With IPO, CSN Cimentos plans to speed up expansion

CSN Cimentos faz compra bilionária no Nordeste e reforça as estruturas  antes do IPO - Seu Dinheiro

With an aggressive growth plan, which consists of acquisitions and new projects, CSN Cimentos plans to offer its shares on B3 in early August. The cement maker’s IPO, by which it intends to raise R$3 billion, will be crucial in the strategy of the company, part of the group led by businessman Benjamin Steinbruch.

The cement plant was born from CSN steel, the anchor of Steinbruch’s businesses, ranging from steel, mining, port and rail logistics to energy and other assets. In February, Steinbruch made the IPO of CSN mining (iron ore), and then saw in the stock exchange a source of resources to finance his projects.

The first cement plant was set up in 2009, in Volta Redonda, in Rio de Janeiro state, next to the steel plant, and the second in 2015, in the municipality of Arcos, in the state of Minas Gerais, where it holds reserves of limestone, which is the raw material of the product. Last year, it sold 4 million tons, obtaining 14% of the total of the Southeast region, according to information in the IPO prospectus.

CSN Cimentos aims to be the third or second of the sector in the country in a few years. Last week it took the first step by acquiring Elizabeth Cimentos, located in the State of Paraíba, and putting a foot in the Northeast cement market, the second largest in the country. It paid R$1.08 billion for the asset, which has the capacity to make 1.3 million tonnes per year and holds 26% of sales in the state.

With the purchase, CSN added 6 million tonnes of production capacity per year and went to the fifth position in the sector in this aspect. The expectation is that Cade, the antitrust regulator, approve the deal in 45 days.

The growth projects listed in the stock offering will require investments of R$6.2 billion by 2028 — if all of them are carried out. These are factories designed for the states of Sergipe and Ceará (Northeast), Pará (North) and Paraná (South). This way, the company intends to spread its activity in four Brazilian regions, with all plants under the age of 20 years. “The idea is to be the most competitive cement maker, in efficiency, quality and prices,” says a source.

However, in this eight-year course, CSN will be able to hold one or other project in case assets are acquired — at the moment, there is a package of 10 plants for sale by LafargeHolcim, which is the third in the country and has made the decision to leave. The assets are located in the Southeast, Northeast and Center-West regions, one of them in the State of Paraíba. CSN has already announced that it will make a purchase offer.

Of the investment package, including the acquisition of Elizabeth, the plan is to use the R$3 billion of the IPO and the R$4 billion be divided between debt and cash generation. The goal is to have a financial leverage of 2 times the net debt-to-EBITDA ratio, according to a source who closely follows CSN’s strategic plan.

The company projects Ebitda generation in the range of R$1.5 billion, from sales of about 5.7 million tonnes, for 2022. To do so, there better mix of products, better prices, consumption growing 6% per year and gain in market shares.

CSN informs in the prospectus that it already has the environmental and installation licenses of the factories of Sergipe (in Maruim) and Paraná (Cerro Azul). The company has also said that the equipment for two has already been purchased for several years and is stored in the port of Antwerp, in the Netherlands.

The market occupation with Elizabeth covers the States of Paraíba, Pernambuco and Rio Grande do Norte, and can reach ranges in Bahia and Ceará. The Sergipe unit will allow to reach the entire south of the Northeast region, according to the assessment. On the other hand, the unit of Paraná targets the southern region, where the rivals Votorantim, InterCement, Itambé and Supremo Cecil predominate.

The two plants, which would add 6 million tons to CSN, are expected to go into operation by the end of 2024. The expansion of Arcos, although rapid, would be dependent on possible new acquisition of assets — in this case, those that are for sale by Lafarge. The plant in Arcos already supplies well the cement market of Minas Gerais and other states.

In this scenario, competition will be fierce, as there are 22 manufacturers after the incorporation of Elizabeth by CSN, which has three competitors in the state: Lafarge, InterCement and Buzzi/Brennand. Of these, about ten are small and have regionalized operations.

The main rivals, besides the three above, are Votorantim (market leader), Mizu, Apodi, Supremo Cecil, Ciplan and Itambé. Cimento Tupi is in judicial reorganization and the João Santos group, in financial and corporate crisis (family management), currently operates only two or three of the ten factories it owned.

