Arquivos investments - Page 2 of 3

Pet food draws R$2.5bn in investments

Mars, PremierPet, Petz, Nestlé and BRF expanded operations recently

09/01/2022

Mars had already injected R$165 million to build the Ponta Grossa facility — Foto: Divulgação

Mars, owner of the brands Pedigree, Whiskas and Cesar, has joined the recent wave of investments in the pet food market, which totaled R$2.5 billion since last year. The U.S.-based manufacturer will invest R$200 million in a new plant focused on the production of wet food for dogs and cats in Ponta Grossa, Paraná.

The company had already injected R$165 million to build the facility. The plant, the company’s fourth focused on pets, is expected to be finished in the first quarter of 2024.

In June 2022, PremierPet, owner of the Golden and Premier brands, started operating its fourth plant, in principle for dry food, after injecting R$1.1 billion in the facility. In the same month, Petz’s Zee.Dog launched a natural food brand with a capital expenditure of R$10 million. A year earlier, Nestlé announced the construction of its second Purina factory in Brazil and injected R$1 billion to expand production of wet food as of 2023. Last year, BRF, which already owned Balance, acquired Rio Grande do Sul-based Hercosul, which makes the Biofresh brand, for an undisclosed value.

Although it has the potential to sell 8.3 million tonnes, given the size of the population of dogs and cats in the country, sales are currently around 3.7 million, according to the association of pet products industry Abinpet. This difference shows the potential for growth, the association’s head José Edson Galvão de França said.

The volume of pet food sold is expected to grow by 6.6% in 2022, faster than the Brazilian economy. Last year, the food segment alone accounted for 78% of the revenue of the pet industry, whose turnover totaled R$35.8 billion.

“This growth requires investment, there is no idle capacity in the industry. Today we are the second-largest manufacturer of pet food, second only to the United States,” said Mr. França, noting that sales could be higher, but home feeding is still common in the country.

This scenario, however, has been changing, according to data from consultancy Kantar. Before the pandemic, industrialized dog food had a 35.8% slice of the market, and in the 12 months through March they accounted for 43.8%. Home-cooked pet food represents 11% now, down from 15.9%. Kantar also said that the number of households with pets fell by almost 3% this year compared to 2021. “The economic crisis may explain this,” the consulting firm said.

With more than 14,500 square meters built – and forecast to reach 25,000 square meters in six years – the Ponta Grossa plant will expand the company’s production capacity. The company currently has facilities in Recife (Pernambuco), Mogi Mirim (São Paulo) and Descalvado (São Paulo). In addition, it has an industrial plant for snacks and chocolates, such as Twix and M&M’s, in Guararema (São Paulo).

Ponta Grossa was chosen for its proximity to suppliers of raw materials and the main distribution routes. The facility will employ 150 people at the beginning of the operation and 300 in five years. Initially, the unit will supply the domestic market, especially the South region, which accounts for 20% of the Brazilian market. But it will also export to South American countries. In 2021, exports grew 33%, to $412.5 million, and pet food accounted for 95% of sales.

Mars has two strong brands, according to Euromonitor: Pedigree, with 11.5% of the market, and Whiskas, with 5.4%. Besides these two, the new plant will produce wet food for the brands Cesar, Sheba, Optimum and Kiteekat.

“Mars sees the sachet category as large and important enough for us to launch a new plant focused exclusively on it,” said João Konstantinidis, chief manufacturing officer at Mars Petcare. The privately-held company does not disclose its revenues in Brazil, nor the share of wet food in sales.

In total sales, wet food is still small in volume in the dog category, which accounts for 85% of total sales. Dry food accounts for 98.7% of volume. But while dry food sold 0.4% less at the end of the 12 months through March, sachets grew 0.1%, Kantar said.

*By Raquel Brandão — São Paulo

Source: Valor International

https://valorinternational.globo.com/

1 de September de 2022/by Gelcy Bueno

Murray News

Bamaq unveils R$700m investments by 2025

Group with interests in heavy construction equipment, luxury cars expects to reach R$2.2bn in revenues this year

08/26/2022

Clemente Faria Junior — Foto: Maria Tereza Correia/Valor

Bamaq, a group with interests in heavy construction equipment, luxury cars, financing, and car insurance, plans to invest R$700 million by 2025 to expand current businesses and enter new services. The group ended 2021 with revenues of R$1.6 billion and expects to reach R$2.2 billion this year, up 37.5%. The expected profit for this year is R$108 million.

