’s overall footwear export volume and a decline in average prices. Footwear sold to the U.S. typically has higher added value, Ms. Linck said.
Even so, some shipments went ahead, absorbing part of the new tariffs. “Brazilian companies maintained some volumes, partly absorbing the tariff. In some cases, the U.S. importers also absorbed part of the cost to preserve long-standing relationships,” she said. However, she warned this is a short-term fix and unsustainable in the long run, underscoring the need to revisit the tariff measures.
Export redirection
Ms. Santos said exporters in other sectors also had to cut prices in August to redirect shipments originally bound for the U.S. to other markets. “Exporters had to lower prices to ensure their goods were absorbed elsewhere. They lost bargaining power, which pushed prices down,” she said.
A report from the Foreign Trade Indicator (Icomex), published by the Brazilian Institute of Economics at Getulio Vargas Foundation (FGV Ibre), shows that of the 15 main products Brazil exported to the U.S. that were hit by tariffs, nine saw U.S. sales decline in August. Meanwhile, sales to the rest of the world rose or fell less sharply.
For instance, exports of semi-manufactured iron or steel products fell 28.3% to the U.S. but surged 99.7% to other destinations. Boneless frozen beef exports dropped 47.4% to the U.S. but rose 67.9% elsewhere. Coffee exports climbed 16.4% to the U.S., while falling 0.7% to other markets.
Still, the reallocation of exports may be more complex than it appears. Lia Valls, a professor at UERJ and associate researcher at FGV Ibre, said the data do not necessarily mean that Brazilian exporters have found alternative markets.
“Some of these shipments may still be aimed at the U.S. market, even if routed through other countries,” she explained. Some multinational companies are using facilities in other countries to ship to the U.S., replacing direct exports from Brazil. “There may be a reconfiguration happening that the data aren’t capturing yet,” she said.
Source: Valor International
https://valorinternational.globo.com
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10/09/2025
BRAZILIAN AMAZON RESIDENTS COMPLAIN ABOUT HEAT, POLLUTION
Climate crisis should already be treated as a public health and social crisis, survey shows
In the Brazilian Amazon, the climate crisis should already be treated as a public health and social crisis, especially for traditional and Indigenous communities. This is what shows a new survey released this Wednesday (8), in which a third of the more than 4,000 respondents claim to be directly affected by global warming—whether through rising living costs, food insecurity, or heat-related chronic diseases.
The increase in electricity prices was the most common impact mentioned by the Amazonians who responded to a survey by Umane and Vital Strategies, with support from the Devive Institute. In total, 83.4% complained about higher electricity bills.
Other problems included rising average temperatures (82.4%), increased air pollution (75%), more frequent environmental disasters (74.4%), and rising food prices (73%). All of these factors cause and exacerbate health problems, says Luciana Vasconcelos Sardinha, deputy director of chronic non-communicable diseases at Vital Strategies.
Indigenous peoples, quilombolas, riverside communities, and rubber tappers are among the most affected, representing 42.2% of respondents who claim to be directly impacted by the climate crisis. These groups report worsening water quality and food production, increased vulnerability to extreme events, and dependence on natural resources for survival. Most depend on the Brazilian Unified Health System (SUS) for healthcare.
“The environmental agenda is directly related to public health, especially for more vulnerable populations who, in addition, are farther from urban centers and feel the consequences of drought more acutely, for example. These people also have a more acute perception of what is happening because they depend on natural resources that are under threat,” says Ms. Sardinha.
She emphasizes that exposure to climate change is also greater due to the accumulated deforestation over the last 20 years.
Regardless of the respondents’ income, the survey’s technical manager emphasizes that environmental problems weigh financially on households because they are unable to produce or collect enough of their own food and raw materials. As a result, in addition to food insecurity, households are in the red.
In the Brazilian Amazon, the main economic activity is agriculture. It covers over 5.1 million km2 of land distributed across nine states—Acre, Amapá, Amazonas, Mato Grosso, Pará, Rondônia, Roraima, Tocantins, and part of Maranhão. On the map, deforestation is a historical reality, Ms. Sardinha points out, and makes extreme droughts trigger even more serious consequences, for example.
Of the total respondents, 53.3% say they have reduced practices they believe worsen the crisis, and 38.4% say they feel guilty about wasting energy. According to Ms. Sardinha, this feeling reflects a mental health issue, specifically climate anxiety.
There is widespread evidence of health damage caused by intense heat throughout Brazil, says Ana Valério de Araújo, executive director of the Brazil Fund for Human Rights. With poorer health, the population is unable to work, worsening economic activity in regions affected by climate disasters, she says.
“Some groups have their rights violated more than others because they are already experiencing structural changes, in addition to those caused by climate change. For example, Indigenous peoples, who simultaneously fight for their right to land and against the impacts of extreme weather events, which tend to be much greater than for those living in urban areas,” she explains. The trend, she adds, is for climate change to deepen social inequalities if there are no governance and preparedness in the public and private sectors.
Source: Valor International
https://valorinternational.globo.com
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10/09/2025
FEDERAL POLICE SAY METHANOL CRISIS COULD BE LINKED TO FUEL FRAUD
Director-General Andrei Rodrigues says probe entered phase of interagency cooperation with state forensic units
The director-general of Brazil’s Federal Police, Andrei Rodrigues, said on Wednesday (8) that the ongoing investigation into the contamination of alcoholic beverages with methanol may be connected to a major fuel fraud uncovered recently by the Federal Police.
“There is a possible connection with the previous operation on fuel adulteration, especially since the methanol’s port of entry was Paranaguá. It probably involved some criminal organization,” Mr. Rodrigues told reporters at the Ministry of Justice and Public Security headquarters.
He added that the investigation is now in a “phase of cooperation,” particularly in the forensic area, through a national integrated system that brings together Federal Police experts and state forensic police.
“We are combining efforts to gain access to materials seized by other police agencies, as well as to our own seizures, so that everything can be sent for forensic analysis,” he explained.
On September 29, the Federal Police started investigating a series of methanol poisoning cases in São Paulo. The move followed suspicions that the incidents could be linked to organized crime groups and to the recent fuel fraud probes.
The investigation was launched at the request of Justice and Public Security Minister Ricardo Lewandowski, who said Tuesday (7) that the Federal Police joined the case because authorities cannot rule out the possibility that the contamination represents a “national problem.”
According to the minister, the suspected criminal involvement may not necessarily involve the country’s well-known prison factions, but rather an organization operating specifically in the illicit alcohol production and beverage falsification trades.
Source: Valor International
https://valorinternational.globo.com
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10/10/2025
JURISTS EXPECT A YOUNGER REPLACEMENT FOR JUSTICE BARROSO
Justice’s early retirement gives President Lula another opportunity to appoint an ally to Brazil’s Supreme Court
The three frontrunners to succeed Justice Luís Roberto Barroso on Brazil’s Supreme Court—Bruno Dantas, minister at the Federal Court of Accounts (TCU); Attorney General Jorge Messias; and Senator Rodrigo Pacheco (Social Democratic Party, PSD, of Minas Gerais)—are all considered well qualified for the position, according to jurists and lawyers interviewed by Valor. Mr. Barroso announced on Thursday (9) that he will leave the court after 12 years.
Constitutional law professor and attorney Lênio Streck said Mr. Barroso’s retirement opens the way for President Lula to nominate someone who could remain on the court for roughly two decades. “One key factor is appointing someone younger, and that’s exactly what Lula will do—I have no doubt. The president will choose a highly aligned, organic candidate,” Mr. Streck said, pointing to Mr. Messias as the favorite.
According to Mr. Streck, naming either Mr. Pacheco or Mr. Dantas would steer the choice toward a more political discussion, something the government is likely to avoid.
