Sale of Bahia mining company nears completion

Acquisition of Bamin by Mota-Engil awaits approval from Brazil’s land transport regulator, sources say

 

 

 

Acquisition is tied to a rebalancing of the concession agreement — Foto: Divulgação
Acquisition is tied to a rebalancing of the concession agreement — Photo: Divulgação

The sale of Bamin (Bahia Mineração) to Portuguese infrastructure group Mota-Engil is in its final stages, according to sources familiar with the matter. The transaction is currently under review by Brazil’s Land Transport Agency (ANTT), which must approve the transfer of control of the West-East Integration Railway (Fiol) concession in Bahia state.

In addition to the ANTT review, the acquisition is tied to a rebalancing of the concession agreement, negotiations that are also underway within the regulatory agency and could later be referred to the consensus chamber of the Federal Court of Accounts (TCU), according to people familiar with the discussions.

For Mota-Engil, a Portuguese company whose major shareholders include China Communications Construction Company (CCCC), the acquisition of Bamin drew interest because it involves not only the railway segment between Ilhéus and Caetité, in Bahia state, but also a port project in Ilhéus and a mining operation in the region, said Manuel Mota, the company’s vice-CEO.

“It is a complex project, but one that encompasses three areas of expertise within the group. The port segment, where we have extensive experience in port construction and operations; the railway segment, where we also have operational expertise; and mining, where we likewise have experience in building and operating mines,” said Mota.

The executive said Mota-Engil is currently the largest Western contractor in the railway sector worldwide. “We have more than 2,000 kilometers of railways under construction in Africa and completed nearly 2,000 kilometers of railways in Latin America over the past five years.”

According to a source, issues under discussion at ANTT include extending the term of the Fiol concession and renegotiating the construction schedule so that completion of the railway would be postponed from 2027 to 2031. The assessment is that such changes would be necessary to make the acquisition viable.

There is also an expectation of additional renegotiations, though those would need to be submitted to the TCU consensus chamber because they would involve deeper contractual changes. Within the current administration, there is a view that the Fiol concession model—auctioned in April 2021 during the administration of former President Jair Bolsonaro—contained structural flaws.

ANTT did not respond to requests for comment.

The concession between Ilhéus and Caetité in Bahia state was awarded to Bamin in 2021, but construction of the segment failed to advance as planned. The company, controlled by Kazakhstan-based Eurasian Resources Group (ERG), blamed the war in Ukraine for the difficulties faced by the group. However, since the auction, the project had already been viewed as financially challenging, and Bamin’s capacity to finance construction had long been questioned within the sector. The company operates a mining project near Caetité and also plans to build a port in Ilhéus.

In recent years, the federal government has sought a solution for the project, which is considered strategically important from a logistics standpoint. The segment is the first stretch of the Fiol railway, which also includes two additional sections: an intermediate segment connecting Caetité to Correntina, also in Bahia state, and another expected to extend the network to Mara Rosa, in Goiás state. The latter section is expected to connect with the North-South Railway and with the Fico railway currently under construction by Vale.

The federal government had at one point pressured Vale to acquire the asset. The mining company studied the acquisition in partnership with Cedro and BNDESPar, the investment arm of Brazil’s National Development Bank (BNDES), but the plan did not move forward.

Bamin did not return requests for comments.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Trade war pushes Brazilian companies to seek new markets

Record exports to 42 countries highlight a growing effort to diversify sales beyond traditional destinations amid global uncertainty

 

 

 

The trade war launched by U.S. President Donald Trump has heightened the urgency for Brazilian companies to find new markets for their products. The results are already evident. In 2025, Brazil posted record export volumes to 42 countries, according to data from the Ministry of Development, Industry, Trade and Services.

Among the destinations that received record shipments—excluding the United States and China—were Canada, India, Turkey, Paraguay, Uruguay, Bangladesh, the Philippines, Panama, Pakistan, and Norway. The trend could gain further momentum in the coming years as Brazil expands its network of trade agreements to cover its exports.

“Many companies already have diversification in their DNA. But revisiting export strategies has become necessary in light of changes in the global environment,” Tatiana Prazeres, the ministry’s foreign trade secretary, told Valor. “The global environment, marked by challenges, shifts in trade policy, and geopolitical tensions, has fostered greater pragmatism among both governments and the private sector,” said Constanza Negri, international trade and integration manager at Brazil’s National Confederation of Industry.

Government officials argue that companies’ growing search for alternative markets has helped accelerate trade negotiations, including the Mercosur-European Union agreement. Last week, Brazil’s Congress approved two Mercosur trade agreements that are part of this broader diversification strategy: accords with Singapore and the European Free Trade Association (EFTA), whose members are Switzerland, Norway, Iceland, and Liechtenstein. Taken together, the agreements increase the share of Brazil’s trade covered by trade deals from 12% to 31%.

That figure could increase further.

Mercosur is negotiating a trade agreement with Canada, which has moved from the 10th-largest destination for Brazilian exports in 2023 to the 8th-largest in 2025. According to the ministry, negotiations are also underway with the United Arab Emirates, Indonesia, Lebanon, and Vietnam.

Last week, on the sidelines of the G7 summit, President Lula discussed the potential launch of Mercosur-Japan trade negotiations with Japanese Prime Minister Sanae Takaichi. The start of those talks could be announced at the South American bloc’s summit later this month.

Brazil is also seeking to expand its existing agreements with India and Mexico. Negri highlighted the speed with which Congress approved the agreements with the European Union, Singapore, and EFTA, a departure from Brazil’s traditionally slower approach to trade liberalization. In her view, the debate is no longer about whether trade agreements are necessary, but about which agreements make the most sense for Brazil.

Prazeres argued that the Singapore and EFTA agreements are more important to Brazilian exporters than many observers realize. Although exports to those markets are heavily concentrated in crude oil and fuels, the range of products shipped there is significantly more diversified than aggregate trade figures suggest. Of the roughly 8,000 categories of goods exported by Brazil in 2025, about 2,500 were sold to Singapore, and 2,280 were exported to EFTA countries.