The largest investment will be made in a new business focused on leasing of heavy equipment (such as backhoe loaders and motor graders), trucks, and utility vehicles for construction. The group represents the brands Iveco, New Holland Construction, FPT Powertrain Technologies, and Continental in 14 states.

The group will also invest in opening a fintech, expanding a new tire sales business, opening new heavy equipment and luxury car dealerships, expanding a remote equipment management service, and expanding insurance services.

The CEO of the Bamaq Group, Clemente Faria Junior, said that by 2023 an investment of R$134 million will be made with own funds in the structuring of the heavy equipment and truck rental business. “From the second year of operation on, the intention is to finance half of the amount to be invested,” he said. The executive’s forecast is to make investments of R$160 million in 2024 and R$204 million in 2025, totaling R$498 million in three years. Mr. Faria added that most funds will be invested in the acquisition of a fleet for rental.

“Customers used to want to buy heavy equipment, but today there is growing demand for the use as a service model,” the executive said. He noted that the heavy machinery sales business now has 40,000 customers. For each heavy machine purchased, the same customer uses, on average, three trucks on the construction sites. And a portion of customers do not have funds available to acquire the entire fleet but are interested in the rental model.

Mr. Faria said that even the demand for the purchase of heavy equipment in Brazil is heated, mainly because of the demand from large agribusiness producers located in the region known as Matopiba — named after the four bordering states of Maranhão, Tocantins, Piauí, and Bahia. “Agribusiness accounts for 30% of our sales,” the CEO said. Besides equipment sales, the group sells auto parts, tires, and lubricants. It also does equipment maintenance and remote fleet management.

The area of heavy machinery and trucks operates today with 14 business units and revenues of R$672 million in 2021. This year, Bamaq foresees the opening of Iveco and New Holland Construction units, two of them in Marabá (Pará), one in Sinop (Mato Grosso) and one in Luís Eduardo Magalhães (Bahia).

Another bet in the heavy machinery area is the sale of Koneq, a remote telemetry service that allows the remote management of equipment. The service controls engine temperature, the hydraulic system, fuel level, machines in operation, and the electric fence. Currently, there are 940 pieces of heavy equipment in the field in the country monitored by this system. The goal, according to Mr. Faria, is to reach 3,000 systems installed within 12 months. Bamaq invested R$5 million to develop the technology and will invest more R$5 million in 2023 in the service.

In the area of luxury cars, which accounts for 25% of the group’s revenue, there are plans to open a Porsche store in Salvador this year. Bamaq is also investing in the expansion of the consortium for luxury vehicles. The group has Mercedes-Benz and Porsche dealerships and represents both brands in Minas Gerais. “We have just been appointed to represent Porsche in Bahia. The store in Salvador, expected to be opened in the fourth quarter, will be the first in the state,” said Mr. Faria.

The CEO said that vehicle sales grew 22% in the 12 months through June. “Today we have 1,200 people waiting in line for a Porsche, 400 waiting for a Mercedes-Benz, and 550 waiting for the delivery of heavy equipment,” said Mr. Faria. According to the executive, industries face difficulties to meet the heated demand of consumers in the post-pandemic due to lack of parts.

In this scenario, the group sees as an alternative to help control customer anxiety a successful Brazilian institution, the so-called “consórcio”. It’s a kind of buyer’s club, a purchasing pool through which a group of people pays monthly installments on a certain item, such as a car or a house so that every month the group can afford to buy one. In 2021, said Mr. Faria, the “consórcio” business grew 180% compared to the quotas sold. The volume of commercialized credits grew 89% and the portfolio increased 82%, surpassing 20,000 active clients.

Another bet of Bamaq is in the financial industry. The group has filed a request with the Central Bank to open a fintech, which will offer financial products and services by digital means, including vehicle and heavy equipment financing, loans, credit cards, and acquisition of receivables. The fintech will be composed of a direct credit company (SCD) and a credit rights investment fund (FIDC). The portfolio is expected to reach R$100 million in the first year, R$500 million in the second year and R$1.7 billion in five years.

