He is currently the director of the International Monetary Fund’s Western Hemisphere Department
10/25/2022
Ilan Goldfajn — Foto: Silvia Zamboni/Valor
Brazil has officially nominated the former Central Bank President Ilan Goldfajn as a candidate to run the Inter-American Development Bank (IDB) this Monday. Valor reported the negotiation for Mr. Goldfajn to be the nominee in the last weeks. He is currently the director of the International Monetary Fund’s Western Hemisphere Department.
In a note, Economy Minister Paulo Guedes said that Mr. Goldfajn “combines broad and successful professional experience in the public sector, multilateral organizations, and the private sector, in addition to a solid academic background, which unequivocally qualifies him for the position.”
Mr. Guedes also said in the note that the “Economy Ministry, supported by the Ministry of Foreign Affairs, will take steps so that Brazil, which is the second-largest shareholder of the bank, assumes the Presidency of the IDB for the first time since its creation.” According to the minister, Brazil “is committed” to “the process of regional integration, driving the development of green infrastructure in transport, energy and telecommunications among the institution’s member countries.” The goal is to lead to a “greater integration of Latin America and the Caribbean into regional and global value chains, with expected gains in productivity, employment and income for the region.”
“In addition, it will be important to seek greater private participation wherever possible in an effort to significantly increase resource mobilization for financing the region’s sustainable development projects,” the ministry said.
The IDB has been chaired on an interim basis by Honduran Reina Irene Mejía Chacón since September, when American Mauricio Claver-Carone was removed from office following an internal investigation that revealed his involvement with a female employee. The election for the presidency of the development bank will be held on November 20.
Company currently operates 74 weekly flights in Brazil and is undergoing restructuring
10/25/2022
Carlos Antunes — Foto: Divulgação/Claudio Gatti
With an eye on the growth in demand for international travel, TAP Air Portugal, the second-largest international airline in Brazil in terms of seats offered, will be able to reach its pre-pandemic supply level on the São Paulo-Portugal route by the end of this year for the first time since the beginning of the pandemic.
This is the estimation of Carlos Antunes, the company’s director for Latin America. The pandemic has led the group to a major restructuring, supported by financial support in the order of €2.3 billion – the company is likely to receive more €900 million soon, according to Mr. Antunes.
The company currently operates 74 weekly flights in Brazil. But the crisis caused by Covid-19 made the operation shrink dramatically. “In São Paulo, we got to the point we had one flight a week,” recalled the executive, about the most challenging moments of the pandemic.
“One of the group’s strengths is Brazil, the second most important market after Portugal. Of the total passengers we transport from Brazil, 45% go to Portugal and the rest go to other destinations via connections,” he said.
TAP has the second-largest share of the Brazilian market among international airlines, with 11.7% of demand (measured in revenue passenger kilometres or RPK) in the year through August – it loses only to Latam, which holds 15.2% of demand, according to data from the National Civil Aviation Agency (ANAC).
The Portuguese airline has gradually resumed its offer and in the end-of-year festivities it will add one more flight in the Guarulhos-Lisbon direction, totaling 21 per week – the same it operated in 2019. From São Paulo, the company has also already recovered its three weekly flights to Porto.
But the group still has challenges ahead. It currently operates 74 weekly flights in Brazil, or 84% of its pre-pandemic level – in 2019, there were 86 flights. By the end of the year, the estimate is to reach 89%. Since March the group has resumed flying to all of its 11 destinations in Brazil – the last was Porto Alegre.
TAP’s overall operating revenue in the second quarter was about four times higher than the same period last year, totaling €830.6 million. The figure is equivalent to 99% of the revenue for the same period in 2019, before the pandemic. At the end of the quarter, however, the group was still left with a net loss of €80.4 million. Part of the loss comes in the face of higher costs, in addition to the depreciation of the euro.
The company is 100% state-owned. It had David Neeleman, founder of Azul, as a shareholder until 2020. In the last years, TAP is undergoing a restructuring after receiving a €2.55 billion contribution from the European Commission to overcome the crisis. More €900 million euros are expected soon, said Mr. Antunes.