For Roberto Dias, a professor of law at FGV Direito SP, the ideal profile to replace Mr. Barroso would resemble that of current Chief Justice Edson Fachin: “A justice who speaks primarily through court opinions, avoids political circles, and reinforces the perception of impartiality at the Supreme Court, especially at a time when the court continues to face fierce criticism.”
Mr. Dias noted that while the leading contenders meet constitutional requirements of “impeccable reputation and distinguished legal expertise,” they are closely tied to politics. He argued that Mr. Lula should instead consider appointing a woman, preferably a Black woman, to promote greater representation on the court.
“In the Supreme Court’s composition, people with diverse perspectives are essential to forming more consistent decisions that reflect the diversity and pluralism enshrined in the Federal Constitution,” he said.
Criminal law expert and PUC-SP professor Conrado Gontijo agreed that Mr. Messias, Mr. Pacheco, and Mr. Dantas possess undeniable legal credentials, having held important positions throughout their careers.
Mr. Gontijo said Mr. Barroso played a central role in key democratic debates during his tenure at the Supreme Court, fulfilling with “absolute rigor” the constitutional mission entrusted to the court’s justices. During Mr. Barroso’s tenure as chief justice, he added, the court faced enormous and unprecedented challenges, including “serious and unfounded attacks.” “His unwavering defense of the Constitution and all it represents was vital to preserving Brazil’s institutional framework,” Mr. Gontijo said.
Attorney Antônio Carlos de Almeida Castro, known as Kakay, praised Mr. Barroso’s performance as both justice and president of the Supreme Court, as well as his leadership of the Superior Electoral Court (TSE). “The open confrontation initiated by [then-President] Bolsonaro, who insulted and vilified him, shows that Barroso was on the right side and that he clearly unsettled the far-right faction in power at the time,” Mr. Castro said.
Mr. Streck divided Mr. Barroso’s Supreme Court stint into two distinct phases. In the first, the justice supported Car Wash Operation, the now questioned anti-corruption task force, adopting a more “punitive” stance. In the second, particularly over the past two years, during his presidency, Mr. Barroso became a key defender of democracy as the Supreme Court came under attack from the Bolsonarist movement.
Throughout his tenure, Mr. Streck emphasized, Mr. Barroso consistently acted in defense of the Constitution and individual rights. He cast votes advancing social rights for minorities, Indigenous peoples, racial quotas, and same-sex marriage, even while maintaining a more liberal stance on labor reform.
“This duality defined Mr. Barroso’s legacy on the court, as a justice who, while once punitive in criminal matters, will be remembered for his steadfast defense of minorities and fundamental rights,” Mr. Streck concluded.
Source: Valor International
https://valorinternational.globo.com
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10/13/2025
BRAZIL REDIRECTS TARIFFED GOODS TO OTHER MARKETS, LIFTS SALES
Higher coffee and beef prices help offset losses from Trump’s tariff hike
By redirecting shipments in August and September, Brazil managed to offset the drop in export revenue for major products hit by U.S. President Donald Trump’s new tariffs. Of the 20 most-exported Brazilian goods affected by the tariff hike in those two months, nine saw a decline in sales to the United States but either increased exports to the rest of the world or saw smaller declines compared to the same period in 2024.
Although exports of those nine products to the U.S. fell by $375.5 million, shipments to other countries rose by a combined $1.25 billion in August and September compared to the same months last year.
This rebound was driven primarily by shipments of unroasted coffee and frozen boneless beef to alternative markets. Export revenues also benefited from higher prices for both products.
Foreign Trade Secretariat (SECEX) data show that coffee exports were redirected mainly to European countries such as Germany and the Netherlands, as well as Japan. Beef exports increased sharply to China and the Philippines.
Exports of both products also surged to Mexico, a U.S. neighbor that could be serving as a gateway to the American market. In August and September, Brazil’s frozen beef exports to Mexico nearly quadrupled (up 292.6%), while coffee exports rose 90% compared to the same months of 2024.
The analysis of the 20 top export products was conducted by Lia Valls, an economist and professor at Rio de Janeiro State University (UERJ) and a researcher at the Brazilian Institute of Economics at Fundação Getulio Vargas (FGV IBRE), in collaboration with Valor, using SECEX data. The list includes items affected by both Mr. Trump’s 50% tariff and Section 232 tariffs, which target steel and aluminum, based on research by the Institute for Industrial Development Studies (IEDI).
These 20 products accounted for 29.3% of all Brazilian exports to the U.S. in August and September, including those not subject to the new tariffs.
Varying impacts
Ms. Valls noted that the tariff hike had a wide range of effects on different goods. “The data show a reconfiguration of markets, but some products are still facing more complex situations,” she said.
Among the 20 main products hit by the tariffs, Brazil increased exports of six to the U.S., though at a slower pace than to other markets. For the remaining five, exports to the U.S. rose while shipments to other countries grew less or fell. As a result, the U.S. share of Brazil’s exports of these 20 products dropped from 28% in August and September 2024 to 21.4% this year.
The U.S. share of Brazil’s overall exports also fell, from 11.6% to 9% in the same comparison.
However, not all redirected exports were able to fully recover lost revenue, said Rafael Cagnin, chief economist at IEDI. He pointed to one of the most important items affected by the tariffs: semi-manufactured iron or steel products. Shipments of these items to the U.S. totaled $360.5 million in August and September, down 19.4% from a year earlier, a $86.7 million drop in revenue.
Meanwhile, exports of the same items to other countries rose 36%, totaling $127.2 million—a $31.5 million increase that was not enough to offset the losses in the U.S. market.
Revenue gains were also only partial for other major export categories to the U.S., such as prepared foods and preserved beef, and electric transformers.
Coffee and beef lead gains
Among the 20 products analyzed, unroasted coffee and frozen boneless beef stood out for more than offsetting the drop in U.S. exports.
Brazil’s frozen boneless beef exports to the U.S. fell 58%, a $90.9 million loss in revenue. But shipments to other countries soared 70% in the period, generating an additional $1.16 billion.
Unroasted coffee exports to the U.S. dropped 11.3%, or $27.52 million, while exports to other countries rose 9.1%, generating an additional $155.3 million in revenue. The comparisons cover August and September of 2025 versus the same months in 2024.
Coffee and beef are among Brazil’s key exports to the U.S., but they were less affected by the tariff hike, said Mr. Cagnin. “That’s because these products are not heavily dependent on the U.S. market, making it easier to redirect shipments and still exceed what was needed to make up for the losses,” he said. “And both products are benefiting from favorable pricing trends—coffee prices are rising, and so are beef prices.” That, he added, gives exporters more leverage in price negotiations even as they adjust their destinations.
China stood out as the top alternative market for frozen beef. After the tariffs were imposed, the U.S. share of Brazil’s beef exports dropped from 8.6% in August–September 2024 to 2.3% in the same months of 2025. China’s share rose from 58.8% to 67.2%, with a sales increase of 81.8%. Exports to Mexico grew even more—up 292.7%—though from a smaller base. Mexico’s share rose from 1.5% to 3.6%.
“Exporters are exploring new markets beyond the U.S., and China is capitalizing on this,” said José Augusto de Castro, president of Brazil’s Foreign Trade Association (AEB). “While Brazil looks to diversify its exports due to the tariff hike, China is expanding its share of global imports. We’re hitting export records for meat, and China is taking that in, just as it did with soybeans in the past.”
Rising China dependence
Mr. Cagnin warned that increasing dependence on China, especially for meat exports, is a concern. “Brazil is already highly reliant on the Chinese market when you look at overall exports,” he said.
He also pointed to products that saw export declines both to the U.S. and to other countries, including diesel engine parts, plywood from other wood types, and alternative cane and beet sugars.