According to Prazeres, those figures indicate substantial room for Brazilian companies—particularly industrial exporters and producers of higher-value-added goods—to expand their presence in those markets. “There are many opportunities for companies in products that may represent only a small share of Brazil’s exports to a given country, but can make a significant difference for an individual business,” she said. Beyond trade diversification, government studies project meaningful economic gains from the Singapore and EFTA agreements.

Singapore is viewed as a gateway to Southeast Asia, one of the world’s most open and dynamic regions. The ministry estimates that the agreement could increase Brazil’s gross domestic product by R$28 billion, boost investment by R$11 billion, and expand total trade flows by $40 billion by 2040, driven by higher exports and imports. For the EFTA agreement, projections indicate a R$2.69 billion increase in GDP, an additional R$660 million in investment, and a R$3.34 billion rise in Brazilian exports. Both agreements have received strong support from industry groups for their potential to expand trade and investment opportunities.

Negri noted that the EFTA deal is especially significant because it strengthens Brazil’s ties to a market closely integrated with the European Union. She also pointed out progress in areas like investment regulations and government procurement. In contrast, the Singapore agreement is seen as a means to expand Mercosur’s access to Asian markets.

Industry groups, however, advocated stringent rules of origin to prevent trade triangulation, in which products from third countries could enter Mercosur via Singapore. “Trade relationships do not develop on a blank sheet of paper,” said Leandro Consentino, a political scientist and professor at business school Insper, emphasizing the political aspect of trade policy. “It is not solely an economic issue. There is also a significant political element, especially this year when both Brazil and the U.S. are approaching elections.”

*By Giordanna Neves and Lu Aiko Otta — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Pension withdrawals slow after Brazil’s financial tax change

Levy on larger private pension contributions curbed inflows, but fewer investors pulled money from plans in early 2026

 

 

 

Withdrawals from private pension plans slowed in the first months of 2026 after a new Financial Transactions Tax (IOF) started applying this year to larger contributions to Free Benefit Generator Life Plan (VGBL) pension plans. The move followed a sharp drop in inflows in the second half of 2025.

In January, the 5% financial-transactions tax stopped applying to annual VGBL contributions of R$300,000 or more at each insurer. It now applies only to amounts above R$600,000, based on each participant’s total contributions across the market.

“It shows, to some extent, that participants understand this money is indeed for the long term and that withdrawing it carries a penalty if they want to return,” said Ângela Assis, CEO of Brasilprev. “But there is no denying that the IOF hurt the sector.”

Rogério Calabria, head of investment and pension products at Itaú Unibanco, said the propensity to save has increased. “There is the issue of high debt, on average, across all income levels, and people are trying to rebuild some of their wealth,” Calabria said. “The war leads to that, interest rates that were expected to fall and are not falling anymore also lead to that, and there are significant uncertainties. When that happens, people hold back on spending and become more conservative in their investments.”

Data for the first four months from the National Federation for Private Pension and Life Insurance (Fenaprevi) show net inflows fell 7.8% from the same period in 2025, to R$6.7 billion. Contributions totaled R$54.1 billion in 12 months, down 8.3%, while withdrawals dropped 8.5% to R$47.4 billion. Through March, net inflows had grown 7.2% in 12 months, precisely because withdrawals declined 10.7%.

Regulatory uncertainty

For Fenaprevi’s president, Edson Franco, the tax has had a spillover effect even on Free Benefit Generator Plan (PGBL) plans, which are not taxed upon contribution, because of the regulatory uncertainty it created.

“Investors end up turning to other accumulation products. There are pension products that do, in fact, offer tax incentives for long-term retention, but Brazil has this inconsistency of offering very short-term instruments with full tax exemption,” Franco said, referring to tax-incentivized credit securities. “When clients also see a penalty at the point of entry, meaning a reduction in the nominal amount contributed, they naturally step away.”

Franco said the industry stepped up communication with participants and has run campaigns to attract new money, helping soften the IOF impact. “Last year, the drop in inflows reached 20%, and this year it was 8%, largely because of the effort by entities to explain who is subject to the tax.” He said he still does not have a clear read on what drove the reduction in withdrawals and that it remains to be seen whether the movement will become a trend.

This is an important market for the formation of long-term savings, and the industry “made a major effort for years to spread financial education and convince society to invest,” said Marcelo Flora, partner at BTG Pactual and CEO of its insurance and pension unit. He expects the government to eventually review the toll, given the contradiction of taxing those who are planning for the future at the point of entry.

“Those who already have accumulated resources now think twice before making a withdrawal,” said Érico Soares Neto, director of BTG Vida e Previdência. Soares Neto said inflows rose 7% this year, to R$1.08 billion, driven by a slower pace of outflows.

At the end of April, 11.2 million people in Brazil had some type of private pension plan, with reserves of R$1.8 trillion, equivalent to 11% of GDP. That is still limited for a relatively young industry that had been expanding year after year until it hit the brakes in the middle of last year.

According to data from Anbima (Brazilian Financial and Capital Markets Association), the funds that hold the sector’s reserves had posted net withdrawals of R$7.1 billion this year through June 17.

“We feel the lost opportunity because pensions could be performing much better if not for this aberration,” Franco said. “Taxing income is what is expected from accumulation products, with a tax incentive for the long term. That is what is done around the world, never taxation at the accumulation stage. This is a punishment for prudent behavior.”

Long-term appeal

Private pension plans have so many advantages that, depending on the situation, they are still worth considering, including for amounts above R$600,000, said Gustavo Lendimuth, a senior executive in Santander Brasil’s distribution and advisory area.

Lendimuth cited long-term tax deferral, the absence of so-called “come-cotas”, the semiannual advance tax charged on other pooled funds, and a rate that falls to 10% after 10 years under the regressive tax table as some of those advantages.

Pension plans also help simplify estate succession, without going through probate. “It is a solution for different needs: for those who want to accumulate, transfer resources or invest for the medium and long term. From five years onward, it is already advantageous.”