Bamaq was founded in 1974 by Clemente Faria, grandson of the banker who founded Banco da Lavoura, in 1925, also named Clemente Faria. In 1971, his sons Gilberto and Aloísio Faria split Banco da Lavoura into Banco Bandeirantes and Banco Real, which were later sold to Caixa Geral de Depósitos (today Itaú-Unibanco), and ABN (today Santander). In 1974, the banker’s grandson, Clemente Faria, founded Bamaq, which started as a Fiatallis dealership (today New Holland Construction). The group operates in 16 states in the Northeast, North, Central-West, and Minas Gerais, employs 770 people, and has just over 70,000 active customers.

*By Cibelle Bouças — Contagem, Minas Gerais

https://valorinternational.globo.com/

26 de August de 2022/by Gelcy Bueno

Murray News

WEG to invest in Brazil’s largest wind turbine

Production of new 7MW equipment expected to start by 2025

07/05/2022

New wind turbines will initially be made at a manufacturing facility in Jaraguá do Sul — Foto: Divulgação/WEG

WEG, the Santa Catarina-based machinery and equipment maker, will invest in the production of Brazil’s largest wind turbine. The 7-megawatt equipment, whose rotor has a diameter of 172 meters, will be tailored to serve other markets as well.

The company is investing in the development, engineering, testing and validation of the technology, and will invest in assets to make and install this equipment as needed.

The manufacturing of the new wind turbines will initially take place in Brazil, at the manufacturing facility in Jaraguá do Sul (Santa Catarina), where the company already produces wind turbines and has a wind operations center to control, monitor and analyze equipment in operation across the country.

The prototype of the new wind turbine is expected to go into operation in early 2024, with the start of serial production in the following year.

Unlike the 4.2 MW platform currently manufactured by WEG, which stands out for its focus on the specific wind and weather conditions in Brazil, the new wind turbine has characteristics adapted to serve other markets as well.

Today the company holds 10% of the domestic market and competes in the segment with Vestas, GE, Siemens Gamesa, Nordex Acciona and Wobben. João Paulo Gualberto da Silva, WEG’s energy managing director, explains that the company intends to grow in the wind power generation business and the initial strategy is to reallocate the funds currently invested in the manufacture of the 4.2 MW wind turbine to this new model.

“We will need to make some adjustments and, possibly, expansions. However, the priority is to make the most of the existing manufacturing structure. We will continue to take advantage of our capacity to produce many components internally, such as generators, motors, electronics, and even paints, thus obtaining important cost and quality advantages,” the executive told Valor.

As with all the platforms developed, WEG says it takes into consideration the weather conditions in Brazil, but intends to market this equipment in other geographies, taking advantage of the regions where the company already has a commercial and manufacturing presence.

“We have had success with our 2.1 MW platform, which totals 650 MW in operation, exceeding availability commitments, as well as with our current 4.2 MW platform, of which we have already commercialized over 1,000 MW.”

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/

5 de July de 2022/by Gelcy Bueno

Murray News

Audi unveils investments to resume production in Paraná

Brand will inject R$100m to modernize assembly line with new machines, tools and systems

06/30/2022

Audi had halted activities in Brazil for over a year — Foto: Reprodução/Instagram

Audi unveiled Wednesday morning an investment of R$100 million to resume vehicle production in São José dos Pinhais, Paraná. The decision to make cars again in Brazil after having halted activities for over a year was announced in December 2021. But the German carmaker had not yet defined investments.

According to the company, which made a ceremony to restart the assembly line and invited Paraná Governor Ratinho Junior, the funds will be used to modernize the assembly line with new machines, tools, quality control equipment, information technology systems and logistics infrastructure.

The brand had already invested R$446 million in Brazil since the creation of the Inovar-Auto automotive program in 2012. Two models will be made in Paraná: Q3 and Q3 Sportback 2.0. Both will have combustion engines.

The vehicles will be imported in semi knocked-down (SKD) kits – in sets of parts partly put together and shipped to the port of Paranaguá from Audi’s plant in Hungary.