“These trends highlight the need to reduce dependency on the U.S. and expand to new markets, such as the European Union and South America,” he said. “The deeper shift brought by the tariff hike is that the U.S. can no longer be seen as a reliable partner.”
Interestingly, some tariffed products still saw growth in U.S. exports. Ms. Valls highlighted rubber tires used in buses and trucks, which surged 417.3%. Exports of bulldozers and angledozers rose 66.2% and 707%, respectively.
For Mr. Castro, this could be due to Brazil’s role in supply chains or intra-company trade. Ms. Valls added that some items were listed under specific codes in the U.S. exemption decree, which may allow room for classification debates and open up opportunities to continue exporting those products.
Source: Valor International
https://valorinternational.globo.com
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10/13/2025
FAILURES IN ADOPTING NO-TILL FARMING INCREASE HERBICIDE USE IN BRAZIL
A mainstay of sustainable practices, the system affects weed control when producers neglect other soil care practices, according to a study
The incomplete adoption of no-till farming, a planting system that reduces the impact of agriculture on soil health, increases Brazilian soybean producers’ costs with herbicides. This is the conclusion of the study “Brazil as a world leader in soybean production: until when and at what cost?”, conducted by the Escolhas Institute.
According to the study, between 1993 and 2023, soybean farming area grew 317% in the country, while the estimated use of synthetic herbicides increased 2,019%, to 195,000 tonnes. In 1993, for every kilogram of herbicide used by farmers, 23 bags of soybeans were harvested. Now, the harvest averages seven bags.
Juliana Luiz, research manager at the Escolhas Institute and one of the study’s coordinators, says the reason for increased herbicide use is the widespread adoption of no-till farming without complementary soil conservation practices.
No-till farming is based on three procedures: not turning the soil, maintaining permanent soil cover (with either plants or crop residues), and diversifying crops. “No-till farming is a very important revolutionary practice that prevents erosion and increases water and nutrient absorption. The problem is its adoption without integrated management,” says Ms. Luiz.
For the study, the authors used public data from the Brazilian Institute of Geography and Statistics (IBGE) on production, from the Ministry of Agriculture on the use of synthetic pesticides, and statistics from the Brazilian Federation of the No-Tillage System. The researchers visited and interviewed 34 farmers from Mato Grosso, Goiás, and Paraná, who cultivate a total of 88,100 hectares, to investigate their production practices. Escolhas analyzed 45 soil conservation and regeneration practices.
The producers were divided into conventional producers who adopt fewer of these practices; regenerative producers who used more practices; and farmers who use organic farming, a method that prohibits using synthetic herbicides and disturbing the soil, which precludes direct planting. According to the study, conventional producers adopt no-tillage systems, but only 31% use crop rotation, 15% use mulch, 15% use green manure, and 31% use organic manure.
When farmers don’t adopt complementary measures, Ms. Luiz says, no-till farming makes it difficult to combat weeds, requiring more herbicide applications. “With incomplete management, pesticide use needs to be increased.” She adds that producers use crop succession—soybean and corn, soybean and cotton—but not rotation, which involves greater crop diversity in the same harvest.
Henrique Debiasi, who researches soil management at Embrapa Soja, says that no-till farming is used on 33 million hectares in Brazil, but, according to him, there are no official statistics on the system’s full adoption. “No-till farming itself is widely adopted, with minimal soil disturbance. But permanent soil cover and crop diversification have low adoption,” he explains.
Mr. Debiasi says that not disturbing the soil already helps reduce erosion and increase productivity. Studies by Embrapa Soja show that no-till farming increases soybean productivity by 30% to 40% compared with conventional tillage. “But with the full no-tillage system, productivity increases by 50% to 60%,” says Mr. Debiasi.
The full system requires more preparation time, but producers are gradually increasing their adoption of these management techniques, according to Mr. Debiasi. “Soil cover has low adoption, but the biggest problem is the lack of diversification in the production system. We practice direct seeding, but not no-tillage,” he says.
Croplife Brasil, an association representing the pesticide industry, told Valor that it had not had access to the study and therefore would not comment on it. The association noted that the no-tillage system is a global benchmark in sustainable intensification.
“In tropical conditions, where straw decomposition is up to ten times faster than in temperate regions, the rational use of herbicides [is] a conservation tool, not a sign of dependence. [Without] chemical control, the no-tillage system would cease to exist, and so would the progress achieved,” Croplife said in a statement.
Croplife added that, according to the UN Food and Agriculture Organization (FAO), in 2021, Brazil ranked 41st in the global ranking for pesticide use per hectare—about half that seen in smaller markets. “This result shows that Brazilian proportional use is moderate and consistent with that of the world’s leading agricultural powers, contradicting the recurring perception of excessive use,” the association said.
Source: Valor International
https://valorinternational.globo.com
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10/17/2025
MINING STOCKS RISE AS CHINA TIGHTENS EXPORT CONTROLS
Shares of foreign companies with projects in Brazil surge; some reach record highs
Shares of foreign mining companies with rare earth projects in Brazil have risen since Thursday (9), following China’s announcement that it would impose stricter controls on exports of the group of elements. Some of these stocks reached record highs this week.
According to Valor Data, shares of Brazilian Rare Earths, listed on the Australian exchange, jumped 14.8% in just one week (from October 9 through 16), hitting an all-time high of A$5.72 on Thursday (16).
Aclara Resources, listed on the Toronto Stock Exchange in Canada, gained 5% over the same period and also reached a record high on October 14, trading as high as C$4.45. As of Thursday (16), the stock was stable at C$3.15.
Meanwhile, shares of Meteoric Resources and Viridis Mining, both listed in Australia, rose 15% and 15.08%, respectively, during the period.
According to the latest edition of the Critical Minerals Investment Guide, published by Brazil’s Ministry of Mines and Energy (MME), these four companies hold four or fewer of the ten rare earth mining projects currently in the pre-operational phase in the country.
“If we look at what’s happening globally, there are hundreds of projects under development, but the rise in the stock prices of miners operating in Brazil signals confidence, a bet that the country could become an important player compared to other regions,” said Fernando Landgraf, professor at the Polytechnic School of the University of São Paulo (USP) and former president of the Technological Research Institute (IPT).
Today, China dominates nearly the entire global rare earth supply chain, from production to processing. Brazil holds the world’s second-largest reserves but still plays only a minor role in production. The country’s only commercially operating mine, run by Serra Verde in Minaçu (Goiás), began operations in 2024 and aims to produce 5,000 tonnes of rare earth oxides per year.
Last year, global rare earth oxide production totaled 390,000 tonnes, with China accounting for 270,000 tonnes, or about 70% of the total, according to the U.S. Geological Survey (USGS).
Under China’s new rules, which will further tighten its grip on critical minerals, foreign companies will need Beijing’s approval to export magnets that contain even trace amounts of rare earth materials of Chinese origin, or that were produced using Chinese extraction, refining, or magnet manufacturing technologies.
Klaus Petersen, Brazil country manager for Viridis, said the company’s stock likely rose in response to the pressure China has been putting on the West. He noted that this environment makes rare earth companies, including those still in pre-operational stages, appear as potential future alternatives to China’s monopoly.
“China has increased export restrictions on rare earths, setting conditions such as knowing where the material is going and whether it will be used for military applications, which they oppose but can’t fully control,” Mr. Petersen said. “Everyone wants this material, especially for defense, not to mention electric vehicles. In any case, China has shut its doors even tighter, putting pressure on the entire Western world.”
Viridis’s project lies on the geological structure of an ancient volcano in the Poços de Caldas Alkaline Complex in Minas Gerais, with an expected average production of 9,400 tonnes of rare earth oxides per year, extracted from ionic clays that concentrate these elements.