With R$484.2 billion under management at Brasilprev, Assis said the first months of the year were productive despite the IOF blow. In BB Seguros’s earnings presentation, the company that controls Brasilprev reported a 10.2% increase in pension reserves and inflows of R$3.9 billion, compared with withdrawals of R$1.5 billion in the same period ended in March 2025. Contributions rose 9% in 12 months, to R$15 billion. Recurring net income in the first quarter was R$538 million, up 51% from a year earlier.

For this year, the insurer projects growth of 8% to 11% in pension reserves.

At Itaú, the IOF on VGBL plans forced a change in strategy, Calabria said. He said the use of data technology made it more efficient to attract clients from competitors through pension plan transfers. “Now there is this need because the market has become smaller.”

With R$351 billion in pension assets, Itaú has also focused on PGBL, which is not subject to the IOF and is a product the bank already leads in sales and knows how to sell.

The product is used by taxpayers who file the full income tax return and can deduct up to 12% of taxable income, increasing their tax refund. “Our client understands it. It is an advisory product, and we have been explaining that some clients could be better allocated in PGBL than in other investments; [the client] has to reallocate, it is a benefit they are leaving on the table,” Calabria said.

Another front has been expanding the client base, lowering the average ticket and bringing more people into the product.

Calabria said the first four months were productive also because Itaú, like other peers, moved quickly to attract clients who reach the IOF limit on VGBL plans.

“That high-value client who has R$600,000 to allocate in the year across all insurers, we wanted to reach first.” Inflows through April reached R$4 billion, half of which came from transfers.

Despite the slower pace, Calabria expects the sector to grow this year, partly because high interest rates provide an organic boost to invested reserves. “The IOF has an impact, there is no doubt, but the market has not ended. The sector is rearranging itself. It will grow less than it had been growing, but it is too early to make very pessimistic or very optimistic projections.”

He said he still sees demand for the product, but some investors have lost interest. It has become harder to sell the product and explain the IOF, Calabria said. “There is no way not to be concerned about the rule change. It scared off some clients who think it is better not to touch this.”

Competition and transfers

Lendimuth, of Santander, said the group is gaining pension market share again this year after the IOF change. “This is a reversal that was planted,” he said. The executive said that, while clients could still contribute R$600,000 without the new tax until the end of last year, the commercial focus was on executing those contributions. Now, the effort is concentrated on transfers and retention. “It was the best first quarter for new contributions, but we planted a lot of transfers, which we will harvest in the future.”

He said face-to-face work by investment specialists at AAA offices has made a difference, since pension plans are predominantly consultative sales. The bank redesigned incentives, expanded its sales repertoire and improved the timeliness of information.

In general, insurers linked to the large banks suffer the biggest losses, but Itaú has managed to defend its ground through consultative sales.

In the first four months, according to Susep, Brazil’s private insurance regulator, Itaú Vida e Previdência retained nearly R$2 billion on a net basis, considering amounts accepted and ceded. Bradesco Vida e Previdência lost R$1.3 billion, followed by Brasilprev, with R$827.3 million; Caixa Vida e Previdência, with R$297 million; Zurich Santander, with R$290.5 million; SulAmérica, with R$226.2 million; and Icatu Seguros, with R$82.5 million.

Newer players moved in opposite directions, with BTG attracting R$1.3 billion and XP Vida e Previdência losing R$38.5 million, after being one of the leaders throughout 2025.

Last year, XP’s inflows were boosted by the transfer of plans sold on its platform from Icatu and SulAmérica to its own insurer. That friendly asset-transfer drive totaled R$17 billion. XP was followed by BTG, with R$7.8 billion, and Itaú, with R$7.5 billion.

By Adriana Cotias — São Paulo

Source: Valor International

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TCU warns government of growing risk of bailing out state-run companies

Review of 2025 government accounts points to worsening financial conditions at companies and insufficient oversight by ministries

Brazil’s Federal Court of Accounts (TCU) has warned the federal government of a growing risk that the Treasury will have to provide financial support to non-dependent state-owned companies in the coming years.

In its review of the president’s 2025 accounts, approved last week, the TCU said the worsening financial condition of several federal companies, combined with insufficient oversight by the ministries responsible for them, increases the likelihood of new Treasury injections.

The warning is based on audits of 11 non-dependent federal state-owned companies—entities that do not rely on the Treasury to fund their operations—including Brazil’s postal service Correios, Eletronuclear, the Brazilian Nuclear and Binational Energy Holdings Company (ENBPar), airport operator Infraero, asset management company Emgea, the Brazilian Mint, PortosRio, and federal port authorities known as Companhias Docas.

According to the court, some companies already pose an immediate risk to public finances, including Correios, while others have accumulated problems that, if left unaddressed, are likely to worsen and could require federal support over the medium and long term.

Non-dependent federal state-owned companies ended 2025 with a primary deficit of R$5.1 billion. Although the result improved from the R$6.7 billion deficit recorded in 2024, it maintained the deteriorating trend seen since 2023, when the group of companies began posting negative results, with a deficit of R$700 million, after surpluses of R$3 billion in 2021 and R$4.8 billion in 2022.

“The gradual reversal from positive results to growing deficits over the 2023-2025 period demonstrates a deterioration in these companies’ ability to finance themselves and adds pressure to the consolidated fiscal effort,” the court said.

According to the TCU, the financial deterioration of state-owned companies stems from a combination of factors, including loss of competitiveness, declining revenues, rigid cost structures, and reliance on one-off, non-recurring measures, such as capital injections, financial income, and asset sales, to support results.

The report also identified shortcomings in oversight by the ministries responsible for the companies, which it described as a “systemic deficiency.” According to the TCU, monitoring has not been sufficient to identify and correct problems proactively, increasing the risk that liabilities will eventually become obligations for the federal government.

Among the cases cited is Correios. The TCU described the postal service’s situation as the most serious and urgent among the companies analyzed. According to the court, the company is operating in a state of technical insolvency, has posted losses since 2022, and depends on government-backed borrowing to maintain operations. A financing agreement signed in 2025, worth R$12 billion and guaranteed by the federal government, requires a minimum government contribution of R$6 billion by 2027.