Initially, Audi’s line, which is located in the same plant as sister brand Volkswagen, will have a production capacity of 4,000 vehicles per year in two shifts. The vehicles produced will be destined, initially, only to the domestic market.

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

30 de June de 2022/by Gelcy Bueno

Murray News

China-controlled TCP plans to invest R$370m by 2023

Investments will be directed to expansion of areas for refrigerated cargo, purchase of cranes

06/21/2022

Terminal de Contêineres de Paranaguá (TCP), controlled by China Merchants Port, will start an investment plan of nearly R$370 million, which will be injected by the end of 2023. The goal is to increase capacity, both for storage and cargo handling.

Part of the funds will be used to purchase 11 RTG cranes, which are used to move containers. The investment was already part of the obligations of the concession, but the decision to acquire them at this time was due to the tax exemption window opened with the extension of Reporto, a tax regime that suspends the collection of federal taxes on imports of equipment in the industry, until the end of 2023.

The company’s goal is to expand its cargo-handling capacity by 15%.

The investment plan also includes a 43% expansion of the area destined for reefer containers, which will reach 5,178 sockets. One of TCP’s main cargoes is frozen meats – in 2021 the terminal accounted for 35.4% of Brazil’s chicken exports.

The container yard will also be expanded, by 20,000 square meters. This will be possible through the optimization of the terminal’s structures, which currently occupy 480,000 square meters.

The need for expansion emerged, in part, from the logistical chaos generated by the pandemic. In late 2019, just before the health crisis, TCP completed investments that expanded its area by 150,000 square meters. At the time, the expansion was seen as being enough to meet the demand of the next decades, said Thomas Lima, the company’s chief commercial and institutional officer. “With the pandemic, we had our capacity taken right away. All the parameters changed,” he said.

During the Covid-19 crisis, global logistics chains went through complete disorganization amid port closures, interruptions in production lines and delays in clearance. The effects seen since 2020 include clogged ports, container shortages and crammed warehouses.

In addition to the pressure generated by the pandemic, cargo handling is up. The volume of full containers handled by TCP grew 5.9% in 2021 compared with the previous year. In the first quarter of this year, it rose again – by 2.3%.

In the executive’s view, the perspectives are positive. “The Port of Paranaguá is very focused on agribusiness, which is a growing industry, despite the country’s GDP. The world is consuming more meat, and this tends to boost cargo-handling operations.”

Mr. Lima acknowledges that the pandemic still impacts operations. Recent lockdown measures in China have reduced the number of empty reefer containers coming into the country. This could create a bottleneck for meat exports, which need the equipment. “Exporters have their warehouses full because slaughtering has not stopped,” he said.

The executive considers that it is complex to foresee when the situation will be normalized. However, for him, the trade flow between Asia and Brazil is expected to normalize at the end of this year if China refrains from imposing new Covid lockdown measures.

¨*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/

21 de June de 2022/by Gelcy Bueno

Murray News

States speed up investments in election year

Manoel Pires — Foto: Wenderson Araujo/Valor

The states started this election with accelerated investments, even with more restrained revenue growth. The combined investments of 26 states and the Federal District totaled R$4.24 billion in the first two months of the year, up 115% year over year.

The data shows, according to experts in public accounts, that these expenditures by states are likely to remain strong after a boost in 2021, when investments closed the year with a real increase of 83.6% compared with the previous year. Financial surpluses from previous years are expected to help this, even though revenue flow has already shown a slowdown at the beginning of the year. State governments ended last year with R$140.2 billion in cash, R$61 billion more than the previous year.

According to data from the fiscal reports of the states, the collection of sales tax ICMS totaled R$85.4 billion in the first two months of the year and is already behind inflation, with a real drop of 3.2% against the same period last year. ICMS is the main tax collected by state governments. Current revenues, which include other taxes and transfers from the federal government, advanced 2% in real terms in the same comparison.

The revenue and expenditure data for the first two months were collected by Valor from the fiscal reports submitted by the states to the National Treasury Secretariat (STN). The expenditures with investments considered the primary capital expenditures. The values for the first two months of 2021 were updated by Brazil’s benchmark inflation index IPCA.