For Marcelo Carvalho, CEO of Meteoric, the recent rally in the company’s shares will not necessarily accelerate investment decisions for its project, also located in the Poços de Caldas complex. Meteoric expects to produce 13,600 tonnes of rare earth oxides per year.
“Our investment depends on hitting certain milestones, such as environmental licensing and economic feasibility studies, which aren’t market-driven,” he said. “Of course, investor appetite grows, but the timing doesn’t change much.”
Mr. Carvalho added that investors are closely watching U.S. dependence on Chinese rare earths. “When the market sees restrictions, it invests in what could break those restrictions in the future,” he said.
As Valor reported in September, Viridis and Meteoric are pursuing strategies to diversify both financing sources and future buyers for their production, seeking paths that reduce exposure to Chinese influence.
Aclara and Brazilian Rare Earths did not comment before publication.
Aclara’s project is located in Goiás, and, in September, the company secured a commitment of up to $5 million from the U.S. International Development Finance Corporation (DFC) to fund its feasibility study in Brazil.
Brazilian Rare Earths’s project is located in Bahia, and the company announced this week it had raised 120 million Australian dollars (US$78 million) to accelerate the development of its rare earth initiatives in the country.
Source: Valor International
https://valorinternational.globo.com
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10/20/2025
GOVERNMENTS, CORPORATIONS INCREASINGLY CONCERNED ABOUT HACKER ATTACKS
Critical systems, such as payment systems and power plants, including nuclear ones, are among the targets; global losses could reach $57bn this year
Online scams are part of Brazilians’ daily lives—some of the most common involve criminals posing as relatives in need and asking for help paying an upcoming bill or faking the kidnapping of a family member and demanding ransom. In 2025, however, the country saw more serious incidents affecting the national financial system. Hackers broke into C&M and Sinqia, two companies that provide tech services for Pix, Brazil’s instant payment system, and stole more than R$1.5 billion. In September, the Brazilian Federal Police arrested eight cybercriminals before they could pull off another billion-real hack against the Pix ecosystem, this time targeting Caixa Econômica Federal, a state-owned bank.
These cases are examples of crimes that have increasingly concerned governments and large corporations: attacks on critical systems, such as payment platforms, port and airport navigation systems, and the operation of power plants, including nuclear power plants. It’s no surprise that cybersecurity was the main topic of discussion at this year’s Futurecom in São Paulo. Hacks into critical systems have disruptive potential and can have a similar effect to a terrorist attack, except that the attackers can be miles away and easily conceal their identities. This is what happened last September, when a cyberattack hit several European airports, including Heathrow (UK), Brussels (Belgium), and Dublin (Ireland), among others.
The objective, in attacks on both government and corporate targets, is economic, whether by stealing large sums, demanding ransoms to “return” tech systems’ control to their original owners, or stealing citizens’ data for use in other crimes. “There’s [a lack of] punishment and difficulty in tracking and identifying these hackers. Furthermore, payments [to criminals] are made with cryptocurrencies, which can be untraceable,” says Márcio Kanamaru, leading partner for technology, media, and telecommunications (TMT) at KPMG.
The losses reach hundreds of billions of dollars. According to a study by Cybersecurity Ventures, published last March, ransomware attacks are expected to cause losses of $57 billion this year, and the figure is expected to reach $276 billion per year by 2031. According to an IBM global survey on the cost of data breaches conducted with approximately 600 companies, these attacks caused, on average, losses of $4.4 million for companies. Furthermore, some industries face more problems than others. The average loss among healthcare companies, for example, is $7.42 million per system breach. Criminals target databases containing patient information, which are then used to defraud insurance companies and impersonate people, among other crimes.
Losses vary from the ransom paid to criminals to the time it takes companies to fully restore their systems after a breach. The IBM survey indicates that 76% of organizations took more than 100 days to recover from an attack, while 26% took more than 150 days to resume normal operations—only 2% of the companies surveyed said they took less than 50 days to restore their systems. “This calculation compares similar situations. We try to understand how long the company’s system was down. But it’s still a very subjective metric,” explains Eliane Rodrigues, director of information security at VTEX.
Another problem is underreporting, as many crimes are not reported to authorities to avoid damaging the organization’s reputation. “Generally, companies don’t want their names involved; they often don’t even file a police report to avoid exposure,” says Paulo Baldin, director of cybersecurity at CLA Brasil. Underreporting is even more common in companies targeted by organized crime. “When a police operation and a company’s name appear in connection with a criminal group, it causes significant reputational damage,” emphasizes Paula Leite, director of business intelligence at security consultancy Control Risks.
But cybercrimes can take on even greater dimensions, especially when attacks are carried out between nations. “One of the first measures Russia took against Ukraine was to attempt to take down the enemy country’s digital infrastructure,” highlights Carlos Barroso, IP head for Latin America at Nokia. “These invasions are intended to demoralize governments and destabilize regions,” Mr. Barroso believes. “On a broader geopolitical level, it is possible to compromise energy and water infrastructure and cause very serious accidents for the population,” adds Arthur Capella, general director of Tenable Brazil.
These attacks are also becoming more frequent. In July, the Singapore Ministry of Defense said its critical systems were being targeted by hackers, allegedly Chinese, who were attempting to spy on essential sectors such as energy, telecommunications, and the public healthcare system. In October 2024, the servers of American Water, the largest public sanitation utility in the United States, were hacked, putting the water supply to 14 million Americans at risk. The company managed to shut down its systems before a major loss occurred, but the customer service portal, as well as the billing system, was down for a few days, creating problems for consumers.
The biggest challenge in the coming years will be building mechanisms to mitigate these risks, as the cybersecurity industry faces challenges such as a lack of skilled labor and the need for more investment, says Mr. Kanamaru of KPMG. “As the trend is for infrastructure to become increasingly digital, it’s important to consider a long-term government policy for cybersecurity. We will have to continually invest and have budgetary provisions to ensure these critical systems are always protected.”
Source: Valor International
https://valorinternational.globo.com
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10/21/2025
BRAZIL BLACKOUT REVEALS ONGOING RISKS IN NATIONAL POWER GRID
Fire in Eletrobras substation caused cascading outages across the country and raised reliability concerns
A fire at a power substation in the southern state of Paraná triggered a nationwide blackout in the early hours of Tuesday (14), highlighting structural vulnerabilities in Brazil’s electricity grid.
The incident occurred at a reactor in the Bateias substation operated by Eletrobras, which is part of a 500-kilovolt (kV) high-voltage transmission line. The fire caused the shutdown of about 10 gigawatts (GW) of power. While some regions experienced only brief outages, others were left without electricity for over two hours.
President Luiz Inácio Lula da Silva met with Mines and Energy Minister Alexandre Silveira at the presidential palace just hours after returning from an overseas trip to discuss the incident.
The blackout activated the Regional Load Relief Scheme (ERAC), a safety protocol that automatically disconnects parts of the system to prevent broader damage. Authorities downplayed the event and rejected the notion of a systemic crisis. Mr. Silveira called it a one-off infrastructure issue, saying Brazil’s national grid operator, ONS, responded promptly.
ONS said the fire severed the connection between the southern grid and the Southeast and Central-West regions, prompting a preventive supply cut across the country in varying degrees. The Ministry of Mines and Energy classified the incident as a “severe contingency.”
In a statement, ONS said it began a coordinated response to restore power as soon as the situation was identified. Electricity was reestablished in the North, Northeast, Southeast, and Central-West regions within 90 minutes. Full restoration in the South took about two and a half hours.
ONS Director-General Marcio Rea said in the statement that the agency quickly reestablished the system, “demonstrating the robustness of the National Interconnected System (SIN).” He described the event as a controlled power interruption caused by a “fortuitous incident,” the type of failure that could happen in any country.