The TCU also warned of contagion risks among companies operating in the same sector. In the nuclear segment, Eletronuclear was classified as posing a high fiscal risk because of debts related to the construction of the Angra 3 nuclear plant and structural deficits arising from the operation of the Angra 1 and Angra 2 plants. According to the court, the company posted losses in 2025 and lacks sufficient resources to meet short-term obligations without resorting to new borrowing.

The TCU also highlighted that Eletronuclear’s situation directly affects Indústrias Nucleares do Brasil (INB) and puts pressure on ENBPar. In the auditors’ assessment, there is an immediate risk that Treasury injections will be needed to cover current and capital expenditures of companies within the group.

Federal port authorities present a mixed picture, with risks ranging from medium to high. Among them, PortosRio was identified as the most concerning case. The company has negative equity, insufficient cash generation, and already received R$1.14 billion in Treasury injections in 2024. Labor liabilities further aggravate the situation, as the number of active lawsuits has increased, with provisions totaling R$435 million, “driven by the obsolescence of a compensation and career plan that has remained unchanged for more than 15 years.”

The Port Authority of Rio Grande do Norte (Codern) was also found to be in a fragile position, marked by consecutive operating deficits from 2021 to 2024, equity restored only through an extraordinary Treasury capitalization in 2025 and an imminent risk of revenue losses. The remaining port authorities face medium risk, with vulnerabilities stemming from chronic underinvestment and rising personnel costs.

“A cross-cutting risk factor affecting all port authorities is the Portus pension fund liability, which has a significant actuarial deficit at each company and lacks restructuring plans under adequate supervision by the Ministry of Ports and Airports,” the report said.

The Brazilian Mint, meanwhile, was classified as medium risk. According to the court, the company has sustained positive results primarily through financial income generated by accumulated reserves, a strategy that may be exhausted in the coming years.

Emgea, in turn, is in a more comfortable financial position but will face uncertainty regarding its sustainability after December 2026, when its main source of revenue, linked to the management of housing-related claims from the Wage Variation Compensation Fund (FCVS), comes to an end.

Brazilian Mint relies primarily on financial income from reserves to sustain positive results

Infraero was classified as low risk in the short term. Even so, the TCU warned of possible structural deterioration over the medium term because of operational restrictions imposed on Santos Dumont Airport, its only profitable asset.

“In the company’s own projections, maintaining these restrictions represents cumulative losses of R$983 million by 2030 compared with a scenario of greater operational flexibility, making dependence on Treasury support likely after 2030,” the court said.

Economist Alexandre Andrade, director of Brazil’s Independent Fiscal Institution (IFI), said the economic and financial deterioration of federal state-owned companies currently represents a highly significant fiscal risk for the federal government. First, because a company may be reclassified as a dependent state-owned enterprise, becoming part of the federal budget and increasing pressure on spending limits established under Brazil’s fiscal framework.

The second risk involves capital injections, which also place pressure on spending caps. “These injections constitute primary expenditures and can limit room for other spending within the fiscal framework’s caps. Even if the contributions are structured so that they are not directly recorded in the primary balance, they may increase gross debt through the issuance of government bonds,” said Andrade.

The economist said the lack of monitoring indicators for state-owned companies can encourage management to take excessive risks or expand expenditures, especially payroll costs, beyond cash-generation capacity, on the assumption that the National Treasury will rescue the company if necessary. “In that case, society as a whole would bear the cost,” the IFI director said.

In a statement, Codern said it continues to generate sufficient resources to fund operations and meet its obligations on a regular basis. The company also said accounting results in recent years had been affected by non-cash expenses, including depreciation, provisions and monetary adjustments, which affect accounting results but not operational capacity or liquidity. Regarding the capital injection received in 2025, the company said the capitalization helped “restore the company’s equity structure,” while it continues to implement measures to increase operational efficiency, strengthen revenues and improve results.

Codeba said the company is profitable and has consistently distributed dividends to shareholders. “In 2025, it achieved a record liquidity position of R$331.2 million, reflecting excellent operational management and the strategic recovery of assets,” the company said.

The other state-owned companies contacted did not respond to a request for comment. The Ministry of Management and Innovation in Public Services, which oversees the Secretariat for State-Owned Enterprises, also did not respond.

  • By Giordanna Neves and Jéssica Sant’Ana — Brasília
  • Source: Valor International

https://valorinternational.globo.com/

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World Cup has limited impact on Brazil’s inflation, study finds

Price increases linked to major sporting events are concentrated in a few categories, typically fade as tournaments end

 

 

 

Prices for lodging services, parking, and some food products may rise during major sporting events such as the FIFA World Cup and the Olympic Games, but the effects generally do not persist beyond the duration of the competitions, according to a study by Warren Investimentos.

According to Andréa Angelo, the firm’s inflation strategist, such events may add roughly 0.05 percentage point to Brazil’s headline inflation rate. Food prices account for 0.01 percentage point of the effect, while industrial goods and services each contribute about 0.02 percentage point.

“The impact exists, is statistically robust for certain items, and is consistent with the temporary increase in demand associated with tournaments. Even so, it is diluted within the aggregate index and does not have a permanent nature, suggesting that the effects on Brazilian inflation tend to be limited to the period of the event,” the study said.

To reach its conclusions, Angelo analyzed the behavior of items included in Brazil’s Extended Consumer Price Index (IPCA) during FIFA World Cups and Olympic Games held since 2010. Using statistical models, she calculated coefficients measuring each item’s sensitivity to major sporting events, their effect on prices, and their contribution to the IPCA.

The analysis identified statistical correlations between the events and price increases in 16 components of Brazil’s official inflation index. However, the overall impact on inflation was found to be small and temporary.

According to the study, some food products are among the items that tend to post the largest price increases during major sporting events. Bell peppers showed an estimated impact of 7.6 percentage points on prices, followed by cilantro at 5.1 percentage points and guava at 4.2 percentage points.

Angelo noted that although these products stand out statistically, it is difficult to find a logical explanation for why their prices would rise during such events. Despite the increases, these items carry very little weight in household consumption baskets and have virtually no effect on the IPCA, according to the study.

