NEWSLETTER – MAY 2025
05/01/2025
CAN MAKERS SEEK TARIFF CUT TO REDUCE RELIANCE ON SOLE SUPPLIER ALUMINUM INDUSTRY PUSHES BACK, CITING RISKS TO LOCAL PRODUCTION AND RECYCLING CHAIN
The Brazilian Aluminum Can Association (ABRALATAS) and the National Union of the Beer Industry (SINDICERV) have joined forces to request the elimination of import tariffs on aluminum sheets used to produce beverage cans. The organizations argue that relying on a single domestic supplier drives up costs and that allowing more imports would boost competitiveness.
Opposing the proposal is the Brazilian Aluminum Association (ABAL), which points to “technical inconsistencies” and argues that the current 10.8% tariff aligns with global standards. The request is under review at the Ministry of Development, Industry, Trade and Services (MDIC) and seeks to add the aluminum sheet to the Exception List to the Common External Tariff (LETEC). The issue has sparked internal disputes within the industry.
At present, virtually all the aluminum sheet used in Brazil’s can industry comes from a single source: Novelis, which operates a plant in Pindamonhangaba, São Paulo state. The petitioners say this dependency—imports account for less than 1%—poses a risk and limits growth.
“If we were talking about a market that produced one million cans, maybe it would make sense to have just one supplier, though even in this case there would be risks. But we’re the world’s third-largest market, producing 35 billion cans annually—it’s very risky to rely on only one supplier,” said ABRALATAS president Cátilo Cândido in an interview with Valor.
ABAL, in turn, argued that the Brazilian market is open to competition and capable of attracting new players. According to the group, the dominance of the current supplier is due to economies of scale, logistical efficiency, and the natural dynamics of capital-intensive industries like aluminum.
“If there’s concern about supply, the call should be for new entrants. The tariff itself isn’t the barrier—there’s also a lack of investment and the so-called ‘Brazil cost,’” said ABAL president Janaina Donas. She noted that the same arguments were made in 2022, when the tariff was temporarily suspended until the following year.
At the time, industry groups requested an import quota of 200,000 tonnes. The Executive Management Committee (GECEX) approved just 50,000 tonnes. However, only 2,484 tonnes were actually imported under the zero-tariff window—just 1.25% of the original request.
ABAL said this shows that the expected benefits of zeroing the tariff were overstated. According to the group, the measure did not visibly reduce prices or increase competition. “In 2022, the mechanism was used to pressure suppliers. That’s what this is about,” Ms. Donas said.
In 2024, Brazil’s aluminum can industry reached its highest sales volume on record. Supporters of the tariff cut argue that imported aluminum coils would help level the playing field, driving down final product prices.
ABAL, however, said the proposal ignores hidden costs embedded in domestic prices that would become external expenses for manufacturers. For example, Brazil’s current supply chain allows can makers to forgo holding large inventories.
“If they import the product, they’ll need to hold inventory for 30 to 40 days, at a minimum. Right now, the supplier [Novelis] manages that—manufacturers don’t need to carry the stock themselves,” Ms. Donas explained.
Beyond cost concerns, petitioners cite structural and logistical risks. “Every factory has problems—strikes, climate issues, logistical disruptions. Every can produced in Brazil depends on these coils,” said Mr. Cândido.
Asked for comment, Novelis said that it has invested around $1.2 billion in Brazil over the past 12 years to expand production and ensure supply reliability. “In addition, the company helped build Brazil’s aluminum can recycling system, considered a global benchmark, which generates income for over 800,000 waste pickers,” it said in a statement.
ABAL noted that the proposed changes would jeopardize that infrastructure. “They want to harm the national industry and dismantle a supply chain—including the recycling system—that they themselves rely on to meet their commitments,” Ms. Donas said.
In a statement to Valor, the MDIC said the request has been under review since December 19, 2024. On March 27, ABRALATAS and SINDICERV representatives met with Vice President and Minister Geraldo Alckmin to reiterate the demand.
The public comment period has now closed. The matter is undergoing technical review by the Tariff Change Committee (CAT), which began deliberations on Monday (28). The findings will be forwarded to GECEX for a final decision.
Source: Valor International
https://valorinternational.globo.com
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05/02/2025
J&F IN TALKS WITH BRAZIL’S CENTRAL BANK CHIEF OVER MASTER DEAL
Businessman Joesley Batista visited Gabriel Galípolo amid J&F’s interest in the Brazilian bank’s assets
Gabriel Galípolo, chair of Brazil’s Central Bank, met on Thursday (1) with businessman Joesley Batista of J&F Investimentos, in what was his only scheduled appointment on the Labor Day holiday. The meeting, held from 3pm to 4pm, was also attended by Ailton Aquino, head of supervision, and Gilney Vivan, head of regulation. It was added to Mr. Galípolo’s official agenda the previous evening.
The Central Bank said only that the meeting addressed “institutional matters.” J&F declined to comment. However, five people familiar with the matter said the holding company’s interest lies in Banco Master. One source close to J&F said the company is preparing a bid for Credcesta and Master’s portfolio of court-ordered government debt (precatórios), possibly through its financial arms PicPay or Banco Original.
When asked whether Banco Master was discussed, Mr. Aquino did not deny it and said only that the meeting “was good.”
The proposal by Mr. Batista reportedly includes assets from the personal estate of Banco Master owner Daniel Vorcaro. Sources familiar with the talks said the deal could help partially cover Master’s liabilities that fall outside the scope of Brazil’s deposit insurance fund (FGC), including pension fund-held securities.
Credcesta is a payroll-deductible credit card for public servants that began in Bahia. It was acquired by Banco Master during Rui Costa’s term as governor and later expanded nationwide. If J&F moves forward, the acquisition would advance a long-standing goal to expand PicPay’s footprint in payroll loans—but it would directly clash with Banco de Brasília’s (BRB) own interest in the asset.
Master’s precatório portfolio, totaling R$8 billion on the bank’s 2024 balance sheet, could gain value if the Treasury begins repayments as scheduled in July. Payment order for these government debts—from municipalities, states, and the federal government—will be decided by various courts, from Brazil’s Regional Federal Courts to the Supreme Court, but mainly by the Superior Court of Justice (STJ).
BTG Pactual, led by André Esteves, also remains interested in Banco Master’s less-liquid assets, including precatórios, judicial credit rights, and equity stakes in companies, sources said. BTG could either purchase the assets outright or manage a fund holding them, helping to avoid a scenario where the FGC would have to cover Master’s certificates of deposit (CDBs).
One possibility under discussion is that the FGC could lend money to a fund capitalized with these assets. That fund, in turn, would manage Master’s liabilities, potentially allowing Mr. Vorcaro’s bank to repay CDBs gradually—or even ahead of schedule.
As previously reported by Valor, Brazil’s major private banks are involved in discussions about the parts of Banco Master not being acquired by BRB. However, in recent days, especially Itaú and Bradesco have reportedly shown reluctance to take direct stakes or accept arrangements that would overburden the FGC.
While the Central Bank gave no details about the meeting’s agenda, it said Mr. Galípolo’s engagement with Mr. Batista complied with the “quiet period” rules of the Monetary Policy Committee (COPOM), which meets next week on May 6–7. None of the parties involved—the Central Bank, Master, J&F, or BRB—commented on the matter.
Source: Valor International
https://valorinternational.globo.com
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05/05/2025
RACE FOR CRITICAL MINERALS GAINS MOMENTUM AS BRAZIL EYES INVESTMENT OPPORTUNITIES
The urgency to reduce carbon emissions to combat climate change has sparked a global race for minerals critical to the energy transition—one of the topics set to be discussed at COP30 in Belém. Brazil sees this movement as an opportunity to attract investment and boost its mining sector. The country holds some of the world’s largest reserves of critical minerals.
According to the 2025 edition of the Mineral Commodity Summaries, a report by the US Geological Survey (USGS), Brazil advanced one position in the global rankings for rare earths and lithium in 2024, now occupying second and sixth place, respectively.