Eletrobras said the shutdown was triggered by a “reactor incident” and that power was restored shortly after. “ONS will determine what led to the larger disturbance in the national system. Eletrobras will collaborate in identifying the causes,” the company said.
System resilience
While experts acknowledged the system’s general robustness, the scale of the outage raised concerns. Luiz Carlos Ciocchi, former ONS director-general, said the blackout was “very different” from a 2023 incident that did not involve a fire. “The first question that needs answering is what exactly happened at the substation and why a fire in one component shut down an entire plant,” he said.
Mr. Ciocchi added that the automatic protection scheme worked as intended, but further analysis was needed. “System security must always be a top priority in the power sector,” he said. He noted that the fire happened during low consumption hours and in a region without high renewable output. “The key is understanding what went wrong.”
Power systems engineer Celso Torino pointed out that the 10GW outage was almost equivalent to power plant Itaipu’s capacity of 14 GW.
“We need to better understand why a reactor fire at a 500kV substation caused the complete shutdown of 750kV lines connecting Itaipu’s 60-hertz output to Southeast Brazil,” said Mr. Torino, a former Itaipu operations director. “The N-1 security criterion tells us this shouldn’t happen.” He referred to the N-1 standard, which requires the grid to withstand the loss of a key component without triggering cascading failures.
Mr. Torino said the episode calls for a broader governance review of the national grid, including planning, operational stability, and consumer cost structures.
Carlos Adolfo Pereira, who heads the transmission division at the Brazilian Infrastructure and Basic Industry Association (ABDIB), said it was too soon to conclude there was a substation failure and a more detailed assessment was needed.
He noted that the industry has been investing in modernizing transmission systems, especially replacing outdated equipment. “Transmission companies are expected to invest about R$40 billion through 2034 to upgrade old infrastructure,” he said.
“Reliability issue”
Edvaldo Santana, former director at energy regulator ANEEL and a columnist for Valor, said the blackout was one of the most significant in recent memory. The August 2023 outage cut 22.5GW of supply, while a 2010 failure involving Itaipu lines knocked out about 11GW.
Mr. Santana questioned how a fire in a single reactor—typically considered a minor contingency—could affect the entire country, especially during low demand at around 12:30 a.m. “Even for a critical substation, a reactor fire should have been contained locally. This is a serious reliability issue,” he said.
Industry sources described the Bateias substation as strategically important, part of a high-capacity 500kV line, but said it should have withstood the failure. The widespread impact indicates the system is “sensitive” to minor incidents, they said.
Experts warned the event reinforces a troubling conclusion: Brazil’s grid remains “on a knife’s edge,” not due to energy shortages but because of a combination of structural weaknesses. These include fragile transmission infrastructure, equipment failures, excessive daytime solar generation followed by steep nighttime demand ramps, and networks that remain ill-equipped for extreme weather events.
Repeat of a known pattern
The event echoed a familiar pattern seen since the August 15, 2023 blackout. An ONS report blamed that outage on voltage control failures in wind and solar farms. Since then, the operator has adopted a more conservative management approach.
Still, Brazil has experienced at least five major blackouts since then. Even minor incidents have had an impact. In August last year, a short circuit at an Eletrobras substation caused by a stray kite left 942,000 households without power in São Paulo and Guarulhos.
Heavy rains also knocked down transmission lines and damaged dams in Rio Grande do Sul, while storms cut power to millions in the São Paulo metro area. In both cases, authorities struggled to respond quickly, leaving consumers in the dark for days.
Specialists advocate for capacity auctions and technologies such as batteries and reversible power plants to improve grid resilience.
“Until 2021, utilities invested R$18 billion a year. By 2025, that number will rise to R$46 billion. From 2025 to 2029, we expect R$235 billion in total investments, with 40% focused on modernizing networks,” said Ricardo Brandão, executive director for regulation at the Brazilian Association of Electricity Distributors (ABRADEE).
The blackout comes just as Brazil prepares to transition from the dry season to the rainy period, which starts in November. There is still uncertainty over rainfall patterns and the recovery of hydropower reservoirs. Operational challenges are compounded by the rapid growth of renewables and pricing distortions that create additional costs for consumers and threaten the sector’s balance.
Brazil narrowly avoided two national blackouts this year, one in April and another on Father’s Day, August 10. With low daytime demand, rooftop and small-scale solar generation surged to record levels, forcing ONS to disconnect large wind and solar parks to avoid overloads. Such incidents occur when the grid lacks infrastructure to carry excess generation, or when supply outpaces demand.
Source: Valor International
https://valorinternational.globo.com
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10/21/2025
NEW HACKER ATTACK TARGETS FICTORPAY, A BUSINESS SERVICES COMPANY
According to one source, Brazil’s Central Bank observed unusual financial transactions made through FictorPay and alerted Celcoin, the company to which the fintech is affiliated
FictorPay, a fintech, was the target of a hacker attack that stole company funds on Sunday. The information was first reported by Platô Br and confirmed by Valor.
FictorPay offers financial services for businesses, such as accounts, loans, advance payments, and payment tools. According to one source, Brazil’s Central Bank observed unusual financial transactions through FictorPay on Sunday and alerted Celcoin, the company to which FictorPay is affiliated. Celcoin is linked to Pix, the Central Bank’s digital payment system, but FictorPay is not.
Sources following the case say that it was “a direct attack” on FictorPay, unlike other attacks occurred this year. In these other cases, the attacks were carried out through information technology service providers (ITSPs), which are the companies that connect financial and payment institutions, on the one hand, and BC’s systems, such as Pix itself, on the other.
According to the sources, no systems managed by the Central Bank were attacked.
In a statement, FictorPay said it was notified of “irregular activity in the technology environment of a service provider that serves several companies, including [our] company.” According to the fintech, “the incident is being investigated by the provider itself, with the support of information security specialists, and to date, there is no record of any impact on FictorPay’s own systems.”
Celcoin also released a statement saying that there was no invasion, attack, or compromise of its technology infrastructure or transactional environment. “Atypical activity was identified in a customer’s account, which was promptly detected by our monitoring systems. As soon as the behavior was noticed, we preventively blocked the transactions and immediately alerted the customer.”
“Analysis indicates that the origin of the incident lies with a white-label application solutions provider used by this customer and other companies in the market, impacting several BaaS and Core Banking players, with no connection to Celcoin,” it stated. The company says it is “supporting the customer in the investigation and recovery procedures.”
When contacted, the Central Bank declined to comment.
Source: Valor International
https://valorinternational.globo.com
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10/21/2025
BANKS, FINTECHS DUEL OVER TAXATION
Traditional institutions have higher nominal tax rates and advocate for equality; rivals see lower effective rates
The Brazilian Federation of Banks (Febraban) has intensified its conflict with fintechs over taxation. According to Valor, the dispute escalated behind the scenes regarding Provisional Presidential Decree 1303, when fintechs opposed an increase in the Social Contribution on Net Profit (CSLL) rate that would apply to them and, in response, proposed raising the rate for traditional banks.
In a report released on Monday, Febraban outlines arguments against fintechs paying a lower CSLL rate and advocates for tax fairness. The organization strongly criticizes Nubank. “It seems unjustifiable that the world’s most profitable financial institution (The Banker), with the highest valuation in the banking industry (Bloomberg), with bank explicitly in its name, 100 million accounts, the second-largest card portfolio, R$200 billion in personal loans, and 67% annual interest for households, pays a nominal CSLL rate lower than that of banks. This is very difficult to explain!” stated Febraban, which represents traditional banks.