Among the most sensitive items, only lodging services—showing an estimated impact of 4.2 percentage points—have a measurable effect on inflation, contributing around 0.02 percentage point to the index. According to the economist, this category may be influenced by travel undertaken to visit friends and relatives to celebrate or watch matches together.

The survey also identified a second group of products with moderate sensitivity to major sporting events. This category consists primarily of industrial goods, including personal computers (0.89 percentage point), men’s underwear (0.74 percentage point), and jewelry (0.71 percentage point).

Some of these findings have more intuitive explanations. Parking services (0.60 percentage point), for example, tend to experience stronger demand as more people travel to watch games. Meanwhile, products such as fruit juice (0.49 percentage point) and cookies (0.45 percentage point) may reflect increased consumption by fans during tournaments.

Angelo emphasized that sporting events can influence price movements, but not enough to materially affect inflation trends or generate a meaningful impact on the IPCA.

She also acknowledged that the vacation season often coincides with the timing of major competitions and may influence some of the results, particularly in categories such as lodging, where demand typically increases. Nonetheless, she argued that there are no other significant factors capable of fully explaining the patterns identified in the study.

*By Grace Vasconcelos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Central Bank may slow cuts after lowering Selic to 14.25%

Economists say reference to 2028 inflation horizon raised doubts about next steps of Brazil’s Monetary Policy Committee

 

 

Brazil’s Central Bank cut the Selic base rate by 25 basis points to 14.25% at its Monetary Policy Committee (Copom) meeting on Wednesday (17), but the accompanying statement raised questions among economists about the authority’s next steps.

As Valor had reported earlier in the week, most financial-market participants expected the rate cut. What they did not expect was a statement referring to the quarter after the so-called “relevant horizon,” the period the Central Bank uses as a benchmark for its decisions and that reflects the time needed for monetary policy to take effect. That horizon had been the fourth quarter of 2027, but the statement mentioned the first quarter of 2028.

“It is commendable to work with an alternative scenario, but if the Central Bank usually looks at the relevant horizon, why does it mention the following quarter? In practice, the authority extended that horizon. This raises the question of whether the relevant horizon is now the one that allows it to cut rates,” said Gino Olivares, chief economist at Azimut Brasil Wealth Management. “It is contortionism to be able to continue cutting [the Selic].”

Paulo Val, chief economist at Occam Brasil, raised a similar point. In his view, the extension of the inflation-convergence horizon comes at a time when the monetary authority should be more “cautious.” “The Central Bank should shorten the convergence horizon, not extend it. By signaling that it may be looking further ahead [than it should], it may contribute to a deterioration of longer-term horizons,” he said.

Luciano Sobral, chief economist at Neo Investimentos, said the Central Bank is moving away from a model to which it had tied itself in the past and that is now creating problems for the authority. “I just don’t know how it will get out of this trap,” he said, adding that this departure from the model is likely to create noise among financial-market participants. “The market demands a lot of consistency and adherence to the model, and this deviation by the Central Bank will bring it a lot of criticism,” he said.

Laiz Carvalho, Brazil economist at BNP Paribas, sees it differently. She said expanding the relevant horizon was more of an “attempt to signal what may happen in 45 days, assuming the alternative scenarios.” “I don’t think the fact that it talked about the first quarter of 2028 now means it can talk about that all the time. I think it did this to show that the door is more closed to a 25-basis-point cut than before,” she said.

Door left open

The statement did not give firm guidance on future decisions, leaving the door open to further cuts amid unanchored expectations and the inclusion of fiscal stimulus to consumption in the balance of risks for higher inflation.

Copom therefore stressed that its next steps will depend on “new information.” It also said uncertainty around the projections remains higher than usual. For the relevant horizon of the fourth quarter of 2027, the Central Bank’s IPCA inflation forecast rose to 3.7% from 3.5% in the previous statement.

On the projection, Carvalho said it would be important for the Central Bank to explain in next week’s minutes how it arrived at 3.7%. “Taking into account the relevant horizon of the fourth quarter of 2027, our inflation forecast is 3.6%. This shows that the Focus survey projection for the Selic, at 13.75% this year and 12% in 2027, is not enough to bring inflation to the target,” she said. “I need an alternative scenario above Focus to get close to convergence to the target,” she said.

Sobral said Copom is showing that the scenario has worsened, but that there is still room to cut rates. “What the Central Bank is indirectly communicating is that the interest rate is very high and that it is very far from the neutral rate, so it can accommodate a clearly worse scenario,” he said. “But the postwar world has become more complicated. Even if oil falls back below $80 a barrel, inflation expectations are unlikely to improve,” he said.

Olivares also sees the scenario with greater concern, especially because of a more conservative Federal Reserve. “In this globalized world, how can you be out of step with the [interest-rate] cycle of the largest economy without seeing your currency lose value?” he said, referring to the fact that a smaller interest-rate differential tends to pressure the exchange rate, while a weaker real would add another source of inflationary pressure. “There was a very clear surprise in the United States at this meeting, with the Fed proving more cautious than expected.

“If it is more conservative, we have to recognize our insignificance as a small economy,” he said. “The Central Bank can argue that the level of interest rates is very restrictive. But then why is inflation still above the target and activity still strong? Something does not add up.”

Case for a pause

Val said the current scenario would be consistent with the end of the easing cycle. “We are seeing the economy grow and real income gains. Inflation is also deteriorating in a real way. These levels are incompatible with meeting the target.”

According to Val, Copom’s tone was confusing, and the decision was not strong enough to contain the deterioration in expectations. “A stronger signal would have been that the most likely scenario is for interest rates to remain stable at this level. But the Central Bank did not want to provide direction.”

*By Arthur Cagliari, Bruna Furlani and Hamilton Ferrari — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/

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Companies invest with eye on future and competitiveness

Long-term view and competitive gains shape strategy of leaders honored at the 26th “Executivo de Valor” awards

 

 

Maintaining a focus on long-term projects and improving competitiveness has become the main strategy adopted by the leaders chosen for the 26th edition of the “Executivo de Valor” awards as they seek to keep delivering strong results in a more turbulent and uncertain global environment, marked by wars, protectionism, and a retreat from globalization. In Brazil, the picture is even more challenging because of high interest rates and the October elections.