Marcelo Carvalho, executive director of the Australian mining company Meteoric, notes that of the 17 rare earth elements, four are essential for the production of magnets used in electric vehicle motors and wind turbines, making them critical to the energy transition.
“An electric car motor carries 1 to 2 kilograms of these rare earth magnets, while a wind turbine can carry up to two tonnes of this material,” he says.
Meteoric does not yet produce in Brazil but has a promising rare earth project in the Poços de Caldas region (MG).
“We have 1.1 billion tonnes of ore, which extends the project’s useful life to over 100 years,” Mr. Carvalho adds.
Lithium, indispensable for the manufacture of electric car batteries, requires 8.9 kilograms of the mineral per vehicle, according to the International Energy Agency (IEA).
Brazilian company Sigma Lithium, located in the Jequitinhonha Valley (MG), accounts for almost all of the country’s lithium production. The fifth-largest producer in the world, Sigma Lithium produces 270,000 tonnes of green lithium per year and is building a second unit, which is expected to double its production capacity.
According to the Ministry of Mines and Energy (MME), more than 50 projects are underway across Brazil and are expected to reveal new reserves of strategic minerals in the coming years.
“At a time when decarbonization is urgent, mining is considered the driving force behind this movement, which is essential for the preservation of the planet, with the supply of strategic inputs,” says Silvia França, director of the Mineral Technology Center (Cetem).
In addition to advances in rare earths and lithium, Brazil leads the world in reserves and production of niobium, a mineral used across segments, including electrification, mobility, and steelmaking. The country holds 94.1% of the world’s known niobium deposits. It also ranks among the global leaders in graphite, nickel, and manganese—essential materials for batteries and energy storage.
CBMM, based in Araxá (MG), is the world’s largest producer of niobium, with a production capacity of 150,000 tonnes per year, exceeding current global market demand. The company invests R$250 million annually in its technology program. In 2024, in partnership with Toshiba Corporation and Volkswagen Caminhões e Ônibus, CBMM unveiled the first electric bus powered by a lithium-niobium battery.
“This milestone not only demonstrated the technological feasibility of the project but also positioned Brazil at the forefront of innovation, showing that the country can contribute to more sustainable energy solutions,” says CBMM CEO Ricardo Lima.
In steelmaking, niobium enhances the properties of steel, helping to reduce CO₂ emissions throughout the production process.
Vale also contributes to lowering CO₂ emissions in steel mills by supplying the industry with high-quality iron ore. In addition to being one of the world’s largest iron ore producers, Vale ranks as the sixth-largest nickel producer and the 11th-largest holder of copper reserves, both critical for the energy transition.
In 2024, Vale produced 160,000 tonnes of nickel and plans to increase annual production to between 210,000 and 250,000 tonnes by 2030. In copper, the company produced 348,000 tonnes in 2024 and is investing to boost output to 700,000 tonnes by 2035.
Part of Vale’s nickel and copper production is based in the Carajás region (PA), where its iron ore operations are also concentrated. The company plans to invest R$70 billion between 2025 and 2030 in the Novo Carajás program, which encompasses iron ore and copper projects.
“Novo Carajás has the potential to position Brazil as a global leader in the supply of critical minerals and reinforce its leading role in combating climate change,” said Vale CEO Gustavo Pimenta.
According to the Energy Research Company (EPE), demand for critical minerals is expected to grow significantly by 2034, driven by the expansion of the electricity grid and the increasing electrification of vehicles. In EPE’s projections, demand for rare earths alone is expected to grow sixfold over the period.
Aware of the rising demand, Serra Verde Pesquisa e Mineração (SVPM), based in Minaçu (GO), is evaluating the possibility of doubling production before 2030 without shortening the useful life of its mine. The company began operations in January 2024 as the only producer outside Asia of the four critical rare earth elements: neodymium, praseodymium, dysprosium, and terbium.
“This makes Serra Verde a strategic asset for Brazil and the global market,” says SVPM president and Serra Verde Group chief operating officer Ricardo Grossi.
The company expects to produce at least 5,000 tonnes of rare earth oxide annually over the next 25 years.
Despite the promising projects, Raul Jungmann, president of Ibram—which brings together mining companies—points out that for Brazil to move beyond its role as a commodity exporter, it must overcome regulatory hurdles.
The National Mining Agency (ANM) acknowledges that the long gap between the initiation of research and the start of production remains a major bottleneck in meeting the growing demand for critical minerals, with projects taking an average of nearly 20 years to complete the entire cycle and commence production.
In 2024, the ANM authorized 4,630 mineral research projects and granted ten exploration rights, all related to critical minerals. The agency also reported that at least ten initiatives are underway to simplify regulations and expand legal certainty in the granting and management of mining titles.
Along with cutting bureaucracy, the government aims to stimulate investment in critical minerals by expanding project financing. In 2024, the BNDES, in partnership with the MME and Vale, launched a R$1 billion Critical Minerals Fund to support strategic mineral research, development, and mine implementation, with a focus on junior and medium-sized companies. Investments from the fund are expected to begin in the second half of 2025.
In 2025, with the support of the MME and in partnership with Finep, the BNDES opened a public call with a budget of R$5 billion for the submission of business plans that include investments in production capacity as well as research, development, and innovation for the transformation of strategic minerals and the production of processed materials or manufactured products aimed at the energy transition and decarbonization.
The public call is open until April 30, with the selection results scheduled to be announced by June 12.
“All these actions focused on critical minerals are part of the new industrial policy. Nova Indústria Brasil has been paying close attention to the green agenda, which is one of its strategic pillars, and to the innovation agenda,” says José Luis Gordon, director of Productive Development, Innovation, and Foreign Trade at BNDES.
The MME also launched the Guide for Foreign Investors in Critical Minerals for Energy Transition in Brazil last year and is closely monitoring the progress of bill 2780/24, proposed by Representative Zé Silva (Solidariedade-MG), which aims to establish the National Policy on Critical and Strategic Minerals. The bill is awaiting the opinion of the rapporteur in the Economic Development Committee. After it is voted on, the proposal will still be reviewed by the Environment and Sustainable Development, Mines and Energy, Finance and Taxation, and Constitution, Justice, and Citizenship committees.
Source: Valor International
https://valorinternational.globo.com
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05/05/2025
BRAZIL SEEKS BIOTECH APPROVAL DEAL WITH CHINA
At least ten GM seed varieties remain unused due to delayed clearance from Beijin
Croplife Brasil—the organization representing biotech companies—along with the national associations of corn (Abramilho) and cotton (Abrapa) producers and the Brazilian Agricultural Research Corporation (Embrapa) will seek to advance negotiations with Chinese authorities for a long-awaited agreement on the synchronized approval of genetically modified (GM) crops.
At least ten GM seed varieties already approved in Brazil have not been planted because they are still under review in China—a process that can take up to eight years. Since China is the primary buyer of Brazilian soybeans and a major importer of Brazilian corn, exporting products containing traits not approved in China could trigger trade barriers.
Eduardo Leão, executive director of Croplife Brasil, said the goal is to sign a memorandum of understanding that would align approval processes between the two countries and open the door for China to export its own biotechnology to Brazil. “We are optimistic, as the timing is favorable. China has been investing more in biotechnology and gene editing, and there’s growing interest in exporting this technology to Brazil,” he told Valor.
While the Brazilian delegation is in China, the biotechnology committee of the China-Brazil High-Level Commission for Consultation and Cooperation (Cosban) will meet to address the issue. Mr. Leão noted that President Lula’s presence in the country will help “boost” the sector’s outreach.
“The relationship with China has reached a level of maturity, transparency, and clarity among the negotiating teams that is unprecedented,” said Luis Rua, secretary of international relations at the Ministry of Agriculture. “This has enabled significant progress.”
The National Union of Corn Ethanol (Unem) will also host a seminar with Chinese importers to promote dried distillers grains (DDG), a high-protein byproduct of ethanol production used in animal feed. Market access for DDG is one of the key items on Agriculture Minister Carlos Fávaro’s agenda during talks with Chinese authorities.