For CSN, the weapon will be the cost efficiency of its factories, as they are more modern: for Sergipe, it projects a cost 32% lower than the country’s average. In Elizabeth, 2015, the index reaches 25% below. The company wants to keep the sales rate at 73% for material stores and home centers and only 20% to 25% for distributors.

The bet is that the country’s infrastructure sector will generate more works and that the pace of real estate launches and the demand for self-construction and home renovations will be maintained.

To get to the Stock Exchange, CSN’s schedule, according to sources, are: on the 16th, the definition of the share price range; on the 19th, the beginning of meetings with investors in Brazil and abroad; on August 5th, the pricing (stock value); and on the 9th, the beginning of negotiations at B3.

Source: Valor international


BRF commits to net zero greenhouse gas emissions by 2040

BRF S.A. | Uma das maiores companhias de alimento do mundo

BRF committed on Wednesday to achieve net zero greenhouse gas emissions by 2040. The announcement was made by CEO Lorival Luz during the 2nd ESG Forum organized by the company.

“The climate issue is a challenge for everyone. Everyone need to do their part, and the deadline for us to act decreases every day. BRF has been preparing to face the issue of global warming for a long time, so we are aware of the relevance of the announcement we are formalizing today,” he said during the online event. “We will reduce greenhouse gas emissions and neutralize residual ones.”

According to global vice president of institutional relations, Grazielle Parenti, the company will adopt actions at various stages of its production chain. The goal is to reduce, by 2030, 35% of the direct emissions generated by the company’s operations and the indirect emissions generated by the consumption of electrical or thermal energy, in addition to 12.3% of indirect emissions, with neutralization of residual emissions by 2040.

Four fronts will be priorities in actions: sustainable grain purchase, promotion of low-carbon agriculture, increased use of renewable energy and increased operational efficiency. The grain purchase process will have new guidelines for this chain to be free from deforestation. The company will not work with grain from properties where deforestation has occurred in the Amazon biome.

Regarding renewable energy, there will be investments in wind and solar sources so that more than 50% of the energy consumed by the operation will come from clean sources by 2030. The company had already announced in March a partnership with Banco do Brasil to finance and support 9,500 integrated poultry and swine producers to install solar panels in farms and hatcheries.

JBS, the world’s largest animal protein company, also announced that it anticipated to 2025 from 2030 the goal of zero illegal deforestation in its cattle supply chain in the Cerrado, Pantanal wetlands, Atlantic Forest and Caatinga biomes. For the Amazon, the limit set by the company was already 2025.

Source: Valor international


Industrial output up 1.4% in May after three months of decline

Empresas de manutenção industrial em são paulo - Brilhante

Brazil’s industrial production increased 1.4 percent from April to May, after three consecutive months on the wan (down 4.7 percent year to date). May’s result brings industry to the same threshold as February 2020, before the COVID-19 pandemic started.

The sector saw a 13.1 percent growth in the first five months of 2021 from the same period last year and a 4.9 percent increase in the past 12 months. Comparing to May last year, the industrial output increased 24 percent, the second highest rate since the beginning of the survey’s time series, in January 2002. The highest was observed last month (34.7%).

Food products (2.9%), coke, oil by-products, and biofuels (3%) and mining industries (2%) were the main drivers behind the month’s increase. The data can be found in the Monthly Industrial Survey, released today (Jun. 2) by the government’s statistics agency IBGE.

Research Manager André Macedo stated that May’s positive result does not mean a reversal in the negative balance from February through April. “There has been a return to positive, but it is far from recovering the recent loss experienced by the industrial sector. Much of the negative predominance in the last few months is directly linked to the aggravation of the pandemic, early in 2021, which brought about a disarray in production chains,” he reported in a note.

The researcher noted that the shortage in the supply of raw materials and the hike in production costs are among the consequences faced by the industrial sector. “Even though the result in May compared to April was positive, if we look at the beginning of 2021, faced with aggravation of the pandemic and all of its effects, the balance is still negative, considering that, if we observe other indicators, like the moving quarterly average, the reading is still on the decline,” he said. In May, the moving quarterly average dropped 0.8 percent.