Opening the event, held at the Rosewood hotel in São Paulo, Frederic Kachar, director-general of publishing company Editora Globo and Sistema Globo de Rádio, said no leader reaches goals alone, without a team aligned with the business. He also highlighted common traits among the winners, such as their ability to adapt to shifts in the business environment, build autonomous and integrated teams, and attract and retain talent.

Kachar also emphasized the importance of shared leadership, with strong teams around the CEO and family members who are a key part of the support network behind successful professional trajectories.

Valor’s editor-in-chief, Maria Fernanda Delmas, highlighted the meticulous work carried out by the jury in selecting the executives who stood out in “a very difficult scenario.” She also stressed the importance of valuing people within companies, citing recommendations from specialists. “The best leader is not the one who has an answer for everything, but the one who creates an environment where the team can flourish. And more important than hiring individually brilliant professionals is being able to build a team that is adapted to the company’s culture.”

Capital costs

The unusual nature of the current geopolitical environment, with simultaneous wars affecting commodity prices and bringing inflation into Brazil, was highlighted by Itaú Unibanco CEO Milton Maluhy Filho. He noted that this dynamic has prompted a reorganization of investor flows, which ended up benefiting emerging markets, including Brazil. “But this is a flow that can leave quickly, just as it came in. What matters more is attracting long-term investment that helps Brazil achieve vigorous growth,” said the bank’s chief executive..

In Maluhy’s view, reducing the cost of capital is essential. “This involves three pillars: interest rates, the institutional environment, and legal certainty. If there are conditions to improve these three points, reforms and transformations in productivity and global competitiveness will also gain strength.”

A forward-looking approach is an important guide. Daniela Manique, Solvay’s CEO for Latin America, said that, at the specialty chemicals company, investment decisions are based on one question: “Does this project make us more competitive, more sustainable, and less carbon-intensive? If the answer is yes, we move forward,” she said. Manique said the focus on heavy investment in the energy transition remains unchanged.

WEG CEO Alberto Kuba is following a similar path. He said the Brazilian maker of electric motors, automation systems, transformers, and generators has centered its strategy on three megatrends that do not change in the short term: sustainability, energy efficiency, and artificial intelligence. “Given all the uncertainties, our focus is on reducing vulnerabilities and risks,” he said.

Of WEG’s 68 plants, 48 are abroad, and the company has been seeking to manufacture products closer to customers to reduce problems related to logistics, supplies, and currency fluctuations. In such an unpredictable scenario, Kuba said, the most sensible way to make decisions is to assess whether the investment is aligned with the company’s long-term goals and to analyze risks and their probabilities, as well as opportunities.

Risk management

Also looking to a broader horizon, Vale CEO Gustavo Pimenta said instability in the current environment should lead to a world more focused on food, energy, and mineral security. Although conflicts between countries affect the flow of goods and generate inflation, Pimenta said this does not change the mining company’s plans: “Our business is medium- and long-term. If we believe iron ore and copper, for example, have positive prospects, we keep investing.”

Miguel Setas, CEO of infrastructure concessions company Motiva, stressed the importance of analyzing the risks inherent to each business and economic environment. The company has been drawing up scenarios on the impact of the war in Iran on oil prices. “We prepared for this crisis by entering 2026 with more than 80% of investments contracted; therefore, execution is mostly guaranteed. Our response to this geopolitical shock is risk management and the adoption of measures that mitigate these risks, in particular being able to bring forward as much as possible the contracting of our investments.” For 2027, more than half of investments have already been contracted.

Caution is a valuable asset in volatile scenarios. Pedro Lima, CEO of coffee company Grupo 3corações, expressed concern about fiscal leverage at the moment. “We are conservative, our debt limit is very carefully managed, very well administered,” he said. The company keeps tight control over expenses, and investments are carefully planned to navigate unexpected developments. “We can have surprises at any moment, because Brazil is like that, so we have to remain cautious at this moment and take care, be resilient and, above all, stay focused on the business.”

Deborah Vieitas, chair of Santander’s board of directors, cited among the key criteria “clarity about risks, which is very important, alignment with the organization’s values and strategy, the long-term impact, and the ability to adapt if the scenario changes.” But she issued a warning against becoming paralyzed by uncertainty. “The speed and quality of the decision — or of the response — make more difference than the search for a perfect solution.”

For the insurance industry, there is a particular feature. “Interestingly, an environment of growing volatility ends up aligning with what we offer. In a more unpredictable world, demand increases for protection, planning, and predictability,” said Paulo Kakinoff, CEO of insurance and financial-services group Porto. Kakinoff said the group continues to expand investments in products, services, technology, and distribution structure, and that the focus is on strengthening the business’s structural capabilities.

Investments remain on track

“The investment bet on the country continues,” said telecom carrier Vivo CEO Christian Gebara, noting that the company invested R$9.2 billion last year. Gebara’s decisions follow the rules of a publicly traded company. “We have a commitment to the market regarding shareholder remuneration, and that is a basis for decision-making, keeping net income growing. All the decisions we make have a very clear focus on generating revenue from EBITDA, cash generation, ending in free cash flow and profit.”

Beto Carrero World is also maintaining its investment plan, with R$2 billion planned for the coming years. The theme park imports all of its equipment and materials. The concern, more than with the exchange rate, is the tax burden and the Import Tax. “This could affect us, but not to the point that we would stop making the investments,” said Alexandre Murad, CEO and chair of the board.

In Brazil, another source of uncertainty is this year’s electoral process. For Santander’s Vieitas, focusing on the long term becomes even more important at this point, and companies must be able to compete in any context.

That is what Embraer has been seeking to do. “It is a global company. We do not expect any impact on our business because of Brazil’s election. On the contrary, our vision is long-term. We have a very well-defined strategic plan, and our focus is to follow that strategy and maintain sustained growth in the coming years,” said CEO Francisco Gomes Neto.