“This is a very opportune moment for Brazil to position itself, as two global powers are hitting each other with tariffs,” said Guilherme Nolasco, president of Unem. “This opens opportunities, and we must be ready to play. Brazil is the reliable alternative for food and energy supply.” He noted that Brazil’s efforts to sell DDG and ethanol to China began before Donald Trump returned to the U.S. presidency.
Brazilian orange juice exporters, meanwhile, are pushing for a tariff adjustment that would provide greater predictability in trade relations with China and potentially encourage future Brazilian investments in the country.
Currently, there are two export tax rates for orange juice—7.5% and 20%—depending on the temperature at which the product arrives at Chinese ports. The industry is seeking to unify the tariff at 7.5%, even though this lower rate currently results in higher energy and logistics costs.
Source: Valor International
https://valorinternational.globo.com
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05/07/2025
INFORMAL EMPLOYMENT IN BRAZIL HITS LOWEST RATE SINCE PANDEMIC
Economists see trend continuing despite expected slowdown
With the exception of 2020—when the onset of the pandemic triggered a wave of layoffs that hit informal workers hardest—the share of informal workers in Brazil fell to its lowest level in the historical series of the Continuous National Household Sample Survey (PNAD Contínua) in the first quarter. A strong start to 2025 in formal job creation has led economists to revise their projections and suggests that informality may continue to shrink in the coming months, even with an anticipated economic cooling in the second quarter.
In the first quarter, the unemployment rate measured by PNAD rose to 7% from 6.6% in the fourth quarter of 2024. However, seasonally adjusted, the rate dropped 0.1 percentage point to 6.5%. Informal workers accounted for less than 38% of the labor force—excluding the pandemic period, this was the lowest level on record. At the time, the preservation of more formal jobs skewed statistics, with informality dipping to 36.5% in the second quarter of 2020 and average real income peaking, a level only surpassed last year. The share of informal workers rose again the following year, surpassing 40% in the second quarter of 2021, but fell back below that threshold in the same period of 2022.
In March, the number of informal workers declined for the fifth straight month, based on seasonally adjusted data from LCA 4Intelligence. Meanwhile, formal employment rose for the 16th consecutive month, accelerating recently, fueled by stronger-than-expected job creation. The General Register of Employed and Unemployed (CAGED) recorded a net gain of 71,500 formal jobs in March. While this was below analysts’ expectations, it helped offset February’s surprisingly high figure, when 431,000 jobs were added.
Growth and reforms
Fernando Honorato, chief economist at Bradesco, said the strong formal job market reflects Brazil’s solid economic growth—GDP has expanded by 3% or more for four consecutive years since 2021. “There were major stimulus measures during this period, from both the federal government and subnational entities [states and municipalities], which spurred activity. As unemployment falls, formalization increases, because employers must offer better conditions than informal work to attract workers. This happened in the previous growth cycle and is happening again,” he explained.
Since that last favorable period, a series of reforms, innovations, and developments have transformed the economy and labor market, further supporting this trend, analysts say. “These are hard to separate from GDP growth effects. Joaquim Levy [former finance minister] once said we’d only see the real impact of the labor reform during a strong labor cycle. And the pandemic hit right after the reform,” Mr. Honorato noted.
Passed in 2017, the labor reform reduced the risk of lawsuits after dismissals—cases that often result in financial shocks and cause companies to shut down. As a result, businesses became more willing to hire formally, said Alessandra Ribeiro, head of macroeconomic analysis at consultancy firm Tendências.
Although the number of labor lawsuits rose again in absolute terms, exceeding 2 million in 2024, economist Bruno Imaizumi of LCA 4Intelligence pointed out that, relative to the employed population and the stock of formal workers, the share of lawsuits remains well below pre-reform levels. He believes the reform still gives employers more confidence by lowering legal risks.
“This helps smaller businesses survive and hire more,” he said.
New contracts
Ms. Ribeiro highlighted that the reform also paved the way for new types of formal contracts, such as intermittent and temporary work. “Today, these account for around 11% of formal hires in the CAGED data,” she said. Other developments also contributed to this trend, including credit and capital market reforms that expanded access to financing and indirectly pushed for formalization.
“Companies that go public or issue bonds need to be more formalized, provide more transparency, and minimize risks to be vetted by banks and investors,” she added.
Mr. Honorato said credit reforms have been a major incentive for formalization. “The creation of the TLP [Long-Term Rate], which opened space for corporate debit, and the collateral framework reform are among several changes that boosted capital markets and encouraged companies to formalize in order to benefit.”
Ms. Ribeiro also pointed to improvements in education and technology. Between 2000 and 2022, the share of working-age Brazilians with higher education nearly tripled from 6.8% to 18.4%, Census data shows. Additionally, digital platforms have facilitated job matching. “It’s not just ride-hailing and delivery apps, but all platforms that reduce the cost of connecting employers and job seekers,” she said.
MEI effect
Another factor is the rise of the “individual microentrepreneur” (MEI) model, which employed 6.7 million people in February. Though often viewed as a form of disguised employment—an issue now under legal scrutiny after Supreme Court Justice Gilmar Mendes suspended related cases—MEIs are counted as formal workers in PNAD statistics.
“Some app drivers and couriers are MEIs, as the government wants. It’s complicated, because many value their independence and flexibility. But there are also those who opt in to access the social safety net or credit programs,” said Rodolfo Tobler, an economist at the Brazilian Institute of Economics at Fundação Getulio Vargas (Ibre FGV).
Mr. Imaizumi of LCA believes that formal job growth could continue as long as the economy stays resilient, easing fears of a sharper downturn in 2025. LCA forecasts unemployment will remain stable this year at 6.6%, with 1.4 million formal jobs created—300,000 more than previously estimated. “That’s fewer than in the past three years, but still a significant figure,” he said.
Tendências has also revised its average unemployment forecast for 2025, lowering it from 6.9% to 6.6%. Its estimate for net formal job creation rose from 1 million to 1.5 million.
Source: Valor International
https://valorinternational.globo.com
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05/07/2025
PETROBRAS CEO PILES ON PRESSURE FOR EQUATORIAL MARGIN DRILLING
“Let’s drill, baby” statement in Houston comes amid push from officials and regional lawmakers for environmental license
Petrobras President Magda Chambriard on Tuesday (6) enthusiastically defended exploratory drilling in the Amazon River mouth, part of an oil province known as Equatorial Margin,
Ms. Chambriard is in the U.S. attending the Offshore Technology Conference (OTC), a global industry event held in Houston. Valor obtained access to the video of her remarks. When contacted, the company confirmed the authenticity of the footage.
Standing alongside Amapá Governor Clécio Luís (Solidarity Party), Ms. Chambriard defended the project, which is under fire from environmentalists, arguing that the possibility of extracting oil in the region represents a major opportunity for the state and for the country.
“I celebrate the presence of Governor Clécio because he represents the opportunity we have in the Equatorial Margin and in the state of Amapá, where we truly believe we will have good surprises once we obtain the license to drill,” she said during a panel hosted by the Brazilian Petroleum and Gas Institute (IBP) at the event. Ms. Chambriard then added in English: “Let’s drill, baby!”
Beside the governor, Ms. Chambriard emphasized the importance of discussing the potential for a new oil reserve in the country at what “the world’s largest oil exploration and production conference.” She also assured that the drilling will be done safely and poses no risk to the population.
“The people of Amapá can rest assured that Petrobras operates responsibly, employing the highest technology for the benefit of the Brazilian population and Amapá society,” Ms. Chambriard said.
Along the same lines, Governor Luís thanked the invitation to join the Petrobras CEO at the conference and highlighted the potential economic impact of the exploration for the state.
“It’s very important to say that for us in Amapá, this is a turning point for our economy. We really want and really need the resources that would come from this oil. And we believe we can do this in a very safe way,” the governor declared.
The statement comes amid pressure from government officials and lawmakers from the North region for the Brazilian Institute for the Environment and Renewable Natural Resources (Ibama) to grant the environmental license for the exploration.