Part of the group’s strategy is to divest assets. As a result, the company closed its aircraft maintenance operation in Galeão (Rio de Janeiro), whose warehouse, the largest in Latin America, was taken over by United.
The challenge today is to understand the new behavior of the clients. On the leisure side, the demand is strong, according to the executive. On the corporate side, demand is between 70% and 80% of pre-pandemic overall.
“Companies have learned to work remotely. And they are still working with a restricted budget. In 2023, we are going to see a supplement of corporate budget for travel,” he said.
The purchasing curve, which used to be around three months in advance, is now around 45 days. “The traveler is still insecure about whether in three months we will have some political or health event,” he said. The international trip, he said, ends up competing for space in the household budget with the replacement of a car or house renovation.
Another challenge for the airlines is to manage the rising costs, which are reflected in more expensive tickets. The executive said that before, the ticket to Europe used to cost something like $600, while today it is $800.
“The problem is that the real has devalued a lot. So before you paid something like R$3,500 on the ticket and today it is almost twice this amount,” he said. Looking ahead to the second quarter of 2023, the executive pointed out that tickets are starting to approach pre-pandemic prices, but in dollars.
Assets in the country are estimated at $200 million, sources say
10/25/2022
Luis Bueno — Foto: Sergio Zacchi/Divulgação
Suzano agreed to buy Kimberly-Clark’s tissue paper operation in Brazil. The two companies did not reveal the value of the transaction, but sources estimate that the U.S.-based company’s assets in the country are valued at around $200 million. With the acquisition, Suzano will have a 22% market share and gains muscle in the Southeast region, Brazil’s largest consumer of toilet paper.
Originally, Kimberly-Clark put its Latin American operations up for sale and wanted to sell the whole package with a single buyer. Sources said that the Latin American operation was valued between $750 million and $1 billion. J.P. Morgan, which advised the company, is still tasked with selling the regional business.
In Brazil, Suzano was competing with Singapore-based company RGE, the owner of Bracell. According to a source familiar with the deal, the Brazilian company presented two proposals, one for the whole package and another for the tissue assets in Brazil, which was seen as more attractive.
With the acquisition, Suzano becomes the owner of traditional retail brands, such as Neve, and of a tissue plant with an annual capacity of 130,000 tonnes in Mogi das Cruzes, São Paulo. The company already had tissue plants in Mucuri (Bahia), Imperatriz (Maranhão) and Cachoeiro de Itapemirim (Espírito Santo), as well as units in Belém (Pará) and Maracanaú (Ceará). “The complementarity of product categories and geography will allow us to further improve the service provided to different customers and offer a more complete portfolio to consumers throughout Brazil,” said Luís Bueno, Suzano’s head of consumer goods and corporate relations, in a note.
Kimberly-Clark’s other brands in the country, such as Kleenex and Scott, will be licensed to Suzano for a “determined term,” according to a statement sent by Suzano to the Securities and Exchange Commission of Brazil (CVM). The closing of the deal is subject to certain conditions precedent, including approval by CADE, Brazil’s antitrust regulator. Diaper and pads operations were not included in the sale.
In a statement to the market, Kimberly-Clark said it sold its tissue operation and that the multinational’s efforts in Brazil “will focus on accelerating the pace of growth of its Huggies, Intimus and Plenitud personal care brands.” “On a global scale and in Latin America, Kimberly-Clark’s tissue and professional categories continue to play a key role in the company’s portfolio, with leading brands in many of the markets where it operates.”
Suzano, owner of brands Mimmo and Max Pure, is already the leader in tissue the North and Northeast regions, while Kimberly-Clark operates mainly in the Southeast region. Only the Neve brand has a nationwide share of 8.3%, according to Euromonitor data. According to the consulting company, the sales of the toilet paper segment reached R$9.08 billion last year.