Source: Agência Brasil


Income tax overhaul hits super-rich

The government’s proposal to overhaul income tax includes two provisions that will affect the super-rich.

The first one provides for taxing, at a 15% rate, gains obtained by exclusive funds. The second one is a system of automatic taxation on profits earned by companies controlled by individuals based in tax havens.

“These things bring a sense of justice,” Isaías Coelho, special advisor to the Economy Ministry, told Valor.

He explains that exclusive funds, created to manage large amounts, do not pay taxes periodically. The tax is levied only when the shares are redeemed. But, in practice, the bulk of the resources remain “a lifetime” untaxed. “It is a great injustice,” he said.

“We intend to treat these funds the same way we treat the others,” he said. If the proposal passes, earnings will be taxed annually at 15%.

Another provision included in the bill seeks to make it more difficult for individuals to create companies in tax havens to avoid taxation in Brazil, Mr. Coelho said. The plan is to tax profits earned by these companies.

For not-so-wealthy investors, the government’s proposal simplifies taxation on financial investments and gives more transparency to earnings. Under the proposal, the rates will be standardized at 15%, regardless of the term of the investment.

Currently, Mr. Coelho said, banks are unable to inform the exact amount of investors’ gains because they don’t know how much tax will be levied. It depends on how long the money will be invested. With the change, banks will be able to inform their clients of the net gains from investments in funds.

The current rules punish investments with shorter terms. The proposal ends this differentiation. In the government’s view, this change will benefit people with lower incomes, who cannot afford to keep their money untouched for a long time.

The one-fits-all 15% tax rate represents a cut in some cases. Currently, taxation may reach 22.5%.

In addition, the different treatment given to day trade is likely to be eliminated. Currently, taxpayers make different tax calculations for day trade investments and for other stock market investments. The government’s proposal is to standardize. In addition, capital losses incurred in day trade can be offset against gains in other stock market operations, which is not allowed today.

Mr. Coelho also says that there is a “misunderstanding” when comparing the tax rate on financial investments, which according to the proposal will be 15%, and the 20% tax that the government wants to impose on dividends. It is not correct to say that they should be the same, because they focus on different things, he said.

In financial investments, the 15% rate is levied on the total gain, which includes the inflation of the period. Thus, if inflation were discounted and taxation were levied only on the real gain, the 15% would indeed represent a much higher rate.

As for dividends, the 20% taxation occurs on the real gain, discounting inflation.

“There is no reason why the two should be equal,” he said. “There is no favoring of fixed income or disfavoring of variable income.”

The government’s proposal to overhaul the Income Tax – bill 2,337/21 – is being analyzed by the Chamber of Deputies. The main points are the adjustment of the Individual Income Tax (IRPF) table and the increase of the exemption range to R$2,500.00 from R$1,903.98. It also proposes to reduce by 5 percentage points the rates of Business Income Tax (IRPJ). In exchange, it creates a 20% taxation on dividends above R$20,000 per month, a measure that faces resistance from lawmakers.

The bill is the second stage of the tax overhaul put together by the federal government. The first one is the creation of the Contribution on Goods and Services (CBS) after the overhaul of social taxes PIS and Cofins.

Source: Valor international


Digital currency will coexist with banknotes for decades

Top 10 Digital Banks 2020 | Fintech Magazine

The plan to launch a digital currency issued by Brazil’s monetary authority is taking time and attention of Central Bank President Roberto Campos Neto. In the last few days, he took part in several debates on the topic.

Some operational issues have already been addressed for implementation in two to three years, but there are still huge difficulties to overcome and countless unanswered questions.

Fábio Araújo, coordinator of the group tasked with building the CBDC (Central Bank Digital Currency), says that account holders who want to have a digital currency account will have to request it from their bank and will, therefore, have two bank accounts: one in conventional currency, the other in digital currency.

What for? To be able to take part in new transactions, such as programmable money or smart contracts, and to use digital currency to make purchases in the internet of things.

With programmable money, the customer defines what she wants to buy – a new car, for instance – and will only be able to use the money set aside to buy that item. When she has a refrigerator that controls the stock of food and there is a shortage of meat, the refrigerator itself will buy the meat with digital currency. The idea fits well in this futuristic world, and implementation is already in an advanced stage in some countries.