The same recipe has been applied at car-rental and mobility company Localiza. “Elections are part of the country’s democratic environment, and it is natural that, during this period, the market pays closer attention to economic and regulatory issues and to investment behavior. Even so, we understand that companies with a long-term vision can move through different cycles while maintaining consistency in execution, financial discipline, and strategic focus,” said Bruno Lasansky, CEO of Localiza&Co.

“The company continues in the direction that has been defined,” echoed Diego Barreto, CEO of food-delivery platform iFood. However, Barreto noted that legal uncertainty and the lack of economic stability plans to think about the country’s future are the factors that most affect the business. For him, the elections in the second half do not make the scenario more unstable than usual. “The way the discussion takes place has always been part of Brazil, it is not a problem or a difficulty,” he said.

The “Executivo de Valor” awards have ArcelorMittal and Welhub as master sponsors; Alelo and Falconi as sponsors; Audi as the official car; 3 Corações as the official coffee; and Rosewood, Eletromidia, and Febraban as supporters.

By Valor — São Paulo

https://valorinternational.globo.com/

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Meat industry seeks broader ban on antimicrobials

Request comes after European Union removed Brazil from list of countries authorized to export animal products to the bloc

Brazil’s meat industry has asked the Agriculture Ministry to expand restrictions on the use of antimicrobials in the country, according to letters sent to the ministry on Thursday (11) and reviewed by Valor. The request comes in response to the European Union’s decision to remove Brazil from the list of countries authorized to export animal products to the bloc starting in September. The move is intended to signal to European authorities a stricter stance on the use of such products in animal production chains.

The Brazilian Animal Protein Association (ABPA) requested that the ministry ban the use of enramycin, avilamycin and flavomycin in the poultry sector. The measure would expand a rule introduced in May covering phosphonic acid derivatives, including fosfomycin.

In the beef sector, the Brazilian Beef Exporters Association (Abiec) asked the government to extend restrictions to the molecules sodium monensin, salinomycin, lasalocid and narasin.

In April, the ministry published a regulation prohibiting the import, manufacture, commercialization and use of performance-enhancing additives containing avoparcin, bacitracin, zinc bacitracin, bacitracin methylene disalicylate and virginiamycin. The Agriculture Ministry did not respond to requests for comment.

The industry groups stressed to the ministry that the request comes amid ongoing discussions with the European Union regarding requirements related to antimicrobial use in animal production, which are set to take effect on September 3.

In the letters, ABPA and Abiec said that although the European decision is linked to proof of official inspection and control mechanisms ensuring the non-use of such drugs in animal production, expanding the prohibitions could “strengthen Brazil’s regulatory position, support efforts led by the federal government with European authorities and demonstrate the country’s commitment to the principles of prudent antimicrobial use and one health.”

In a statement to Valor, ABPA and Abiec confirmed that the letters had been sent. “The initiative aims to support Brazil’s regulatory harmonization efforts with international standards and strengthen the country’s position in ongoing discussions with trade partners, especially the European Union,” the associations said.

*By Rafael Walendorff, Globo Rural — Brasília

Source: Valor International

https://valorinternational.globo.com/

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APM Terminals opens Latin America’s first fully electrified container terminal

With more than R$2bn in investments, the facility expands the capacity of Pernambuco’s port complex by 55% and is expected to handle up to 400,000 TEUs annually in its initial phase

 

 

 

APM’s 100% electric container terminal in Pernambuco
APM’s 100% electric container terminal in Pernambuco — Photo: Divulgação

APM Terminals, the port terminal division of Denmark-based A.P. Moller-Maersk, officially inaugurated its new container terminal at the Suape Industrial Port Complex in Ipojuca, Pernambuco, on Friday. Built with investments exceeding R$2 billion, the facility is the first fully electrified container terminal in Latin America and was designed to increase the container-handling capacity of the Pernambuco port complex by 55%.

In its initial phase, the terminal is expected to handle up to 400,000 TEUs (twenty-foot equivalent units) annually, with the potential to connect Pernambuco to markets across Latin America, North America, Europe, and Asia.

“More than a new port asset, this terminal expands the Northeast’s capacity, integrates Brazil into the world’s main trade routes, and raises the region’s operational standards with a fully electrified infrastructure,” said Daniel Rose, managing director of APM Terminals Suape and Pecém.

The inauguration ceremony was attended by Vice President Geraldo Alckmin, Pernambuco Governor Raquel Lyra, Deputy Governor Priscila Krause, Ports and Airports Minister Tomé Franca, Danish Ambassador to Brazil Eva Bisgaard Pedersen, Ipojuca Mayor Carlos Santana, and Suape Port CEO Armando Monteiro Bisneto, among other government officials and business representatives.

A study conducted by consulting firm A&M Infra and law firm Navarro Prado Advogados in partnership with APM Terminals projects that the new terminal could generate up to R$4.8 billion in additional exports, approximately R$4.9 billion in gross domestic product, and more than 43,000 potential jobs across supply chains linked to foreign trade.

Officials at the event highlighted the terminal’s importance for expanding both state and national port capacity and, in particular, strengthening Suape’s strategic role by diversifying Brazil’s logistics options beyond ports in the South and Southeast regions.

“Modernizing Suape means modernizing Brazil. The delivery of this new terminal represents a major leap forward for the infrastructure of Pernambuco, the Northeast, and Brazil’s competitiveness. It means lower costs, greater integration with global markets, more opportunities for agribusiness and industry, and stronger job creation,” Vice President Geraldo Alckmin said, describing the project as an example of successful cooperation between the public and private sectors.

Governor Raquel Lyra said the terminal reinforces Pernambuco’s position in international trade.

“With this new development, Pernambuco strengthens the Northeast’s logistics competitiveness, creating conditions to attract new businesses, generate jobs, and support the economic development of our state while connecting us even more closely to the world,” she said.

Ports and Airports Minister Tomé Franca highlighted the continued flow of foreign capital into Brazil’s port sector.

“Despite global instability, the port sector has literally become a gateway for investment into the country, demonstrating international confidence in Brazil’s role. This new APM Terminals container terminal is an example of that confidence,” he said.

Remote operations

The terminal’s key technological differentiator is the full electrification of its equipment, which accounted for nearly R$235 million of the total investment, along with the remote operation of major assets, including ship-to-shore (STS) cranes and rubber-tired gantry (RTG) cranes. According to the company, the setup represents a benchmark for innovation in Latin America.