With the buying of Kimberly-Clark’s assets, Suzano makes the opposite way of the American giant. Until recently, Kimberly-Clark was also a large pulp producer, but began buying raw material from competitors because its costs as a producer increased, said an industry source.
The Brazilian tissue industry has been the scene of major merger and acquisition operations for at least four years and announcements of investment in new plants. This year alone, the amount exceeds R$4.2 billion, excluding the sale of Kimberly-Clark’s assets.
In June, Softys, owned by the Chilean group CMPC, took over the Rio de Janeiro-based Carta Fabril, producer of the brands Cotton and Coquetel, and took the leadership of the Brazilian market of toilet paper, with a share of almost 30%. The acquisition was closed for R$1.14 billion, excluding debt. Previously, Softys had already acquired Paraná-based Sepac for R$1.3 billion.
Santher, a traditional Brazilian tissue company, has also changed hands. In June, the Japanese companies Daio Paper and Marubeni acquired it for R$2.3 billion.
The new cycle is also marked by the arrival of more competitors in the domestic market. Bracell itself has already confirmed that it intends to install a tissue plant next to the pulp mill in Lençóis Paulista (São Paulo), with a total installed capacity of 240,000 tonnes per year.
Before the pandemic, 170,000 tonnes of textile waste were disposed of inappropriately in landfills in Brazil
10/24/2022
The textile sector has been increasingly pressured by consumers and investors to reduce the use of natural resources, pollute less, and manage waste more efficiently. And in Brazil there are examples of manufacturers and retailers that are reacting to this pressure.
Before the pandemic, in 2019, 170,000 tonnes of textile waste were disposed of inappropriately in landfills in the country, according to estimates by the Brazilian Textile and Apparel Industry Association (Abit). The production in the following year reached 8 billion pieces of garments and accessories. And the concern is not only with the destination of the product that the consumer no longer wants to use, but how to produce, polluting less.
“Improving the production process is crucial for reducing water, energy and inputs,” says Victoria Santos, competitive intelligence coordinator at the Chemical and Textile Industry Technology Center of the National Service of Industrial Learning (Senai) in Rio de Janeiro. “The challenges are great globally, but in Brazil it is more challenging because we have reliable data only in some stages.”
The level of uncertainty becomes critical when we observe the emission and generation of residues both from production and post-use processes,” she says. She reminds us that there are almost 25,000 companies in the sector in the country, most of them small and medium-sized, which have more difficulties to present data and make this productive chain. “Without a better, more strategic management, this transition is more difficult,” she says.
The urgency of the scenario has led companies, especially large groups, to adopt best practices. Lupo is an example. The company has been acting in sustainability for some time, but has been tracing more audacious goals, especially on the environmental front. Among the initiatives are the reuse of water and more efficient dyeing processes. To this end, it has invested in recent years in machines and technologies that help reduce water consumption during production. Now the brand is changing the packaging of its products, which has already resulted in a 90% reduction in paper use.
Liliana Aufiero, — Foto: Ana Paula Paiva/Valor
“The reduction of paper use in packaging was something we were already studying, and the result was very positive because it also added to the reduction of solid waste,” says Lupo’s CEO Liliana Aufiero. The new packaging, she explained, allows the customer to see the product and the color, without having to open it. The change started with the line of seamless underwear and was extended to the products of the Lupo Sport brand. Soon it will reach the other product lines.
Malwee is focusing on sustainable products. According to Guilherme Weege, CEO of the Malwee Group, a garment is considered to be sustainable if it has at least 30% less polluting or recycled raw materials in its composition and/or a 50% reduction in the environmental impact (waste and use of water and energy) of the process. Since then, at least 92% of the pieces have sustainable processes, jeans being the main example. The company has reduced the use of water in jeans manufacturing by up to 98% and zeroed out the use of harmful chemicals.
Another company that has committed to sustainable goals is Lycra Company. By 2030, the company wants to reduce 40% of the waste produced in the factories, 10% of the water footprint, and treat 100% of the solid waste. By 2023, all products are expected to have at least one sustainable attribute.