For specialists, even though the situation is heterogeneous among the states, with considerable gains in ICMS collection or in specific revenues in some of them, the picture shows that the generalized and accelerated advance in tax revenues seen last year did not continue into 2022, said Manoel Pires, coordinator of the Fiscal Policy Observatory of Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre/FGV). For him, the scenario points to the end of a period of “fiscal bonanza.” The growth of current revenues as a whole, he says, should give way during the year and follow more the performance of tax collection.

The collection of revenues during the year is fraught with uncertainty, said Ursula Dias Peres, a professor of public policy at the School of Arts, Sciences and Humanities (EACH) of the University of São Paulo, and a researcher for the Solidarity Research Network. Besides the effects of the economic slowdown, she said, state revenues will still suffer the impacts of tax changes.

Among them, Ms. Peres highlights the change in the calculation of ICMS on fuels as well as the cut by the federal government in the rate of the Industrialized Products Tax (IPI). This tax finances the State Participation Fund (FPE), which is likely to impact the states that have an important source of revenue in the federal constitutional transfers.

Marco Aurelio Cardoso, secretary of finance of Rio Grande do Sul, says that the collection of ICMS in the first quarter of this year grew 9% in nominal terms compared to the same period in 2021, with a small real drop. For him, this is likely to be the trend for the year. “We don’t believe in a real growth of ICMS this year. At most we will restore inflation [in the collection] and probably stay a little below it.”

In Alagoas there is also a slowdown in the tax collection, said George Santoro, the state’s secretary of Finance. From January to March, ICMS revenue was about 1% higher than the same period last year. For 2022, the expectation is for real growth between this same rate and 2%, which, if realized, will represent a great deceleration in relation to the real increase of 10% in 2021 against the previous year, a level of growth “that won’t come back.”

Even with uncertain scenario for revenues, Ms. Peres said, the investments scheduled for the year are likely to be financed by surpluses in 2020 and 2021. In 2020, she recalled, in good part as a result of extraordinary transfers from the federal government as a bailout for states and municipalities to combat the economic effects of the pandemic and, last year, due to the surprising behavior of tax collection.

“The surplus was big,” Mr. Pires said. “As tax collection was much higher than what budgets projected, in which a much more conservative scenario predominated, most states managed to turn tax collection into cash. The primary result last year was at historical peaks.” This, he said, will help many states balance spending this year, including investments that typically grow in election year. “The revenue slowdown becomes an important focal point for next year’s budget.”

Mr. Cardoso says that in Rio Grande do Sul the expectation is to expand investments to around R$3 billion in 2022, compared to R$2.3 billion last year. The state expects to receive a green light to join the Fiscal Recovery Regime (RRF) offered by the federal government until the end of May.

In Alagoas, where investments accelerated in 2021, the forecast is to keep the works at an accelerated pace this year. According to Mr. Santoro, the investment committed in 2022 is expected to reach R$3.1 billion this year. Last year it was R$3.7 billion.

In a statement, São Paulo’s Secretary of Finance says that the forecast for investments in 2022 is R$27.1 billion this year, of which R$20.5 billion from the Treasury and R$5.3 billion from financing. In 2021, the state invested R$25.4 billion, and in 2020, R$11.2 billion.

The ICMS collection forecast in the budget is R$191.4 billion and the Secretary of Finance says that any revisions will be made throughout the year. Fuels represent about 11% of the ICMS collection and the freezing of the reference price until June and the eventual loss will be measured throughout the year. As for diesel, the adoption of the ad rem rate, according to the secretary, is likely to have a neutral effect for São Paulo consumers.

“The collection will not perform as if the ICMS continued to be levied on current market prices,” says the note. According to São Paulo’s secretary of finance, the collection still showed real gains in the first quarter, compared to the same period last year. In the first two months, there was a real advance of 0.3% considering the ICMS data from fiscal reports, updated by the IPCA.

On the expenditure front, the surge in investments compares with other spending categories. Personnel expenses and social taxes fell 0.72% in real terms in the first two months of the year in relation to the same period last year. Current expenses, which besides personnel also include costs, fell 1.64%.

This, however, is a picture that may change during the year, since it still reflects in large part the Complementary Law 173, which restricted adjustments of salaries of public servants until the end of last year, Ms. Peres said.