The main supporter of the proposal in Brasília is Senate President Davi Alcolumbre (Brazil Union of Amapá). Mr. Alcolumbre, a close ally of Governor Luís, even secured support from President Luiz Inácio Lula da Silva, who went so far as to say that Ibama “can’t keep up this stalling,” in a clear message opposing the stance of Environment Minister Marina Silva.
The minister maintains that the agency’s decision is technical. Ibama argues that the Amazonas River mouth region is environmentally sensitive, requiring strict licensing procedures.
In March, Ibama issued a technical opinion approving Petrobras’s plan for cleaning the drillship designated for exploration in the Equatorial Margin. The approval is a step that brings the company closer to securing the environmental license for exploratory activity in the region.
Besides Amapá, the Equatorial Margin includes ares offshore of the states of Pará, Maranhão, Piauí, Ceará, and Rio Grande do Norte.
Source: Valor International
https://valorinternational.globo.com
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05/09/2025
PETROBRAS EXPECTED TO POST HIGHER Q1 PROFIT ON STRONGER OUTPUT
Analysts from BTG, UBS BB, and Ativa project net income of R$34.9bn from revenue of R$130bn
Higher oil and gas production in the first quarter is expected to drive a year-on-year increase in Petrobras’s earnings, according to estimates gathered by Valor from three banks and brokerages. On average, analysts forecast a net profit of R$34.9 billion, net revenue of R$130 billion, and EBITDA of R$64.3 billion. If confirmed, those figures would represent increases of 47.25% in profit, 10.47% in revenue, and 7.16% in EBITDA compared to the same period last year.
The projections reviewed by Valor come from Ativa Investimentos, BTG Pactual, and UBS BB. Forecasts for net income ranged from R$24.7 billion (Ativa) to R$41.3 billion (BTG), while revenue projections spanned from R$121.2 billion (Ativa) to R$137.3 billion (BTG). EBITDA estimates ranged from R$60.7 billion (Ativa) to R$67.2 billion (BTG).
In the first quarter, the state-controlled oil company reported production of 2.77 million barrels of oil equivalent per day, up 5.4% from the first quarter of 2024.
BTG Pactual analysts Luiz Carvalho, Pedro Soares, and Henrique Pérez noted that, following the market’s negative reaction in the fourth quarter—mainly due to higher capital expenditures—investors remain focused on how spending is evolving. Rising capex, they cautioned, could limit future dividend payouts.
According to BTG, lower investment levels combined with higher production should be key to a recovery in Petrobras’s share price. The analysts also said the company is likely to benefit from better refining margins and lower operating costs due to improved efficiency and fewer maintenance shutdowns.
A separate report from UBS BB, authored by Matheus Enfeldt, Tasso Vasconcellos, and Victor Modanese, emphasized that “the big question for the quarter is capex.” The report noted that the key issue is how capital spending will influence dividend expectations, and flagged a particular risk in Q1 results due to the rollover effect of investments made in the fourth quarter of 2024.
Santander analysts Rodrigo Almeida and Eduardo Muniz said they expect EBITDA growth to be driven by higher output, lower lifting costs, and stronger refining margins. However, they foresee weaker results in the gas and power segment, primarily due to a $283 million charge tied to a legal settlement with EIG Energy. In March, Petrobras agreed to pay $283 million—without admitting fault—to settle a lawsuit filed by the U.S. firm, which claimed losses linked to its investment in the FIP Sondas fund managed by Sete Brasil. Sete Brasil filed for bankruptcy after Petrobras canceled contracts for exploration rigs.
Santander’s estimates, provided in U.S. dollars, project first-quarter net income of $5.393 billion, up 12% from a year earlier. The bank expects net revenue of $20.621 billion and adjusted EBITDA of $11.359 billion—down 13% and 9%, respectively, compared to the first quarter of 2024.
Source: Valor International
https://valorinternational.globo.com
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05/13/2025
BRAZIL’S ETHANOL SEEKS BIGGER ROLE IN ENERGY TRANSITION
At Paris event, sugarcane industry discussed plans to quadruple global biofuel supply by 2035
Brazil’s sugar-energy industry is stepping up its international outreach to gain a larger role in the global energy transition. On May 14, the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) will participate in the traditional NY Sugar Dinner in New York, where it will promote Brazilian ethanol as one of the fastest and most effective solutions for decarbonizing land and maritime transport.
“Ethanol has proven to be highly efficient, significantly reducing carbon emissions compared to fossil fuels,” said UNICA president, Evandro Gussi. Ethanol can cut carbon emissions by up to 90% relative to gasoline.
At a recent event in Paris, industry leaders discussed strategies to increase the global biofuel supply fourfold by 2035. In this scenario, Brazil is seen as having the greatest expansion potential through the conversion of degraded pastures into sugarcane fields, gains in crop productivity, and greater use of corn for ethanol production. “There are also significant investments in biomethane, which will further expand the sector’s energy offering,” Mr. Gussi said.
Brazil is the world’s largest sugarcane producer, with 621.88 million tonnes harvested in the 2024/25 crop year, and the second-largest ethanol producer, having posted a record output of 34.96 billion liters in the last season.
On the demand side, maritime transportation is expected to drive higher ethanol consumption. The International Maritime Organization (IMO) has set targets to cut net emissions from international shipping by 20% by 2030 and reach net-zero emissions by 2050. Companies like Compagnie Maritime Monégasque and Wärtsilä are developing ethanol-powered vessels.
Japan is also expected to boost demand. The country plans to blend 10% ethanol into gasoline by 2030 and 20% by 2040, increasing annual consumption from 1.5 billion liters to 4.45 billion liters. In March, UNICA and the Institute of Energy Economics, Japan (IEEJ) signed an agreement to enhance technical collaboration on sustainable biofuels.
According to Mr. Gussi, initiatives such as Brazil’s Green Mobility and Fuel of the Future programs have strengthened the image of Brazilian ethanol as a sustainable alternative.
Source: Valor International
https://valorinternational.globo.com
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05/16/2025
MARFRIG AND BRF MERGER CREATES R$152BN GLOBAL FOOD POWERHOUSE
MBRF formed through share swap, with expected annual synergies of R$805m
Food giants Marfrig and BRF announced the merger of their businesses on Thursday (15), creating MBRF Global Foods Company, which launches with R$152 billion in consolidated net revenue over the past 12 months. The deal had been widely anticipated by the market, as Marfrig had gradually acquired shares in BRF in recent years until it gained control of the company.
The transaction involves the incorporation of BRF shares into Marfrig at an exchange ratio of 0.8521 Marfrig share for each BRF share. As part of the agreement, BRF shareholders will receive up to R$3.52 billion in dividends, while Marfrig shareholders will receive R$2.5 billion.
“The merger unlocks value and creates the structure needed for relocating the company’s headquarters abroad,” said Marcos Molina, controlling shareholder and chairman of the boards of Marfrig and BRF, in an interview with Valor.
According to Mr. Molina, the new company’s growth drivers—Marfrig, BRF, and U.S. subsidiary National Beef—are centered in the United States, the Middle East, and China. Of MBRF’s estimated net revenue, 43% comes from the U.S., 24% from Brazil, 20% from Asia, and 13% from other markets.
In this context, North America is a potential destination for the company’s new headquarters. “This brings significant advantages, such as high liquidity in the U.S. market, access to more attractive capital costs, and the potential for a revaluation of the companies’ multiples,” he said.
Mr. Molina did not say when the relocation might take place.
New synergies
He noted that BRF’s management has been preparing for this moment over the past three years, ever since Marfrig gained control of the poultry and pork producer. Since BRF returned to profitability, the two companies have already been pursuing commercial synergies.
In his view, the companies have captured all the synergies they could under the previous structure. To unlock further gains, a full business combination was essential.
The newly mapped commercial and logistical synergies in MBRF amount to R$805 million per year, with R$400 million to R$500 million expected in the first 12 months and the remainder in the medium to long term.