One of the main bets to achieve the sustainable strategy is the new generation of bio-derived Lycra yarn. The company recently signed an agreement with Qore, a joint venture between Cargill and the German technology company Helm, for the first large-scale commercial production of bio-based elastane, with Qira, a new generation of 1,4-butanediol (BDO), as one of its main ingredients.
The new product, which will use corn produced by farmers in Iowa (U.S.), is expected to reduce CO2 emissions by up to 44% compared to material with fossil fuel-based resources. The first renewable Lycra yarn made with Qira will be produced by Lycra’s Singapore facility starting in 2024.
The company already uses Lycra® EcoMade technology, made with 20% pre-consumer recycled material and which is certified by the Global Recycled Standard (GRS), responsible for verifying and tracking recycled material.
In retail, C&A, Riachuelo, and Farm are some of the large companies that have included ESG actions in their strategies.
At Farm, for example, 5% of the 2023 summer collection are jeans made with lower carbon and microplastic release, that go through washing with biodegradable inputs in certified sites. Since 2019, about 162,000 jeans were produced, using 133,000 kWh of electricity less than in common processes, besides having 100% of the cotton used with ABR (Responsible Brazilian Cotton) certificate. The products are part of the re-Farm line, an upcycling (reuse) project started in 2015.
Constitutional amendment proposal includes creation of uniform rate, non-cumulative
10/24/2022
Debora Freire Cardoso — Foto: Divulgação
A consumption tax overhaul can not only bring production gains for all major sectors, such as industry, agribusiness and services, but also bring simultaneously greater economic growth and more progressiveness, with reduced inequality.
This is one of the conclusions of a study that simulates the macroeconomic and distributive impacts of the constitutional amendment proposal (PEC) 45/2019. According to the PEC, a Tax on Goods and Services (IBS) would be created from the unification of five taxes – federal taxes IPI, social taxes PIS and Cofins, the state sales ICMS and the municipal tax ISS. The proposed IBS follows the model of the Value-Added Tax (IVA), non-cumulative, with a uniform rate and tax-free investments, among other features.
Authored by professors Edson Paulo Domingues and Debora Freire Cardoso, with the Federal University of Minas Gerais, the study was prepared at the request of the Center for Fiscal Citizenship (CCiF) and is to be discussed Monday in a debate on the sectorial impacts of a overhaul in consumption tax promoted by the think tank.
Based on data from the 2015 national accounts calculated by statistics agency IBGE, the study considered four scenarios. One of them with the replacement of the five taxes by the IBS, without a selective tax. A second scenario adds this replacement and a selective tax on tobacco, beverages, and fossil fuels. Two more scenarios were also simulated adding to this the effects of long-term productivity gains, one at a more conservative level and the other more optimistic. The premise was a overhaul with a neutral impact on tax collection as a proportion of GDP. In the first scenario, the IBS tax rate was estimated at 26.35%, and in the others, at 24.19%.
The study predates the recent sales tax ICMS cuts in fuels, electricity, and telecommunications. For Ms. Cardoso, the changes during this year have no effect on the results because the horizon of the simulation is not short term, and they are unlikely to be maintained permanently.
The results show that the biggest gains from the overhaul would come from industry because, says Mr. Domingues, it is the sector most dependent on investments and in which the effective taxation today tends to be higher due to the large chain of inputs in production.
In the scenarios with no productivity effect, the increase in industry activity exceeds 8%, while in the scenarios that incorporate productivity increase, the effect reaches 16.7%, with the most conservative level, and 25.7% with the most optimistic level.
But the beneficial effect of the overhaul would also reach the other major sectors of the economy, says the study. Even in scenarios with no increase in productivity, there would be an increase in production in agriculture and cattle raising (a little more than 3%) and in the services sector (around 2.5%). According to the study, this result is due to the fact that the effects of the reduction of cumulativeness and the increase in family income more than offset the increase in the IBS rate compared to the current taxation in some subsectors of agribusiness and services. With the productivity gains, the positive impact on the agribusiness activity would be 10.6% in the conservative scenario and 18.2% in the optimistic one. For services, the favorable effect would be 10.1% for the conservative productivity gain and 18% for the optimistic one.