When contacted, Nubank said it was pleased to see that Febraban finally acknowledged that fintechs already pay higher effective tax rates than large banks. However, it alleges that the federation uses biased arguments to harm competition and penalize fintechs that have promoted financial inclusion in Brazil.
“Nubank is proud to have spearheaded a transformation in the sector, increasing competition and access to credit, and reducing interest rates, always focused on offering the best products and services to its customers. We did this through an efficient business model, technological innovation, regulatory compliance, and paying an effective tax rate in Brazil of 34.1%, the highest among the largest companies in the sector,” it said in a statement.
For Febraban, banks and fintechs should pay the same tax rate. Fintechs argue that while banks’ nominal tax rate is higher, their effective tax rate is lower due to factors that reduce it. Febraban says that discussing the effective tax rate without showing the tax calculations is a failure to engage in the debate.
The study also responds to comments by Roberto Campos Neto, former president of Brazil’s Central Bank and current vice president and global head of public policy at Nubank, who said last week that fintechs have a higher effective tax rate than banks.
Source: Valor International
https://valorinternational.globo.com
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10/23/2025
NORTHEAST INDUSTRY BETS ON RENEWABLE ENERGY
The shift toward clean energy could help attract new foreign investors to the region
With 86.8% of its installed power already derived from renewable sources—and set to receive 63% of Brazil’s upcoming solar projects and 89% of new wind projects—the Northeast region has emerged as the natural hub for investments in “powershoring,” the relocation of industrial chains seeking decarbonization and energy security. The region also hosts 18 industrial hubs with energy-intensive operations that could be transitioned to clean energy sources.
These findings are part of a study by Ceplan, a consulting firm, which will be presented on Thursday (23) at a seminar on accelerating powershoring investments in the region. The event is organized by the Northeast Consortium, Banco do Nordeste, and the Climate and Society Institute (iCS).
According to the report, the 18 industrial zones are distributed as follows: two in Maranhão (Açailândia and São Luís); three in Ceará (Caucaia, Eusébio, and Maracanaú); four in Pernambuco (Cabo de Santo Agostinho, Igarassu, Ipojuca, and Paulista); four in Alagoas (Coruripe, Marechal Deodoro, Rio Largo, and São Luís do Quitunde); and five in Bahia (Camaçari, Candeias, Feira de Santana, Simões Filho, and Vitória da Conquista).
These cities are home to industries that require high energy consumption, such as metallurgy and steelmaking, chemicals, food production, non-metallic minerals, rubber and plastic manufacturing, textiles, and automotive production.
“These industries serve both the domestic and export markets and could transition to renewable energy as a strategy to attract foreign investors who must demonstrate to shareholders that their operations are decarbonized,” explains Paulo Ferraz Guimarães, an economist and one of the study’s authors.
He notes that shifting an industry’s energy source is not a simple process. “It often requires adjustments in procedures, machinery, and possibly in production methods,” he says. However, he adds that this transition also represents an opportunity to adopt more efficient and sustainable production processes and strengthen integration into global value chains.
The conversion of existing industrial plants is only one path to powershoring expansion in Brazil. With 45.1 gigawatts of installed capacity and another 104.6 GW projected for development, along with robust port infrastructure and proximity to major consumer markets such as Europe and the United States, the Northeast is a natural destination for decarbonization projects, says Jorge Arbache, economist at the University of Brasília and Valor columnist, who coined the term “powershoring.”
“The question,” he points out, “is why this agenda has not progressed as quickly as anticipated.”
“I believe there are two main explanations,” says Mr. Arbache. “First, trade in green products faces multiple obstacles from developed countries, including both tariff and non-tariff barriers, which have become major roadblocks to progress. This agenda creates significant friction in sectors that lack the same conditions for producing, for example, green steel, green ceramics, or green hydrogen. Direct competition in these areas would be clearly detrimental to some companies,” he notes, citing as an example the Carbon Border Adjustment Mechanism (CBAM)—a tax the European Union will begin imposing in 2026 on the carbon emissions embedded in imported products.
“The issue is that without trade, there is no investment,” Mr. Arbache summarizes. “Many countries still fail to grasp that powershoring is essential to combat green inflation—the rise in prices driven by the need to invest in more sustainable processes and inputs,” he laments.
The second challenge, he says, lies in the lack of coordination and political commitment among the federal and state governments to advance the agenda. “The Nova Indústria Brasil (NIB) program, for instance, only touches on the issue indirectly. Companies need to see a stronger signal of commitment, such as the creation of dedicated funds and de-risking mechanisms to support these initiatives. States also need better coordination; they can’t each go their own way,” he argues.
A similar lack of coordination can be seen in financing, adds Mr. Guimarães. While the country faces energy oversupply at certain times of day—forcing the National Electric System Operator (ONS) to instruct renewable plants to reduce or halt generation (curtailment)—most available financial resources remain focused on expanding supply rather than optimizing use.
Despite these hurdles, Mr. Arbache points out that fuels have been one of the few areas showing faster progress. The former vice president for the private sector at the Development Bank of Latin America (CAF) explains: “It’s one of the few areas where compliance speaks for itself. Decarbonization rules have already been established, and companies are required to meet them—it’s not optional. But other high-emission sectors, such as steel, aluminum, and petrochemicals, which together account for roughly 30% of global emissions, also need to decarbonize. There’s no alternative.”
He adds that the key challenge is finding financially viable solutions. “These solutions don’t exist in many parts of Europe, the United States, or Japan. In fact, several of these countries have scaled back their energy transition investments, which only widens the opportunity for Brazil and the Northeast to take the lead.”
Source: Valor International
https://valorinternational.globo.com
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10/27/2025
BRAZIL’S CARBON MARKET TAKES SHAPE AS CORNERSTONE OF INDUSTRIAL POLICY
Economist Cristina Reis, tapped to lead the new Carbon Market Secretariat, says the initiative will drive innovation and position Brazil in global value chains
Brazil’s carbon market is just the beginning. “We’re setting up something deeply important and strategic for the nation,” said economist Cristina Reis, chosen to head the Extraordinary Secretariat for the Carbon Market, which the Ministry of Finance is now structuring. “The carbon market is pure industrial policy,” she added. “It’s the future.”
The new secretariat will act as the executive body, giving the initial push to the carbon market law enacted in December. Under this law, Brazil will have a system with emission limits and tradable allowances among companies that emit the most carbon, a “cap-and-trade” mechanism. The ministry will define methodologies, monitor progress, and allocate emission quotas across sectors.
In Ms. Reis’s view, the step is far broader. “Decarbonization projects will unleash a vast network of science, technology, and innovation, integrating Brazil into strategic global value chains,” she said. Ms. Reis has not yet been officially appointed to the position and continues to serve as undersecretary for sustainable economic development at the Finance Ministry. She plans to invite José Pedro Neves, her right-hand man, to serve as deputy secretary. “We must prepare to have a strong, large, and powerful exchange—one that’s not dependent on others,” she said.
Agency within two years
“We hope to establish, within two years, a governing body similar to a regulatory agency. We need something permanent and robust,” she said. “But since such a decision takes time, we thought it best to create an interim structure to lay the groundwork for the regulated carbon market—and later transition to a more definitive body.”
The undersecretariat where she currently works—the Undersecretariat for Sustainable Economic Development under the Finance Ministry’s Secretariat for Economic Policy—will continue handling taxonomy, the bioeconomy plan, and several other topics. “The carbon market, however, will move to the new structure,” she noted.
New structure
“We’ll have two undersecretariats,” Ms. Reis added. “One will handle regulation and methodologies and will be led by Ana Paula Machado, currently undersecretary of the Climate Plan at the Ministry of the Environment. She knows the subject well—she worked at the National Civil Aviation Agency (ANAC). She participated in Corsia (the Carbon Offsetting and Reduction Scheme for International Aviation, a program of the International Civil Aviation Organization for reducing and offsetting CO₂ emissions from international flights).”