In the first months of the year, she said, there was pressure for real adjustments and increases, which can make a difference in this expense as of the next months. According to the Superior Electoral Court (TSE), because of the elections this year, real salary increases could be granted to public servants until April 5, but adjustments below inflation have a longer deadline. The increases, the researcher said, can make a difference in personnel expenses in the coming months and become permanent expenses of the states.

Source: Valor International

https://valorinternational.globo.com

12 de April de 2022/by Gelcy Bueno

Murray News

Agriculture, construction boost investments

Carlos Antonio Rocca — Foto: Silvia Zamboni/Valor

Agriculture and construction have driven the growth of investments between 2019 and 2021 in the country. An exclusive study by Fipe’s Center for Capital Market Studies (Cemec-Fipe), linked to the University of São Paulo, found that the two industries accounted for two-thirds of investments in machinery and equipment between 2019 and 2021. During the period, the country faced the first year of the pandemic, the recovery after the height of the crisis and the slowdown of this recovery over the past year.

The concentration helps explain the expansion of investments even in an unfavorable macroeconomic context, said Carlos Antonio Rocca, the coordinator of Cemec-Fipe, who led the study.

“Some key factors for investment decisions are not encouraging. The recovery of the economy has lost steam, the growth expectation for the next three years is the lowest since 2006, and we also have uncertainty. But we investigated who has driven the increase in investments and we found that this came mainly from agriculture, with the good performance of commodities, and from construction, with interest rates still relatively low,” he said.

The study was motivated by the assessment that the growth of investments in the period was “somewhat surprising” since the country has high levels of idle capacity, there is a continued reduction in growth expectations for the coming years and uncertainty remains high, Mr. Rocca said.

Statistics agency IBGE detected investment rates of 15.5% in 2019, 16.6% in 2020 and 19.2% in 2021. The study by Cemec-Fipe excludes 2020 to avoid specific effects of the first year of the pandemic and directly compares the variation between 2019 and 2021, which were more typical years.

To understand the origin of this investment expansion, however, Mr. Rocca takes into account work done by economist Gilberto Borça Jr. showing that the investment rate actually achieved 18.2% in 2021, compared with 16.2% in 2019.

This finding excludes two factors that affected investments in the period. The first is the change in relative prices between the capital goods that make up the gross fixed capital formation (GFCF) and the prices of service goods that make up the GDP, due to the increase in the exchange rate, which affects imported capital goods.

The second is the impact of the value of Petrobras’s rigs. A tax change – the end of Repetro, a special customs regime that eased imports of goods for oil exploration – caused investment to be driven by imports of capital goods recently.

“Even so, it was still a big growth in investments, of two percentage points. And when we look at GFCF data between 2019 and 2021, we see that the highlight is machinery and equipment and construction. From there, we looked at the production of machinery and equipment, and we saw this great weight of those linked to the agricultural sector and construction,” Mr. Rocca said.

Considering IBGE’s index of physical production of capital goods, the segments focused on agriculture grew above 40% in real terms (43.8% in agricultural and 47.8% in agricultural parts) between 2019 and 2021. Capital goods for construction, on the other hand, advanced 40.48%, considering the same base of comparison.

Thus, by the accounts of Cemec-Fipe, the production index of capital goods rose 14.8% between 2019 and 2021. Of this increase, 6.44 percentage points came from the agricultural segment and 0.91 percentage point from agricultural parts, totaling 7.35 percentage points, or almost half (49.7%) of the growth. Capital goods for construction, meanwhile, account for 2.47 percentage points, or 16.7% of the expansion. The weight is much higher than the industrial capital goods segments (only 1.01 percentage point), for instance.

“If you consider the agricultural segment and the agricultural parts segment, virtually 50% refers to machines for the agricultural sector. If you also consider construction, there are two thirds of the investments for these two segments,” Mr. Rocca said.

In addition to evaluating the impact of these segments in the growth of investment, the study also collects investment data from 472 public companies. According to the survey, agribusiness-related companies saw a 52% expansion of the GFCF indicator in the period (considering the evolution of the value of their assets), compared to a much lower rate (24%) for the average of public companies as a whole. The investment measure in this case considers the evolution of the value of assets in the financial statements, both fixed assets (such as real estate and machinery) and intangible assets (such as systems and software, for example), in nominal values.