On the revenue and cost fronts, the goal is to achieve R$485 million per year in synergies. Operating expenses are expected to fall by about R$320 million annually, with measures such as unified commercial and logistics operations, a consolidated IT system, and streamlined corporate structure.
There is also an estimated R$3 billion in present-value tax synergies through the consolidation of corporate tax IDs (CNPJs), which would accelerate the monetization of federal and state tax credits.
Since Marfrig already held 53% of BRF’s capital, the transaction will not require approval by Brazil’s antitrust regulator CADE, Mr. Molina said.
The companies will now call shareholder meetings to vote on the merger. The meetings are expected to take place on June 18, with the transaction slated for completion on July 28.
Of the new company’s total sales, 38% come from processed foods, 34% from poultry and pork, and 29% from beef.
MBRF launches as one of the world’s largest food companies, operating in 117 countries and managing brands such as Sadia, Perdigão, Qualy, Banvit, and Bassi. Its portfolio includes beef, pork, and poultry products, processed items, ready meals, and pet food.
Back in 2019, Marfrig and BRF had discussed a merger but abandoned the talks over disagreements on governance. Marfrig then began acquiring BRF shares until it gained control, now holding 53%.
In 2023, Marfrig sold most of its beef operations in South America to Minerva, aiming to refocus on higher-value-added products.
In the second half of 2024, the two companies took steps that signaled a merger was drawing closer. In September, they announced the unification of their main brands: Marfrig’s premium beef burgers adopted the Sadia/Bassi label, while Perdigão/Montana became the new brand for Perdigão’s processed beef line. The following month, they announced that Sadia would become Marfrig’s export brand for beef.
Source: Valor International
https://valorinternational.globo.com
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05/20/2025
LEGAL DISPUTES INVOLVING PUBLICLY TRADED FIRMS ON THE RISE IN BRAZIL
Stock market slump and new litigation funders fuel surge in cases
Legal disputes involving publicly traded companies in Brazil are on the rise as more businesses struggle financially due to the prolonged period of high interest rates and the emergence of specialized firms funding lawsuits through alternative investments. A key factor behind the trend is the sharp decline in share prices, driven by high risk aversion and the tight monetary environment.
To illustrate the surge, 1,760 new cases were filed in 2024 at the 1st Business Law and Arbitration-Related Disputes Court of the São Paulo Court of Justice (TJ-SP), up 8.4% from the previous year.Compared to 2021, the number more than doubled, rising 104%, according to a survey by law firm Yazbek Advogados for Valor. At the 2nd Business Court, filings totaled 1,782 last year—an 11.6% increase from the previous year and a 124% jump over three years. Arbitration chambers estimate that around 90% of cases involve corporate disputes.
Otavio Yazbek, a former director of Brazil’s Securities and Exchange Commission (CVM) and partner at Yazbek Advogados, said the rise in litigation is a consequence of Brazil’s cyclical economy. “They’re highly correlated. In times of market stress, economic relationships that started off well begin to deteriorate,” he explained.
Mr. Yazbek noted that the surge has become more apparent in recent years, especially after the Operation Car Wash probe, which marked a turning point in the legal landscape, prompting law firms to specialize in disputes involving listed companies. That was also when associations emerged that now lead many of these legal battles.
He added that lawsuits today are “multifaceted,” often extending into criminal courts and prompting complaints with the CVM, Brazil’s capital markets regulator.
The rise isn’t limited to high-profile cases like Americanas. At Toky (formerly Mobly), a dispute involves the founders of Tok&Stok, who attempted a takeover through a public tender offer (OPA) to gain control of the company. The case went not only to court but also to the CVM.
At Oncoclínicas, special situations fund manager Latache has petitioned the regulator to trigger a mandatory OPA due to a change in control. Other minority shareholders are also reportedly considering court action.
At Grupo Azzas, tensions between its two main shareholders—Alexandre Birman of Arezzo and Roberto Jatahy of Grupo Soma—have raised the possibility of a split due to business disagreements. While both parties have hired legal counsel, no court proceedings have begun.
Minority shareholders
Shareholder disputes also featured prominently during this year’s annual general meetings, particularly in board elections. One case involved Hypera, where EMS owner and rival Carlos Sanchez tried to appoint representatives, while Hypera’s main shareholder, João Alves de Queiroz Filho, opposed the move and raised the issue with Brazil’s antitrust authority, CADE.
“The stock market is down, companies are suffering, paying fewer dividends, and naturally, litigation increases,” said Guilherme Setoguti, a litigation partner at Monteiro Castro & Setoguti. He added that Brazil’s capital markets have matured, leading to more active minority shareholders.
“In the past five years, we’ve seen specialized funds defending their positions,” he noted. He also pointed to the evolution of the litigation funding market, with so-called special sits firms financing legal actions. “Litigation finance has matured in Brazil, creating the financial conditions for parties to pursue claims,” he said.
Some arbitration cases backed by litigation funds involve major companies such as Braskem, Vale, and Petrobras. These cases remain confidential under arbitration rules.
A growing number of companies undergoing bankruptcy protection also explains some of the disputes. More than 20 publicly traded companies are currently in court-supervised reorganization, as previously reported by Valor. In Agrogalaxy’s case, creditors challenged the recovery plan. In the textile firm Teka, creditors are in court seeking to prevent its bankruptcy.
Financial stress
Luís Flaks, a corporate law partner at BMA, said that during financial stress, his firm sees a rise in certain types of cases. These include shareholder lawsuits against capital increases that would lead to dilution, as well as liability claims against executives and disputes over shareholder voting conflicts.
He also pointed to an increase in administrative litigation, such as complaints filed with the CVM, and noted that more shareholders are now resorting to legal action to recoup losses.
Diogo Rezende de Almeida, a partner at Galdino, Pimenta, Takemi, Ayoub, Salgueiro e Rezende de Almeida, agreed that lawsuits tend to increase during financial crises. “In this environment of court-supervised or pre-bankruptcy proceedings, with companies restructuring debts, reviewing contracts, and renegotiating terms, creditors are turning to the courts to enforce their rights,” he said. At the same time, he added, companies are seeking ways to avoid enforcement actions.
Another sign of a maturing capital market, Mr. Almeida said, is the growing number of companies with dispersed ownership, pushing minority shareholders to assert their rights.
Mr. Yazbek pointed out that Brazilian law places limits on shareholder lawsuits. One example is the interpretation that only the company—not individual shareholders—can be compensated for damages. “This conservative reading of the law discourages direct shareholder actions,” he said. In the fund industry, however, this interpretation does not apply, which has led to a growing number of lawsuits.
Toky, contacted by Valor, said its board “aims to generate value for shareholders and other stakeholders.”
Grupo Azzas responded that “its key shareholders, Alexandre Birman and Roberto Jatahy, maintain an ongoing dialogue to improve governance.” In a statement, the company said that “despite the ongoing conversations, no transaction has been finalized between them, and the separation or breakup of the business is not under discussion.” It reiterated that “it does not comment on market rumors and remains focused on executing its strategic guidelines, which have delivered excellent results, as shown in the company’s consolidated first-quarter 2025 earnings.”
Teka issued a statement, saying that “with an estimated debt of R$4 billion and a breach of the court-supervised reorganization plan, the company is facing a situation of deep insolvency.” It added, “The court-appointed administrator has acted impartially and responsibly to ensure the legality of the process, transparency in its handling, and the continuation of operations, with special attention to workers’ rights, in strict compliance with its legal duties.”
The other companies mentioned in this story did not comment.
Source: Valor International
https://valorinternational.globo.com
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05/20/2025
BRAZIL BANS ONLINE HEALTH AND TEACHING DEGREES
New rules require more in-person classes across higher education formats
After four delays, President Lula signed on Monday (19) the decree establishing the new regulatory framework for distance learning (EAD) in higher education. The changes will also affect hybrid and in-person learning, reshaping the entire sector. Institutions will have two years to comply.