Taxation on consumption today, says Mr. Domingues, is “badly placed, badly distributed, with very heterogeneous rates.” The study shows that a homogeneous tax rate already brings gains for GDP, investments and consumption because the system today is very inefficient.
The study also details the impacts on 66 industries. In this detailing, the industrial sectors are also the ones with the best performance in terms of increased production. The construction industry, Mr. Domingues points out, is the one with the best performance, with a gain of around 15% in the first two scenarios. In agribusiness, all the main sectors – agriculture, cattle-raising and forestry production and fishing – have growth in all four scenarios, the same happening with the food industry.
In the case of services, although most sectors benefit in all scenarios, says the survey, some branches, such as food away from home, personal services, and private health and education, present a relative fall in the level of activity in the first two scenarios.
Mr. Domingues explains that the fall is due to the nature of these services, which are more aimed to end consumers, with a lower proportion of intermediate inputs in production, and would benefit less from the reduction in cumulativeness that would come from the overhaul. In scenarios in which the productivity effect is considered, he points out, even those service branches would have a positive impact.
Mr. Domingues points out that the effect on economic activity is only one of the impacts of the overhaul. There is also, he recalls, an effect on cost reduction, which happens in all 66 industries in the four simulated scenarios. “Private education, for example, may grow less than industry, but it will become more profitable because its cost of operation will fall.”
The study also shows an increase in household purchasing power measured as a proportion of income. The beneficial effect would come to all groups, but especially to the lower income brackets. In the scenarios that consider the effect of productivity, the gains are more homogeneous among families in 11 income groups.
Despite that, the benefit is greater for lower income families. According to Ms. Cardoso, this happens because the tax overhaul would bring a pattern of heterogeneous sectorial effects, reducing the costs of industry and food production more than those of services. With this, the weight of the consumption basket of the poorest families is reduced more than the consumption basket of the richest, relatively speaking.
In the current system, she says, the consumption basket of higher-income families is more intensive in services and less taxed in relative terms than the consumption basket of poorer families, which is more intensive in goods.
“When discussing tax changes, in general there is the usual opposition between efficiency and equity. But the Brazilian tax system is so cumulative and penalizes the production of certain goods so much that there is no such trade off. There would be both an efficiency gain and a reduction in inequality with a consumption tax overhaul,” says Ms. Cardoso. This effect would be even greater associated with the personalized exemption model, with the devolution of consumption tax paid on the basic food basket to lower income families.
Brazilian company, the world’s leading maker of aircraft with up to 150 seats, has been gaining customers in other segments
10/24/2022
Embraer estimates that the global demand for new aircraft of up to 150 seats in the next 20 years will be 10,950 units — Foto: Divulgação
Embraer, the leading maker of aircraft with up to 150 seats, has been gaining strength to advance on its rivals’ territory abroad with the growing demand for the E-Jets E2 family. With the E195-E2, the Brazilian company has explored segments disputed by Airbus’s A220 or the smaller models in Boeing’s 737 family, and won new customers.
In July, it beat Airbus and won a firm order of 20 E195-E2 aircraft from U.S.-based Porter, worth $1.56 billion. In the same month, it reached the mark of 12 units of E195-E2 delivered to the regional division of the Dutch company KLM, which consolidated itself as the largest operator of Brazilian jets in Europe.
Just over two weeks ago, it received its first order from a Middle Eastern company, SalamAir. The firm order for six E195-E2s, with purchase rights for another six jets, drew attention because, until then, Oman’s low-cost airline only flown Airbus aircraft.
“Although it is an order of moderate size, it signals that customers flying Airbus are also studying Embraer models,” Itaú BBA analysts Daniel Gasparete, Gabriel Rezende, and Luiz Capistrano wrote in a report earlier this month. Half of the order, valued at $935 million, is expected to be included in the third quarter backlog – in June, the company’s firm order backlog stood at $17.8 billion. In the first half of the year, five E195-E2s were delivered, three of them between April and June.