The idea tends to flourish in Brazil with open banking.

By holding a monopoly on the issuance of digital, sovereign-risk money, central banks will be decreeing the death of cryptocurrencies – and that is one intention.

According to Ilan Goldfajn, a former president of the Central Bank of Brazil, the use of cryptocurrencies tends to be limited to speculative and illicit transactions, therefore beyond the reach of regulators. Where the state fails to maintain the credibility and stability of the currency, there will be room for cryptocurrencies.

Mr. Goldfajn took part in a debate on Wednesday that included Mr. Campos Neto and Luiz Pereira Awazu, deputy general manager at Bank for International Settlements (BIS). Mr. Goldfajn said that in this CBDC model, services should remain in the hands of the financial system. Otherwise, it would mean the end of financial intermediaries. Mr. Campos Neto said that the payment system will also be in charge of the custody of the transactions.

“We have entered an era of technological advance that has no turning back,” he said. Mr. Campos Neto also said that he has had weekly meetings with the group in charge of the digital currency and that the matter has been widely discussed in BIS meetings.

“A common factor in coming out of the crisis [of the pandemic] is that it [the currency] be inclusive and sustainable.” The Central Bank did not stop working during the pandemic, on the contrary, “we moved forward with the implementation of Pix, which was a big surprise for us,” he said, mentioning the monetary authority’s instant-payment system. Pix already holds 244 million keys and 88 million people. And 5.8 million businesses of almost 7 million in the country, he said.

The next step will be an offline version of Pix – “we have the technology to do this” – and an international version, about which the Central Bank already is in advanced talks with Italy.

If the country has the Pix, why does it need a digital currency that will be an extension of the conventional Brazilian real? Well, Pix is a payment system, while the currency is a means of payment. The digital currency that exists today is an asset supported by the financial system, while the one that will be available in two to three years will be an asset supported by the Central Bank. As far as security is concerned, these are two incomparable things.

Some of the unanswered questions refer to crucial issues: How will the two currencies, the physical real and the digital real, coexist? Will they have the same exchange rate? With regard to monetary policy, the Central Bank is expected to gain a new liquidity provision mechanism, and the inclusion of digital currency increases the power of monetary management. In this case, there is no great risk of losing the effectiveness of monetary policy.

There is no prospect of conventional money disappearing, because there are huge differences in access to banking services in the country. In some places in Brazil, people must go to a nearby city in search of bank branches to stock up on paper money. The demand for the physical real was clear last year, when the government went to pay emergency aid to millions of Brazilians and ran out of paper money.

Currently more than 90% of the volume of transactions are digital, but 50% of the transactions are still executed in physical currency. In other words, the coexistence between the conventional real and the digital one will continue for some decades to come.

Source: Valor international


Brazil creates 280.6 formal job posts in May

The number of workers formally hired in May this year was higher than the total of people fired in the formal labor market. According to the Economy Ministry, 1,548,715 admissions and 1,268,049 layoffs.

The data come from the General Registration of the Employed and Unemployed, whose monthly update was published Thursday (Jul. 1) in Brasília.

With a monthly balance of 280,666 job posts in May, the national stock of formal jobs reached 40,596,340, with a positive variation of 0.7 percent compared to April’s 40,315,674.

Among the sectors of the economic activities that saw better employment results are services, with 110,956 job openings, especially linked to information, communication, and financial, estate, professional, and administrative activities. Next come trade (60,480 posts); general industry (44,146 posts): agriculture, forest production, fishing, and aquaculture (42,526 posts); and construction (22,611 posts).

Source: Agência Brasil


Softbank invests $200m in Mercado Bitcoin

O novo serviço japonês mmWave 5G da SoftBank é conduzido pela Qualcomm -  NotebookCheck.net News

2TM, owner of Mercado Bitcoin, announced on Thursday a $200 million (R$996.5 million) investment from Softbank. Mercado Bitcoin is the first and largest Brazilian trading platform for bitcoins and cryptocurrencies.