The strictest rules target undergraduate degrees in health and teacher education. These programs can no longer be offered entirely online. Teaching degrees must now include at least 50% of coursework in person. Nursing programs will be allowed only in traditional classroom settings. Other health-related degrees will require a minimum of 30% in-person classes.
“I believe the measures are positive, even if overdue. Distance learning is certainly a way to expand access to higher education—this has been the case in other countries—but it must be quality education. There’s no point in reaching remote areas if the education offered is poor,” said Claudia Costin, former global education director at the World Bank.
Ms. Costin noted that half of all students in distance learning programs drop out, and course quality is a major factor in that decision.
Nonprofit organization Instituto Península also supports the new requirement for 50% in-person attendance in teaching degrees. “Hands-on experiences, including internships and community engagement, shape good teachers. Practice is essential,” said Mariana Breim, the institute’s director of educational policy.
Education Minister Camilo Santana has raised concerns about the quality of training in health and teaching programs since he took office, particularly regarding the large number of students enrolled in online programs. In the 2022 college entrance cycle, about 80% of new students in teaching degrees chose online courses. For nursing degrees, 190,000 students were enrolled in remote programs, compared to 241,000 in in-person programs at private institutions.
“High-quality distance education is a powerful and strategic tool for expanding access to higher education. It plays a key role in meeting the goals of the National Education Plan, which expired last year and remains unmet,” said Mr. Santana at the decree signing ceremony.
The sector often argues that online education helps democratize college access, offering more affordable tuition (roughly a quarter of the cost of in-person programs), flexible schedules for working adults, and opportunities for students in towns without college campuses. Brazil has nearly 2,300 municipalities without in-person higher education offerings. However, only 10% of EAD students actually live in these areas.
The decree also introduces formal regulation of hybrid programs—those combining online and in-person elements—which have seen the fastest growth in recent years but previously lacked official classification. These were often just standard online programs with an increased number of in-person activities.
Meanwhile, for in-person degrees, the share of coursework that can be completed remotely will be reduced from 40% to 30%. Degrees in medicine, law, psychology, and dentistry will continue to be delivered exclusively in classrooms.
Distance learning programs must now include at least 20% of coursework as in-person or live online sessions, and all exams must be taken in person at designated locations.
The new regulatory framework aims to bring order to a market that experienced explosive and often disorderly growth following the pandemic. Brazil’s private distance education sector now serves 4.7 million students online, compared to 3.2 million in traditional classroom settings. In 2023, the number of first-year students in online courses was twice that of in-person programs.
This rapid growth has led to abuses by some institutions. Although regulations require that students complete exams, lab work (especially in health and engineering), and internships in person, it is not uncommon to find students taking exams online, conducting lab activities in virtual environments, and completing internships remotely. In such cases, students may complete a four-year degree without any face-to-face interaction, often leaving them unprepared for professions that demand social and interpersonal skills.
Going forward, exams must be taken in person and proctored by qualified instructors. For live online classes, enrollment will be capped at 70 students per class, and a certified teacher in the relevant field must be present.
While private institutions dominate the distance learning sector, public universities remain cautious. Only about 200,000 students are currently enrolled in online programs at public universities, compared to 1.9 million in in-person programs.
The Education Ministry also plans to inspect the physical locations, or learning centers, associated with online programs, where students are supposed to complete their in-person coursework. Many of these sites lack proper infrastructure, such as labs, libraries, and classrooms. Some operate with multiple institutions under one roof, offering little more than a storefront.
Roughly 50,000 learning centers are registered with the ministry, but it’s estimated that half are not adequately equipped. The sector is repeating the trajectory seen in 2008, when the first boom in distance education prompted the ministry to shut down 1,300 under-equipped centers.
At that time, the government banned the opening of new online programs and student slots for nearly a decade, which led to market concentration and high valuations for established players. In 2011, Kroton paid R$1.3 billion for Unopar, then the leading online education provider.
In 2017, the market reopened, and institutions were allowed to open between 50 and 250 centers per year. The number of centers skyrocketed to the current 50,000. In 2024, the Education Ministry again froze new courses, slots, and centers until the new decree was published, while also increasing in-person requirements for pedagogy and teaching degrees.
Source: Valor International
https://valorinternational.globo.com
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05/23/2025
HEEDING BANKS, CMN CUTS LCI AND LCA MINIMUM TERMS TO SIX MONTHS
Regulatory change takes effect immediately with resolution’s publication; banks had warned of potential funding shortages
Responding to pressure from financial institutions, Brazil’s National Monetary Council (CMN) has shortened the minimum maturity term for agribusiness credit bills (LCAs) and real estate credit bills (LCIs) from nine to six months. The measure, which takes effect this Thursday with the publication of the resolution, follows warnings from banks about shrinking funding sources—especially for the real estate sector—as savings account withdrawals accelerate.
With the Selic benchmark interest rate elevated, demand for these tax-exempt instruments—previously concentrated in private credit funds—has surged throughout 2024. According to data compiled by B3 at Valor’s request, the combined outstanding volume of LCIs and LCAs has reached R$1 trillion.
In a statement, the Central Bank said the decision reflects the importance of these instruments for financing the real estate and agribusiness sectors. Until February 2024, the minimum maturity for LCIs was three months. That month, the CMN extended it to 12 months as part of broader changes to the rules governing tax-incentivized securities. The term for LCAs, which have a similar risk-return profile to LCIs, was increased from three to nine months. In August, following criticism, the CMN reduced the LCI term to nine months to correct the asymmetry. At the time, the Brazilian Association of Real Estate Credit and Savings Entities (Abecip) called the move positive but said a return to the three-month term would be ideal.
Issuance volumes of LCIs and LCAs initially dropped after the changes—from R$30.7 billion in January, near historic highs, to between R$11 billion and R$14 billion by September. LCAs, in particular, plummeted from R$45 billion to a range of R$21 billion to R$24 billion. By December, issuances rebounded to R$26.5 billion in LCIs and R$39.6 billion in LCAs, closing the year with an impressive R$392.6 billion and R$517.2 billion in total outstanding, respectively. This upward trend has continued in 2024, with monthly volumes hovering around R$25 billion for LCIs and R$31 billion for LCAs. As of the end of April, outstanding balances stood at R$560.4 billion in LCAs and R$440 billion in LCIs.
Marilia Fontes, founding partner at Nord Investimentos, said the market has adapted to the longer terms of these income tax-exempt instruments for individuals. As a result, demand resumed even at the nine-month threshold. “Default rates haven’t risen significantly, so banks continue lending to these sectors, which sustains issuance,” she explained.
She also pointed to the taxation of closed-end exclusive funds as a factor driving investors toward tax-exempt securities like incentivized debentures. Additionally, there has been a marked shift from equity and multimarket funds. “That’s why we’re seeing risk premiums narrow,” Ms. Fontes said. In 2024, average returns stood at 95% of the CDI, but have since fallen to 85%-87% of the CDI.
“The restriction last year was a step in the right direction, but it wasn’t sufficient in an environment of uncertainty and high interest rates,” said Mr. Jean-Pierre Cote Gil, credit portfolio manager at Vinland Capital.
The CMN also revised the issuance rules for agribusiness receivables certificates (CRAs), real estate receivables certificates (CRIs), and agribusiness credit rights certificates (CDCAs) to ensure the securities are used specifically for their target sectors. The resolution stipulates that they may not be backed by debt instruments where the debtor, co-debtor, or guarantor is “a legal entity whose primary business activity is not in the real estate sector, in the case of CRIs, or in the agribusiness sector, in the case of CRAs and CDCAs.”
Source: Valor International
https://valorinternational.globo.com
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05/23/2025
JUSTICE MINISTER WARNS OF POLICING CHALLENGES IN BIOCEANIC ROUTE
Mercosur ministers to discuss regional security implications of proposed transcontinental link next week in Argentina
Brazilian Justice Minister Ricardo Lewandowski warned on Thursday (22) that the Bioceanic Route, a flagship South American integration project, will present significant challenges for local police forces. The potential impacts will be discussed at a meeting of Mercosur justice ministers scheduled for May 30 in Buenos Aires, Argentina.