On Thursday, the Brazilian company said that one of the world’s main travel companies, the European TUI, chose the E195-E2 to expand its fleet, which highlights the model’s versatility. The group will receive three aircraft through a leasing agreement with AerCap and will incorporate them into the Belgian operation.
One of the main advantages of the E2 is the 25% reduction in fuel consumption per seat compared to its first generation. In addition, it is 50% less noisy than others in its class.
Embraer estimates that the global demand for new aircraft of up to 150 seats in the next 20 years will be 10,950 units, of which 8,670 are jets and 2,280 turboprops, with a market value of $650 billion.
In a report presented during the Farnborough International Airshow, the company projected that world demand for air travel, measured in revenue passenger kilometers (RPK), will grow at 3.2% per year (considering the compound annual growth rate, CAGR) through 2041, slightly below the 3.3% rate estimated a year earlier because of the short-term slowdown in the global economy, lingering effects of the Covid-19 pandemic – considered as a region, China remains in the bottom in terms of flight resumption – and the Russia-Ukraine war.
In the battle for new orders, the Embraer E2 jets also suffered some defeats, as in the choice of Australia’s Qantas for up to 134 of Airbus’s A220 and A320neo aircraft instead of Brazilian models or Boeing’s 737 Max. Even so, the Brazilian company managed to get “dangerously” close to its rivals in the smaller segments.
In October, Embraer shares went up 7.6%. In the year, however, it is down nearly 50% after gaining almost 200% in 2021.
Plan is to try and replicate in other countries model developed in Brazil
10/21/2022
IHS closed five acquisitions in two and a half years — Foto: Reprodução/IHS
IHS, TIM Brasil’s partner in the neutral network company I-Systems, is looking for fiber optic providers and towers to buy in Brazil, other Latin American markets and in Africa, said Fares Nassar, head of Latin American region at IHS.
“We will look at any tower and fiber business,” he said, including the assets that Telecom Italia’s TIM, América Móvil’s Claro and Telefónica’s Vivo will have to sell as a condition imposed by regulators for the purchase of rival Oi’s mobile business. Among the deals in progress is Alloha Fibra, a broadband provider owned by private-equity firm EB Capital.
Mr. Nassar said the company has no interest in a nationwide or international backbone (transport network), only in access network. Alloha has 110,000 km of backbone. In this case, if there is an agreement to buy Alloha, “it would be interesting to slice” the asset, said the executive, who participated in a debate about neutral networks at Futurecom, a telecoms event, on Thursday.
The search for assets includes other Latin American countries. IHS already operates in Colombia and Peru. In Africa, it has a presence in Nigeria – “an interesting market because it has the same population as Brazil and only 3% of houses passed by fiber.” Mr. Nassar’s plan is to try and replicate in these countries the model developed in Brazil. He said there is no interest in investing in data centers, except for small data centers at the ends of the networks.
As for an eventual consolidation of the large neutral network providers, the executive said: “The market demands a much greater speed than any of us can supply. We will cover Brazil, then we will start fighting.”
IHS closed five acquisitions in two and a half years – CSS, Centennial Torres, Skysites (a small website company), 51% of TIM’s fiber network, and GTS, also of towers. The investment in access networks totaled $1.3 billion.
In the purchase of TIM’s network, it received half of the infrastructure in fiber and half in fiber to a central office, being complemented by copper. Nassar said that everything will be converted to fiber to the home (FTTH). Currently, I-Systems has in Brazil 7,000 towers and 7 million homes with fiber passed in front, in 40 locations. Of the total, about 2.8 million have a copper network and 4 million have fiber.
Government opened public consultation on most effective ways to limit or remove commodities linked to deforestation from supply chains
10/21/2022
Soybean plantation in Pará: crop may be affected in case of restriction in the U.S. — Foto: Claudio Belli/Valor
The United States government has taken a new step to define trade restrictions aimed at prohibiting commodities coming from deforested areas as of December 2020, following the example of what the European Union is preparing. The measure may impact 10% of Brazilian exports to the American market.