“This undersecretariat will have two divisions: one for methodologies and another for regulatory impact analysis. The regulatory impact team will define which activities, sources, facilities, sectors, and greenhouse gases are covered. The other will accredit carbon-credit methodologies that may be accepted as offsets in the regulated market.”
Regulated and voluntary markets
“The voluntary market already exists,” Ms. Reis said. “It’s based on bilateral transactions—contracts between a company and another party that reduce or remove carbon in any sector.”
“Law 15,042 created the regulated market. It requires large emitters—those releasing more than 25,000 tonnes of greenhouse gases per year—to decarbonize,” she said.
To that end, the governing body will set an emission cap and the allowances each regulated entity will have to meet its targets—the “cap and trade.” “Each regulated company will have its own allowance: if it meets it, great; if not, it will have to buy from someone with a surplus.”
“Our system allows companies to buy carbon credits from the voluntary market, but not just any credit,” Ms. Reis noted. “It must be generated under a methodology accredited by the governing body—and that’s the job of this division.”
“For example, a cement producer that has already reached its emission limit has two options: it can buy credits from another company that has reduced emissions beyond its quota, or it can go to the voluntary market and purchase credits from a forest regeneration project using a methodology accredited by the secretariat.”
Strategic planning
“The other undersecretariat will be led by Thiago Barral, former National Secretary for Energy Transition and Planning at the Ministry of Mines and Energy,” Ms. Reis said. “It will focus on implementation and will include two divisions: one for MRV studies—monitoring, reporting, and verification—and another for registries.”
“The MRV division will determine how companies will report their emissions, how monitoring and verification will be carried out, and how this information will feed into the National Allocation Plan. This plan will set emission limits, annual reduction targets, and rules for allocating credits—whether free or paid.”
“The other division will create the system’s registry,” she explains. “That’s where the regulated companies will submit their data: ‘This year, I emitted this much, from this activity.’ This dataset will help us continuously refine the policy.”
Strong exchange
“This undersecretariat will also structure how, in the future, the registry and the system’s assets—the allowances to be distributed—will interact with the stock exchanges,” Ms. Reis added. “Now that we have a regulated carbon market taking shape, a law that can boost the voluntary market, and international transfers that may eventually be traded on exchanges, we must prepare to have a strong, large, and powerful exchange—one that is not dependent on others.”
“As for whether we’ll work with the São Paulo or Rio de Janeiro stock exchange, no decision has been made yet,” she added.
Liquidity
“Carbon credits can be traded on the stock exchange,” Ms. Reis noted. “Today, volumes are still small, but they tend to grow.”
“The system’s assets—that is, the allowances—have been defined as securities under the governance and regulation of the Securities and Exchange Commission (CVM). This ensures the desired liquidity for both the allowances and carbon credits, giving market participants more confidence in these transactions.”
“The financial dimension of carbon markets is highly relevant,” she said.
Start
“We’ll have a testing phase and distribution of allowances within the regulated system—aimed at companies that emit more than 25,000 tonnes of CO₂ per year,” Ms. Reis said. “This phase will begin in four years.”
“After that, there will be a mandatory phase, when companies will have to buy these allowances through auctions—the law sets this to happen in five years,” she added.
“Four years is the time this secretariat has to get everything ready—conduct studies, draft regulations, and issue the necessary ministerial ordinances.”
Building it up
“We’re putting in place something of enormous importance that could have major relevance for the country,” Ms. Reis said. “Minister Fernando Haddad is being bold and innovative by establishing this secretariat within the Finance Ministry. He sees it as both a business opportunity and a way to integrate Brazil technologically into strategic value chains.”
“These decarbonization projects will unleash a vast network of science, technology, and innovation,” she added. “We already have universities, laboratories, and research institutes developing solutions to decarbonize different sectors—what we lacked was demand and scale.”
“With regulation, the carbon market can foster this ecosystem related to science, technology, and innovation, while also strengthening the economic, financial, and legal dimensions of the transition,” she added.
“Just imagine how many consulting firms will emerge,” Ms. Reis said. “We expect a significant impact on the corporate services sector. We must start right away—and do so transparently. We’ll also have to develop an engagement and communication plan. There’s a lot of pressure and anticipation surrounding the carbon market. We must be ready—there are countless possibilities, and now it’s up to the government to regulate and chart this path.”
Sectors
“The question of which sectors we’ll begin with is the most important one,” Ms. Reis said. “The regulatory impact analysis will determine that—we don’t yet have an answer. This will be one of the first decisions the secretariat will make.”
“The testing phase with free allowances will last four years,” she said. “We don’t call them licenses, as the Europeans do; the law uses the term allowances. In Portuguese, license sounded like permission to pollute—and that’s not the idea. It’s an allowance that must be complied with.”
Certification companies
“This is one of the areas causing the most excitement,” Ms. Reis said. “The certification sector is highly concentrated—there are only a few players doing this work. The law stipulates that certification firms must have a minimum capital in Brazil. So, if a company is foreign, it will have to register a business taxpayer number here. It can be headquartered abroad, but it must open a branch in Brazil.”
“Another major discussion concerns methodologies—whether they’re appropriate for our reality,” she added. “That’s why there’s a growing defense of national certification companies, with homegrown methodologies developed by Embrapa and universities. We believe it’s the right time to promote competition in this sector.”
“What’s essential,” she said, “is to properly assess the environmental benefit and the generation of carbon credits—whether the project removes, reduces, retains, or captures emissions. There are many different methodologies.”
“The next step,” she added, “is international recognition, which is still limited today. This debate is already underway, and Brazil will continue to push for clarity—that the needs of the Global South are different. But we also have to look at our companies and ask whether they want to export carbon credits or seek an international seal of approval. And again, that’s precisely the role of the methodology undersecretariat.”
Industrial policy
“I’m a specialist in sustainable industrial policy,” Ms. Reis said. “A country’s development depends on transforming its productive structure to reduce technological dependence. That means developing our own technologies—with inclusion, reduced inequality, and environmental and climate sustainability.”
“The carbon market is industrial policy,” she said. “We’ll define the sectors that will be included, the methodologies, and the allocation of allowances—all of which will become pathways for industrial development.”
“Europe has had its carbon market, the ETS (Emissions Trading System), for 20 years,” she noted. “It has generated €200 billion in revenue. And the use of that revenue has also been strategic: Europeans channeled it into three funds—for innovation, just transition, and modernization. These financed the modernization and innovation of European industry, which had been struggling to compete with Chinese and American companies.”
“In our case, 75% of the revenue from Brazil’s carbon market will go to the Climate Fund, with a portion dedicated to supporting forest projects involving traditional communities and Indigenous peoples. We also have the capacity to promote the development of future technologies.”
“So, the system must be very well regulated, and with a strategic national vision—one that ensures Brazil plays a stronger role in global value chains,” she added. “The carbon market belongs to the future.”
Social cost of carbon
“The carbon market is one more instrument for mitigation,” Ms. Reis said. “It’s not the only one, but it’s a consistent one. Today, about 40 jurisdictions apply a carbon price, covering almost 30% of global emissions. That’s significant.”
“The regulated market targets large emitters, those causing harm to a public good, and ensures they internalize the social cost of carbon,” she said.
Proposal for COP30
“We’ll be working on Brazil’s proposal for the Open Coalition of Regulated Carbon Markets, which should be presented at the United Nations Climate Conference (COP30) in Belém, next November,” Ms. Reis said.