“I believe this will be an extraordinary step forward for the region’s economy, but it will also bring important challenges for local police forces, and I think this will be one of the topics discussed at the meeting,” the minister said at a press conference in Brasília.
The Bioceanic Route incorporates a segment of the South American Integration Corridors initiative, which is led by the Ministry of Planning under Minister Simone Tebet. The goal is to boost regional trade flows and improve access to Pacific ports.
According to Mr. Lewandowski, while the integration offers clear economic benefits, it will also create “a series of security challenges, because we will have kilometers of highways shared between neighboring countries, and we will have bridges,” he noted.
He said the project would require coordination and the construction of new posts for Brazil’s Federal Police (PF), Federal Revenue Service, and Federal Highway Police, as well as the deployment of police forces from neighboring nations.
The Buenos Aires meeting will also include the signing of cooperation agreements. “Our goal is to make police cooperation and supervision even more effective in combating the threats posed by organized crime along the tri-border area,” Mr. Lewandowski said.
His remarks came during the opening ceremony of the fourth Interpol Meeting for South American Police Chiefs. The event focused on outlining a concrete plan that will define priorities, actions, and mechanisms for tackling transnational crime.
Attendees included police chiefs from Argentina, Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, Suriname, Uruguay, and Venezuela, as well as senior officials from Interpol, including Secretary General Valdecy Urquiza.
Mr. Lewandowski emphasized that defeating transnational organized crime requires joint efforts and resource-sharing, including coordinated intelligence, doctrine, equipment, technologies, and operations among law enforcement agencies.
“I have advocated for improving mechanisms for information exchange among South American police forces. We must work to integrate databases, encourage the sharing of intelligence, and promote coordinated policing actions,” he stated.
The Bioceanic Route was also discussed during President Luiz Inácio Lula da Silva’s recent trip to China, where the Brazilian government sought support for the Bioceanic Railway—an initiative that would facilitate grain exports from Brazil through the port of Chancay in Peru.
The Chancay port, financed by China, was inaugurated by Chinese President Xi Jinping last November. A Pacific exit would significantly shorten the shipping time for Brazilian exports to Asian markets.
Source: Valor International
https://valorinternational.globo.com
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05/28/2025
AZUL RESTRUCTURING PUTS GOL MERGER TALKS ON BACK BURNER
Sources say airline is now focused on pushing forward reorganization as quickly as possible
The discussions between Azul and Gol shareholders regarding a potential merger have been put on hold following Azul’s announcement on Wednesday (28) that if filed for Chapter 11 bankruptcy reorganization in the United States, according to sources familiar with the matter. The filing was reported first by Valor on Tuesday.
People close to the situation say the company now aims to complete its Chapter 11 process by the end of this year, since the group has already secured debtor-in-possession (DIP) financing and exit funding from investors. Yet, the same sources warn Azul must navigate the complexities of U.S. bankruptcy proceedings, which are often fraught with unexpected challenges and disputes.
The prospect of a merger between Azul and Gol has been a prominent topic in the aviation sector since mid-January, when a memorandum of understanding was announced by Azul’s shareholders and Abra, the holding company that controls Gol and Avianca. Since then, Azul has been more actively pursuing the merger discussions, while Gol and its shareholders have been focused on concluding their own Chapter 11 process.
With Gol’s restructuring expected to conclude by June 6, attention now turns to Azul. The airline has announced that it has raised $1.6 billion in DIP financing from creditors and investors. Azul also plans to eliminate approximately $2 billion in debt from its balance sheet by the end of the process, including the removal of lease liabilities with the support of AerCap, the group’s main lessor.
Azul’s restructuring plan includes a 35% reduction in its fleet, allowing the company to return aircraft that are currently challenging to operate. For instance, large aircraft like Airbus models face maintenance part shortages, complicating flight operations.
One of Azul’s strategies has been to invest in ACMI (aircraft, crew, maintenance, and insurance) contracts, which involve hiring a company to provide aircraft and crew. The ACMI model was approved by Brazil’s National Civil Aviation Agency (Anac) at the end of last year, and Azul initiated an agreement with Portuguese company EuroAtlantic. Another source close to the matter indicated that Azul is also working to bring another partner into the ACMI operation in Brazil: another Portuguese airline called Hi Fly.
This partnership has been utilized by Azul to address component shortages. In the first quarter, Azul experienced up to a 3% loss in seat capacity in a single month due to supply chain issues, particularly affecting larger aircraft.
The most surprising aspect of the deal involves investments from American Airlines and United Airlines, both U.S. competitors, which are expected to invest up to a combined $300 million in Azul upon the completion of the process. Azul’s documentation states that these investments are subject to certain conditions, though it does not specify what they are.
United Airlines has been a partner of Azul and holds a stake in the company. Conversely, American Airlines is a significant partner of Gol and is a shareholder in the Brazilian airline. Therefore, market expectations were that American Airlines would invest in Gol’s restructuring, which did not occur.
Azul was the only major airline in Brazil that had not sought restructuring in U.S. courts following the pandemic’s impact. In the first quarter, Azul’s debt reached R$31.35 billion, a 50.3% increase compared to the same period the previous year.
Sources close to the matter emphasized that Azul anticipates a swift process in court, with the possibility of completion still this year. However, Chapter 11 proceedings are known for their unpredictability and potential complications.
Gol, for instance, entered Chapter 11 on January 25, 2024, with an initial expectation to complete its restructuring within a year. In 2024, the company faced conflicts with bondholders and had to negotiate to prevent them from hindering the process.
By late 2024 and early 2025, currency volatility and U.S. tariff increases led Gol to project a definitive exit from Chapter 11 on June 6—six months after the original deadline, yet still a relatively quick process.
LATAM underwent a particularly tumultuous Chapter 11 process from 2020 to 2022, amid disputes between creditors and shareholders over control of the company. LATAM’s main shareholders were the Cueto family, Qatar Airways, and Delta Air Lines, who collectively held about 46% of its capital. After the process, their stakes were diluted: the Cueto family retained 5%, Delta 10%, Qatar 10%, Sixth Street Partners 28%, and Strategic Value Partners 16%.
LATAM’s process differed from those of Azul and Gol, as the airline began its restructuring without having secured DIP financing or exit funding. Nonetheless, sources noted that LATAM’s Chapter 11 experience served as a learning opportunity for future airline restructurings and helped Gol expedite its negotiations.
Source: Valor International
https://valorinternational.globo.com
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05/28/2025
STRONGER ETHANOL MARKET DRIVES EVOLUA BACK TO PROFITABILITY
Joint venture of Copersucar and Vibra boosts earnings on better price curve, 18% rise in demand, and plans to expand supply base
Driven by strong demand for hydrous ethanol—the type that competes directly with gasoline—and a more predictable price curve throughout the 2024/25 harvest, Evolua Etanol closed the season in the black. The company, Brazil’s largest ethanol trading firm, had posted a loss in the previous cycle (2023/24) but ended the most recent season with profits surpassing expectations.
The joint venture between Copersucar and Vibra posted a net profit of R$187.8 million in 2024/25, reversing a R$91.8 million loss in the previous cycle. The company reported a return on invested capital (ROIC) of 42%—“one of the highest in the sector,” CEO Pedro Paranhos told Valor.
Unlike the 2023/24 season, when improving sugarcane crop conditions led to a continuous decline in ethanol prices, the 2024/25 harvest featured a more stable supply outlook. This resulted in a more typical price pattern, with lower prices during harvest and higher prices in the off-season, which favored Evolua’s strategy of carrying product into non-production months.
Moreover, strong supply made hydrous ethanol more competitive than gasoline for most of the season, boosting biofuel consumption. Demand rose 18% compared to the previous cycle.
The company’s gross revenue grew 15% to R$12 billion, while ethanol volume traded remained stable at 9.6 billion liters, representing a 25% share of Brazil’s ethanol market.