The State Department, in conjunction with Customs and Border Protection, the Office of the United States Trade Representative (USTR), and other government agencies, opened this week public consultation to receive input on the most effective ways to limit or remove commodities linked to deforestation from supply chains, and to encourage the procurement of sustainably produced agricultural commodities.
One question submitted by the U.S. government in the public consultation is whether all “soft commodities” should be covered by trade restrictions, or just some, citing beef, soybeans, coffee, palm oil, cocoa, pulp, and rubber, which would account for three-fifths of deforestation globally.
The value of trade referring to these products in the public consultation exceeds $3 billion in Brazilian exports to the U.S. (data for 2021), equivalent to about 10% of Brazilian exports to the U.S. market, according to a preliminary impact analysis made by lawyer Rodrigo Pupo, with MPA Trade Law.
Currently there is already a bill going through the U.S. Senate to establish due diligence on legal and illegal deforestation in supply chains for certain commodities.
“The difference with this legislative proposal is that it does not include coffee, which is now in the public consultation, but includes coffee products, which increases uncertainty about the measure and certainly the trade impact,” said Mr. Pupo.
Washington will receive opinions from different interested parts by December 2. Then government agencies will prepare a report for President Joe Biden outlining options for trade restrictions. The USTR must identify foreign countries without adequate and effective protection against deforestation caused by the production of commodities that are likely to enter the United States, and point out the potential risk of each country identified.
There are several other bills introduced in Congress involving environmental policies globally that may affect bilateral relations. One of them directs the Secretary of State to engage with Brazil on environmental enforcement, sustainable development, and emission reduction efforts.
In a recent report on national security strategy, the Biden administration included the goal of mobilizing funding and other forms of support to promote conservation of the Amazon rainforest.
The European Union is well ahead in its plan to ban imports of agricultural commodities linked to deforestation. The goal in Brussels is for the final text of the future regulation to be agreed upon by the European Commission (the EU’s executive arm), the European Council (of European leaders), and the European Parliament before the COP27, which will take place in November in Egypt.
The European regulation will ban the use of several “high forest risk commodities.” The European Parliament’s specific proposal corresponds to 80% of Brazilian agribusiness exports or 40% of total exports to the EU, adding up to $14.5 billion in sales to the bloc in 2021.
Sengi Solar wants to be more than just an alternative to China
10/21/2022
Everton Fardin — Foto: Divulgação
With the inauguration of the first 100% Brazilian photovoltaic module factory, Sengi Solar wants to be more than an alternative to China — the source of most of the solar panels supplied to the world — and hopes to open the door for new manufacturers of solar power components to establish in the country, at a time when Brazil is witnessing the power source increase its installed capacity at a fast rate. Sengi — a company belonging to the Tangipar group, in Paraná state — which operates in the distribution of photovoltaic equipment, has invested R$440 million in the construction of two module factories.
The first one, in Cascavel, also in Paraná, will be officially inaugurated this Friday with operations in one shift, and the company expects to open the other two shifts early next year. The second plant, in Ipojuca (Pernambuco), is scheduled to start operations in mid-2023. The two plants combined will be able to produce 1 gigawatt per year, said Everton Fardin, the company’s CEO. He says that between the first conversation and the production of the first photovoltaic module, there was an interval of only nine months.
To meet production, Sengi still depends on importing raw materials, all of which, according to Mr. Fardin, come from first-line suppliers. However, the company has already started conversations to obtain local supply. Sengi has signed negotiations, for example, with a multinational glass manufacturer with Brazilian production to supply the raw material to the company, whose name was not disclosed for strategic reasons — the glass is one of the main raw materials for the manufacturing of the panels, and is currently imported from China.