Source: Valor International
https://valorinternational.globo.com
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10/28/2025
U.S. EXPECTED TO GAIN GROUND IN BRAZILIAN PULP EXPORTS
Shifts in China’s industry open new opportunities for Brazil in the American market
Brazil’s share of the global pulp market is expected to grow by 6%, reaching 34% by 2030, according to Rabobank. The increase will be driven by new mill capacity and a shift from softwood (pine) to hardwood (eucalyptus) pulp. Although China remains the leading buyer of Brazilian hardwood pulp, the rapid expansion of integrated pulp production in the country is likely to reduce import volumes in the coming years—creating an opportunity for the United States, currently the second-largest destination, to gain ground in Brazil’s export portfolio.
Traditionally, Chinese producers faced high costs and limited wood availability, which made them heavily dependent on imported market pulp. However, during the real estate crisis in 2021, surplus wood originally intended for construction was redirected toward integrated pulp production.
According to Rabobank, China’s integrated hardwood pulp capacity surged from 5,000 tonnes in 2016 to 9,500 tonnes in 2024. The bank projects that by 2027, production will reach 14,500 tonnes—a nearly 53% increase.
“Of the projects planned in the past three years, no one had anticipated this development,” says Andres Padilla, analyst at Rabobank. He notes that the market will likely adjust, with the most efficient producers filling the space left by less competitive ones. Even so, part of the displaced demand will need to find new markets—and the U.S. is emerging as a promising destination for Brazilian fiber.
In 2024, Brazil supplied 82% of U.S. short-fiber pulp imports, totaling 2 million tonnes, according to Rabobank’s report. This marks a 74% increase from a decade earlier and an average annual growth rate of 4.7%. The pulp is primarily used for tissue paper production, including toilet paper and facial tissues.
In the long-fiber segment, typically used for paper packaging, the U.S. market has long been dominated by Canada. However, post-pandemic shifts in global supply chains have opened room for Brazilian and European producers. In 2024, Brazil accounted for 10% of U.S. softwood pulp imports—around 300,000 tonnes—while Canada’s share fell to 75%, according to the bank.
“Brazil is well-positioned. In addition to managing exchange rate volatility more effectively, it benefits from low production costs and competitive logistics,” says Mr. Padilla.
This strength, he explains, is the result of several factors—including the short seven-year rotation cycle of eucalyptus, advances in genetic research that boosted productivity, and large-scale investments in integrated pulp mills.
Beyond Suzano’s Cerrado Project, companies such as Chile’s Arauco and CMPC, as well as Indonesia’s Bracell, are expanding operations in Brazil. There are also expectations for a second production line at the Eldorado mill in Três Lagoas, Mato Grosso do Sul. With these new capacities, Rabobank estimates that Brazil’s pulp exports will rise from 20 million tonnes today to 25 million tonnes by 2030.
Another factor supporting this growth, Mr. Padilla notes, is the price gap between hardwood and softwood pulp, known as the “spread.” Currently, hardwood pulp sells for about $250 to $300 less per tonne on the U.S. East Coast market, according to Rabobank.
“There’s a clear economic incentive for hardwood pulp to gain market share in the U.S.,” Mr. Padilla explains. “The spread is wide right now, and the supply and demand dynamics suggest it will be difficult to close that gap in the short to medium term.”
Beyond pricing, Brazil’s advantage lies in its long-standing commercial relationships with U.S. buyers and its reputation for reliability and quality. “Brazilian suppliers already have deep, consistent partnerships with U.S. clients, meeting their needs efficiently,” Mr. Padilla adds.
Against this backdrop, the White House’s decision to impose a 10% tariff on Brazilian pulp last year was, according to him, “a shot in the foot.” It is no coincidence, he says, that Washington quickly reversed course and eliminated the tariff.
Source: Valor International
https://valorinternational.globo.com
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10/31/2025
CODEMIG, CBMM RENEW NIOBIUM DEAL UNTIL 2070
New agreement replaces contract set to expire in 2032 and increases Codemig’s share in CBMM’s results
The Minas Gerais Development Company (Codemig) and the Brazilian Metallurgy and Mining Company (CBMM), controlled by the Moreira Salles family, have signed a new agreement ensuring the continued extraction of niobium from the Araxá mines in Minas Gerais for another 30 years, with the possibility of a 15-year extension—keeping operations running until 2070.
The new contract replaces the previous one, which was due to expire in 2032, and increases Codemig’s share in CBMM’s profits to include 25% of the earnings from the sale of materials other than niobium, such as rare-earth elements, without requiring any additional investment from the state-owned company.
Luísa Barreto, CEO of both Codemge and Codemig, told Valor the decision to renew the partnership ahead of schedule followed economic analyses that showed it was the best option to boost revenue and enhance the company’s value, at a time when the state government is debating the federalization of its assets.
“This partnership brings the greatest value to Codemig. Beyond extending the collaboration, we secured better terms that generate more returns for both the company and the state of Minas Gerais, including participation in CBMM’s future investments,” Ms. Barreto said.
Updated market valuations for Codemig are expected to be released in the coming weeks, as they will now include potential revenue from other minerals. According to Ms. Barreto, the new structure also strengthens oversight mechanisms and ensures greater predictability for public finances and legal certainty, securing dividend payments for decades.
Among the alternatives evaluated by the state-owned company were launching a new bidding process, direct mining of niobium, or renewing the existing partnership with CBMM. The renewal was deemed the most viable option. “Other partners would hardly be able to achieve the same sales volume or market share we currently have,” she noted.
Codemig is compensated through a silent partnership (SCP), which grants the state-owned company 25% of CBMM’s net profit. In 2024, the partnership generated R$1.73 billion for the Minas Gerais-based company.
Since 1972, Codemig and CBMM have jointly operated neighboring mines in Araxá through the Companhia Mineradora do Pirocloro de Araxá (Comipa), in which Codemig holds 51% and CBMM 49%. Comipa extracts the ore and sells it exclusively to CBMM, which processes and markets the final product.
Current estimates indicate that Codemig’s mine will be depleted in the early 2060s, while CBMM’s deposits could last until 2070 if production continues at the current pace. Until the new deal, Codemig was entitled to 25% of profits only from niobium and was required to invest 25% in other projects to earn proportional returns, as with barite and magnetite.
“We had already participated in those investments, but we had to contribute 25% to be entitled to the profits. Now, when CBMM explores other minerals, including rare earths, which we know are present in our deposits, we will earn profits without any additional investment,” Ms. Barreto explained.
Rare-earth elements are not yet economically viable for extraction, but if conditions change, Codemig’s stake will already be guaranteed. The new contract also ensures Codemig 25% of profits from the potential sale of mining tailings until 2085, even after the partnership ends.
The extended term also resolves long-standing questions about the contractual balance between the two companies. Codemig’s mine contains a higher niobium grade, while CBMM’s has larger reserves and a longer lifespan—an issue that had raised concerns among regulatory bodies about the fairness of the arrangement. With the new timeframe, projections show that by the end of the contract, CBMM’s extracted volume will surpass Codemig’s, balancing the deal.
“Studies show that, considering the contract through 2070, the total volume of niobium extracted from CBMM’s mine will exceed that from Codemig’s, even after accounting for ore grade differences,” Ms. Barreto said.
This is the third major agreement Ms. Barreto has led on behalf of Minas Gerais. She was also responsible for renegotiating the Mariana and Brumadinho settlement agreements following catastrophic damn breaches around iron mines.
Today, the global ferroniobium market is estimated at fewer than 128,000 tonnes, still limited compared to other minerals critical to the energy transition, such as lithium, with CBMM maintaining global leadership.
The company strategically operates below full capacity, helping set the market’s space, but has been expanding into new markets for niobium, which remains primarily used in the steel industry.
Source: Valor International
https://valorinternational.globo.com
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