The facility covers approximately 495,000 square meters and features a 430-meter quay with a depth of up to 15.5 meters, enabling it to accommodate large vessels operating on major international routes. It has a static storage capacity of around 12,000 TEUs and more than 300 power outlets for refrigerated containers.

According to the company, construction of the terminal generated more than 2,000 direct and indirect jobs.

Suape Port CEO Armando Monteiro Bisneto said the start of operations “reinforces the strategic position of our industrial port complex on both the national and international stage” and “sends a clear message to the world that Pernambuco is ready to receive major investments and lead a new cycle of sustainable growth, innovation, and competitiveness.”

Suape is APM Terminals’s second operation in Brazil’s Northeast. The company has operated at the Port of Pecém, Ceará, for more than two decades and continues to expand its presence there.

According to APM Terminals, the main obstacle to logistics development in the Northeast is not demand but the expansion of infrastructure and installed capacity, which is essential to unlock new trade flows and attract long-term investment.

Globally, APM Terminals operates terminals in more than 60 locations across 35 countries and employs more than 20,000 people. In 2025, the company recorded 27,000 vessel calls and handled 25.8 million container moves across its terminal network.

*By Naiara Bertão, Prática ESG — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Central Bank rules begin overhaul of Brazil’s crypto market

Higher regulatory costs may reduce license applications and accelerate consolidation among virtual asset service providers

 

 

 

The Central Bank’s new regulation for virtual asset service providers has already started reshaping Brazil’s crypto market as the deadline approaches for companies to apply for authorization.

Companies in the sector are reviewing their structures, recalculating costs, and assessing whether they will have enough capacity to operate with their own license or whether they will need to team up with larger players to continue offering services in the country.

The deadline to apply for a license ends in late October. Until then, companies involved in intermediation, custody, infrastructure, tokenization, or other services linked to virtual assets will have to decide which business model they will follow under the country’s new regulatory framework.

Industry executives say the regulation provides legal certainty and tends to raise governance standards, but it also imposes a more expensive and complex transition than part of the market had expected. The main concern is the increase in regulatory costs.

For virtual asset service providers, known as VASPs, the new minimum capital requirements range from about R$10 million to R$37 million, depending on the activity. Before the Central Bank published the final rules, industry sources estimated that between 150 and 200 companies could seek authorization.

The current forecast is that not much more than 50 companies will file applications. Some companies are expected to seek partnerships, operate through licensed structures, assess mergers and acquisitions, or reduce the scope of their activities in the country.

Costs drive consolidation

For Julia Rosin, CEO of the Brazilian Association of Crypto Economy (ABcripto) and policy manager for Latin America at Coinbase, the sector already expected regulation to arrive, but some of the requirements ended up far from the expectations formed during the public consultations.

“Everybody knew the rules were coming, since we had public consultations. What happened were two things: some items came out very different from what emerged from the consultations, and problems were identified when companies started implementing the rules internally,” she said.

Rosin said the increase in regulatory costs has led companies to seek alternatives to make market entry cheaper, whether through the hiring of third parties, internationalization, mergers, or the sale of operations.

“You end up creating layers of complexity in the provision of a service because of the demand created by regulatory costs,” she said.

According to people familiar with the matter, the trend is toward concentration. Smaller companies are considering seeking investors, selling portfolios, signing agreements with larger companies, or operating through licensed structures.

At the same time, companies with more capital have begun strengthening areas such as compliance, risk, internal controls, regulatory legal teams, technology, cybersecurity, and auditing. Industry sources also report a shortage of professionals who combine experience in the regulated financial market with technical knowledge of blockchain and virtual assets.

Technology infrastructure has also become another focus beyond staffing. Companies report doubts about certifications, audits, security tests, contingency plans, and system validation.

Support structures

According to João Dunin, chief operating officer of Z.ro Bank, domestic and international exchanges have been looking for providers capable of offering infrastructure for Pix, Brazil’s instant payment system,, individualized accounts, segregation of funds, compliance, know your customer (KYC), procedures, and reporting to the Central Bank. “You regularize the crypto side, but there are also many little legs in the traditional fiat world,” he said.

Dunin said some companies are trying to avoid having to build a full local operation only to handle payments and regulatory obligations. “You will focus on your business. Your business is crypto. Pix transfers, reporting to the Central Bank, that stays in-house,” he said.

Dunin said he has noticed an increase in demand for this type of structure since the regulation was published. According to him, companies began reviewing their models before the final deadline to request authorization.

“We have a deadline. That deadline is October 29,” he said. “The Central Bank is defining the form of the audit, how it will work, evidence and so on. But to audit an exchange operation, it will take two months, maybe three, depending on the level of the audit.”

Among the points that still raise questions among companies in the sector are how information should be reported to the regulator, transition rules for certain services, requirements linked to certifiers, and integration with already regulated structures such as Pix.

For ABcripto, delays in resolving these issues could also affect the regulator itself.

“The longer they take to give these answers, the later people will apply. So they will have an overload of applications,” Rosin said.

Central Bank rules out step-by-step manual

On the Central Bank side, Gustavo Martins dos Santos, a representative of the Financial System Regulation Department said in an interview with Valor in early April that there will not be a detailed manual to guide companies through each step.

“There will be no manual. The rule sets out what is required in an open way, and we will deal with it case by case,” Martins dos Santos said.

He also said the required certification and controls help give the regulator greater confidence that companies seeking to operate in the market have minimum requirements in place.

“The problem when someone enters the market is this: they enter, but removing them is difficult. The administrative cost for society of removing someone from the market is very high,” Martins dos Santos said.

Even among sources critical of the transition design, there is consensus that regulation is necessary. The Central Bank’s entry is expected to raise standards for anti-money-laundering prevention, governance, information security, and accountability.

The risk raised by industry participants is that the pursuit of greater security may reduce the diversity of business models and accelerate market concentration.

*By Lara Asano  — São Paulo

Source: Valoar International

https://valorinternational.globo.com/

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