“The company saw an opportunity and said that if we guaranteed a demand of 1 GW, it would provide the glass needed for production,” said Mr. Fardin. Recently, solar power has surpassed the 20 GW threshold, 14 GW of which are small generation plants, and has become the third most used source of electricity in the country, behind wind power (24 GW) and hydro (109 GW). The growth in the country would have been even greater, but the evolution may be affected by the disorganization of production chains, caused by the resumption of activities in the world and the war in Ukraine.
For the executive, the current scenario allowed the decision on the plant in Brazil. “We understand that China was starting a deindustrialization process, and this is a very strategic product for Brazil and that it is the right time to develop this product in the country,” said Mr. Fardin.
Sengi’s initiative, according to Mr. Fardin, can stimulate other entrepreneurs in the segment to bet on the country as a competitive productive hub.
Unlike wind power generation, which counts on Brazilian suppliers of components such as wind blades and towers, solar generation did not manage to form a local chain.
The executive says that the company saw the level of technology evolution decelerate in comparison to what happened in the past, which facilitated the decision to bet on Brazilian production — the company adopted the most up-to-date technology for manufacturing, whose updating cycles have intervals between six and seven years. Each of the assembly processes takes 25 seconds on average.
“The module technology has reached such a level that the changes are small [between cycles]. We have already sized the plant so that in the next six or seven years it will still be competitive in the market.”
Mr. Fardin also said that the company is in talks with research institutes, universities, and consulting companies to develop research and development (R&D) projects related to the development of national solar technologies. Part of the funds for the implementation of the plants came from the Program in Support of Technological Development of the Semiconductor Industry (Padis), which aims at the formation of a national semiconductor industry. The program establishes as a counterpart the application of 5% of gross revenue in R&D projects.
One of the goals in this case, says Mr. Fardin, is the development of a 100% Brazilian solar cell, which would make the country less dependent on China and more suitable to Brazilian climatic conditions.
The cell is the component that converts sun energy into electric power through the so-called photovoltaic effect, using semiconductor materials, especially crystallized silicon. Several cells form a solar module, and several modules make up a solar panel. “We are thinking about developing a module, especially for the Brazilian market, one that meets all the requirements of our country,” he said.
Latin America’s largest economy is expected to absorb 30% of the 2,240 additional aircraft that will be needed to serve the region, a study by Boeingshows
10/20/2022
David Franson — Foto: Silvia Zamboni/Valor
Brazil will drive the demand for new airplanes in Latin America in the next 20 years and airlines will look mainly for single-aisle jets, which are typically used for domestic flights, a market outlook study conducted by Boeing shows. According to the U.S.-based company, the country is expected to absorb 30% of the 2,240 additional aircraft that will be needed to serve the region, including the Caribbean, in this period.
Most of the new aircraft, or more than 2,000, will be single-aisle jets, said David Franson, the plane maker’s regional director of market forecasting. Boeing, with its 737s, and Airbus, with the A320 and more recently the A220, are the main competitors in global commercial aviation, but China’s Comac is trying to join them with the C919. Brazil’s Embraer has gained traction in the dispute with the smaller and single-aisle aircraft from Boeing and Airbus since the launch of the E-Jets E2 family.
According to the U.S. company, the fleet of commercial aircraft in Latin America is expected to grow more than 85% by 2041. Expansion is likely to account for 60% of new aircraft, while fleet renewal will represent 40%. These jets combined are valued at $335 billion.
According to Boeing’s Commercial Market Outlook (CMO), Brazil will lead this movement, with the potential for more than 670 new aircraft in two decades. “Part of that is going to be determined by the market share of local airlines. But Brazil is the largest economy in the region,” said Mr. Franson.
In the executive’s view, Latin American airlines have recovered strongly after the Covid-19 pandemic and will need more versatile and efficient fleets in an environment of rising fuel costs and sustainability goals assumed for the coming decades.
“The pandemic brought change and versatility is a requirement today,” he said. As for costs, he believes that airlines are better able to manage higher and more stable costs, which are passed on to fares, than volatility.
When asked about the consolidation of airlines in the region, Mr. Franson said that, in Boeing’s view, what matters is healthy competition, which is possible with a larger number of airlines or a few strong competitors.
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