About half of that volume still comes from Copersucar-affiliated mills, but Evolua is working to expand its reach. In the past season, it began forming partnerships with independent ethanol producers. In February, it signed its first such agreement — with Agro Serra mill in São Raimundo das Mangabeiras (Maranhão state), which supplies 80% of the state’s anhydrous ethanol.
“Our main strategic pillar is to grow by building new partnerships with producers,” said Mr. Paranhos. He noted that Evolua is “in talks with several producers to expand its supply base.”
The trader aims to prioritize partnerships with mills in regions where it currently has limited presence—such as the Central-West, North, and Northeast—and with corn ethanol plants, which are not part of Copersucar’s current network.
While it works to expand its supply base, Evolua expects to keep pace with market growth in the current 2025/26 season. Mr. Paranhos projects a 2% increase in Otto-cycle fuel sales—slightly below the 2.6% growth recorded last season—which should drive ethanol sales, whether hydrous or anhydrous (used as a gasoline additive).
In the biofuels sector, expectations are high that the federal government will officially raise the mandatory ethanol blend in gasoline from 27% to 30% in July. Initial projections had anticipated the move between April and May, when distributors sign ethanol contracts. Despite the delay, Mr. Paranhos said the market has already priced in the change.
He added that a drop in hydrous ethanol production will make room for the increased output of anhydrous ethanol needed to meet the new mandate. However, sugar production is unlikely to be reduced to favor ethanol, since sugar remains more profitable than the biofuel.
Mr. Paranhos estimated that total ethanol demand (hydrous and anhydrous) will reach around 35 billion liters this season, roughly in line with last year. He also expects Evolua to maintain its 17% share of Brazil’s ethanol exports.
Source: Valor International
https://valorinternational.globo.com
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05/30/2025
LOWER HOUSE SPEAKER OFFERS FISCAL PLAN TO AVOID IOF TAX HIKE
Ten-day deadline set as Congress leans toward overturning financial tax presidential decree
Amid threats from Congress to overturn the presidential decree raising the Financial Transactions Tax (IOF), Lower House Speaker Hugo Motta (Republicans Party) gave the federal government a ten-day deadline on Thursday (29) to present an alternative proposal. Mr. Motta called for the direct involvement of President Lula in the negotiations for long-term structural measures. Possible alternatives, he said, include passing an administrative reform, reviewing tax exemptions, and reassessing the earmarking of government revenues.
Mr. Motta warned that the country’s fiscal situation is making it “ungovernable” and pushed back on the possibility that the government might take the dispute to court: “That would only worsen the atmosphere here in the House,” he said.
Earlier on social media, Mr. Motta said the ten-day deadline had been agreed upon in a meeting the previous day with Finance Minister Fernando Haddad, Institutional Relations Minister Gleisi Hoffmann, and Senate President Davi Alcolumbre (Brazil Union Party). He emphasized that the government’s alternative plan must be “something lasting, consistent, and not just a fiscal patchwork aimed solely at increasing revenue and hurting the country.”
“I stressed the widespread dissatisfaction among deputies with the federal government’s plan to raise taxes. I also made clear that the mood here is to overturn the IOF decree in the House,” he wrote.
“We have been defending the need to review tax exemptions because Brazil cannot handle the sheer number of exemptions it has today. We need to discuss earmarked revenues and an administrative reform to bring more efficiency to the public sector. Only that will help improve the economic environment.”
On Wednesday night, after the meeting, Mr. Haddad said he had explained to Congress leaders that the IOF hike would be necessary in 2025 due to the difficulty of finding alternatives that could be implemented immediately—without the required 90-day or one-year waiting periods applied to other tax increases. However, he signaled openness to discussing long-term structural measures to replace the IOF hike starting in 2026.
In this context, Mr. Motta pledged to consider creating a working group to draft a proposal to review tax benefits.
When asked if there is now political momentum for revising tax breaks, Mr. Motta said only that this was his sense. Valor reported on Thursday that such tax expenditures could surpass R$800 billion in 2025.
The push to overturn the IOF hike through legislative decree gained momentum during the week, as the main parties from the Centrão bloc signaled their support.
In one of the most tense moments of the press conference, Mr. Motta was asked about government leaders’ remarks suggesting that parliamentary amendments could be blocked if the IOF increase is struck down. He criticized what he described as efforts to “demonize” the amendments and said Congress is fully aware that cutting the tax hike could trigger their suspension.
Mr. Motta also said that taxing betting platforms—an idea backed by some sectors of the government—“is among the alternatives” being considered to create fiscal space, although he gave no further details on how this would be implemented.
Source: Valor International
https://valorinternational.globo.com
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05/30/2025
TARIFF WAR SENDS SHIPPING RATES SOARING IN BRAZIL
Import costs from Asia nearly quadrupled in two weeks as U.S.-China truce begins
The tariff war between the United States and Chia has triggered a sharp spike in maritime freight costs in Brazil over the past two weeks, following the announcement of a 90-day truce between the two countries. According to data from consultancy Solve Shipping, import rates from Asia to Brazil are expected to reach $4,000 per container in June, almost four times higher than in April, when the tariffs were first announced.
The surge stems from the temporary reduction in tariffs, which has led to the diversion of ships and containers to the U.S.-China route, explained Leandro Barreto, partner at Solve Shipping.
“When the tariffs were first announced, many voyages between the U.S. and China were canceled, driving global freight rates down. Initially, the trade war pulled freight rates lower, but now there’s a backlog of cargo, and within these 90 days, it’s like trying to push an elephant through the eye of a needle,” Mr. Barreto said. “Retailers in the U.S. are expected to restock inventories for Black Friday and Christmas during this window because no one knows what will happen afterward. As a result, ships from other routes are being redeployed.”
In just one week, Asia-Brazil freight rates jumped more than 100%, reaching around $3,300 per container, according to Andrew Lorimer, CEO of consultancy Datamar. He expects prices to continue rising in the coming weeks.
“Shipping companies have moved up the General Rate Increase [GRI], which is typically applied during peak demand periods—in Brazil, between July and September, when companies stock up for the Christmas season,” Mr. Lorimer explained.
The market is already seeing reports of blank sailings—canceled voyages—by shipping companies, indicating a reduction in available vessel capacity.
Moreover, container shortages are beginning to emerge and could also impact export routes, Mr. Lorimer said.
Mr. Barreto also warned of the risk of a shortage, especially of refrigerated containers. “At this time of year, reefer containers are already in short supply due to harvests in other regions, so the situation could worsen,” he warned. One mitigating factor might be a decline in Brazilian demand due to the avian flu outbreak, which could curb exports and ease upward pressure on freight rates.
The price surge marks the first significant impact of the tariffs on freight costs in Brazil. Earlier this year, imports were on the rise. Between January and April, container imports grew 10.7% year-over-year, totaling 1.136 million TEUs (twenty-foot equivalent units), according to Datamar.
David Pinheiro, partner at Cargo Sapiens, believes demand increased primarily after the tariff announcement in April. “There was a shift of Chinese exports away from the U.S. to other markets, including Brazil,” he said. Mr. Lorimer, however, cautions that it is unclear whether the early-year rise in imports can be directly linked to the tariffs.
Expectations are that freight rates will remain high during the 90-day truce. For Mr. Lorimer, the major question is what will happen afterward. “Possibly, trade agreements will be established by then, which could ease freight rates. Nonetheless, this issue will likely see some back and forth.”
Another important factor is how tariff negotiations between the U.S. and Europe will unfold, as European ports are already facing congestion for other reasons. “It’s a large market, and an agreement has not yet been reached, which raises uncertainties. There’s already significant congestion in Europe due to low river levels and labor shortages, complicating the entire freight environment, worsening the container and vessel shortage, and pushing prices higher,” Mr. Lorimer said.
Mr. Pinheiro added that making projections is difficult. “The supply chain is so complex that predicting outcomes would be bold. It depends not just on tariffs but also on volumes, vessel availability, and geopolitical conflicts. The market has been very dynamic.”
Source: Valor International
https://valorinternational.globo.com
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