The company was valued at $2.1 billion, becoming the first unicorn of the cryptocurrency segment in Latin America, and the eighth largest in the region considering all sectors – including Stone, Rappi, Creditas, 99, iFood and Nubank. Unicorns are new companies valued at $1 billion or more.

The investment in the startup’s so-called Series B is also the largest ever by the Japanese venture capital group in the crypto industry in Latin America.

This is Mercado Bitcoin’s second round in less than six months. The holding company had already received a Series A injection – an earlier stage in accelerating startups – in January from funds of GP Investments and Parallax Ventures, worth R$200 million. The funds raised were mainly used to buy Blockchain Academy, a financial education arm focused on cryptocurrencies, and fund manager ParMais. It also acquired a stake in FIDD, which provides administration and custody services and operates as a securities company.

Bitcoin jumped from $10,000 in October to $65,000 in April before falling to around $35,000. The appreciation came on the heels of a surge in institutional investments, with milestones such as injections from companies like MicroStrategy and Tesla, bets from asset management companies like BlackRock and integration with cryptocurrencies announced by payment companies such as PayPal.

Bitcoin’s rise has accelerated Mercado Bitcoin’s expansion in Brazil. The company’s customer base grew more than 33% in the first six months of 2021, to 2.8 million, compared with stock exchange B3’s 3.5 million. Mercado Bitcoin estimates that more than 70% of cryptocurrency investors in Brazil are clients.

The exchange surpassed the R$25 billion threshold in transactions in the first half of this year.

The growth has put Mercado Bitcoin on investors’ radar. Until this year, the startup relied on the reinvestment of its profits and had only received injections from partners and some “smart investors,” founder Gustavo Chamati said.

The resources injected by Softbank will be used to expand the 500-strong team and structure, internationalize the operation and accelerate the expansion of the business to other activities beyond the intermediation of buying and selling cryptocurrencies, CEO Reinaldo Rabelo said.

Source: Valor international


Government gross debt falls as analysts warn of imbalance

The government gross debt in Brazil had the third consecutive month of fall in May, something that had not happened for almost a decade. The move is in line with the scenario of a lower public debt at the end of the year as outlined by economists in recent months. However, analysts continue to warn that the imbalance of government accounts remains a source of risks for the country.

Last month, gross debt stood at R$6.7 trillion, equivalent to 84.5% of the GDP, as disclosed Wednesday by the Central Bank (BC). The figure represents a 1.1 percentage point drop in GDP compared to April and 4.4 points fall compared to the end of 2020.

According to the monetary authority, the decline since the beginning of the year can mainly be explained by nominal GDP growth, which had a downward impact of 5.4 percentage points of the product on debt. Two main factors explain the strongest expansion of nominal GDP in recent months. The first is stronger-than-expected growth of the GDP deflator – a type of inflation index that readjusts product values – driven by the rise in commodity prices. The second were the best prospects for the resumption of economic activity in real terms, already adjusted by inflation.

These factors have recently led economists to revise down their projections for the gross debt at the end of 2021 to a level closer to 80% of GDP. Before, projections were around 90% of GDP. Even in the 80% range, debt remains high compared to peers – about 30 percentage points of GDP above the average for emerging countries.

For now, the most optimistic scenario for this year specifically has been coming to fruition, with gross debt falling from March. The last retreat in three consecutive months had been recorded between August and October 2011, according to the Central Bank’s historical series.

But even acknowledging the improvement in the picture for 2021, economists continue to draw attention to the structural imbalance of government accounts.

At a press conference to comment on the May data, Fernando Rocha, head of the Statistics Department at the Central Bank, said that although the primary deficit remains on a “reduction trajectory,” the values remain “very high.” Between December last year and May 2021, the deficit seen in 12 months went to R$428.6 billion from R$703 billion.

For Alberto Ramos, director of the Economic Research Department for Latin America at Goldman Sachs, “the short-term fiscal risk has decreased, but the still high level of public debt (stock) and deficit (flow) still leave the fiscal picture and the economy broadly vulnerable to adverse domestic and external shocks.”

Pedro Schneider, an economist at Itaú, said in a report that the main risk for the coming years “is to have an easing of spending cap rule, which would cause further deterioration of financial conditions, with a negative impact on economic activity.”

Source: Valor international