“Agribusiness-related companies had much stronger growth in this measure of investments than the sample average. This reinforces the data we saw about the substantial growth of agricultural machinery. Public companies have a great weight in the economy, they account for a quarter of the added value, and show a general trend,” Mr. Rocca said.

Source: Valor International

https://valorinternational.globo.com

24 de March de 2022/by Gelcy Bueno

Murray News

Expensive power drives investments in efficiency

Increasingly pressured by electricity costs, companies, large power consumers and even municipalities are betting on more efficient systems, more modern equipment and even their own power generation to remain competitive.

Enel Brasil invested almost R$89 million in 2021 in several projects that are part of its power efficiency program with concrete results. Liasa, an intensive industry that produces metallic silicon, has launched a plan to upgrade its furnaces and foresees an increase in efficiency of up to 10%.

On the manufacturers’ side, companies such as WEG and Onpower are being demanded for increasingly efficient equipment. Data from the 2030 Energy Expansion Ten-Year Plan by the Energy Research Company (EPE) show that power efficiency gains will reduce approximately 6% of the industry’s electricity in 2030.

The water crisis, high tax burdens and subsidies set precedents for a power efficiency investment agenda. In 2021, Enel Brasil, through its four distributors, invested R$88.8 million in projects that are part of its power efficiency program, obtaining as main results the service of approximately 331,000 beneficiaries, saving 62,257.81 MWh throughout the year and reducing end demand by 6,629.33 kW.

“In 2021, we invested more than R$88.8 million in projects supported by the program, with initiatives that combine economic benefits and positive effects for society and the environment. One of the highlights is the Public Call for Projects, held every year and which aims to benefit society as a whole. The Public Call projects achieve this vision of bringing power gains and making the services already offered by the beneficiary institutions more efficient, be they public, private or philanthropic,” says the Enel Brasil’s head of Sustainability, Marcia Massotti.

The industrial sector is perhaps most interested in power efficiency targets. The segment consumes approximately one third of the final electricity to service its production processes. Liasa expects to have a gain in production with the repowering of the furnaces. The company is an electro-intensive industry that produces metallic silicon and began to modernize its equipment in January.

“At the moment we consume 100 average megawatts (avgMW). The idea is to increase production by reducing the amount of energy per ton of silicon metal. The repowering of the ovens is likely to bring an increase in efficiency between 5% and 10%”, says the company’s head of Energy, Ary Pinto Ribeiro Filho.

If in the past the great attraction for industries to settle in Brazil was the availability, quality and price of electricity, over time those advantages were diluted and today the industry has difficulties in being competitive. The president of the Association of Large Energy Consumers and Free Consumers (Abrace), Paulo Pedrosa, says that companies have an ESG agenda, global commitments to emissions, in addition to competitiveness in the market.

“There is a movement of great interest towards power efficiency, such as the contracting of subsided power and self-production to seek competitiveness and meet this global agenda of commitments. Companies are also preparing for a carbon market, which will be a reality”.

What Mr. Pedrosa says is present in the Brazilian reality. A survey carried out in 2020 by the Instituto Clima e Sociedade (iCS) initiative coordinator, Kamyla Borges, with the ten companies with the highest scores in the Corporate Sustainability Index (ISE B3) showed that power efficiency is considered to meet environmental goals.

“Although most claim to implement efficiency measures, few [companies] were those that set specific goals to reduce electricity consumption or power intensity,” says the researcher.

In this high demand, manufacturers are surfing the good times. WEG has demands for performance improvement services, operation automation and equipment preventive maintenance. At Onpower, the demand is for more efficient generator sets. In 2021, the company had the biggest growing curve in sales since 2013. According to sales manager Fernando Lemos, the year was the best in history, with a growth of 92% compared to the previous year.

“We see a greater demand for natural gas and biogas machines, which is another mix. What we noticed is the lack of conductors and semiconductors in the market, an important input in the production chain”.

With an eye on efficiency gains, several cities are betting on partnerships with concessionaires for public lighting services. More than 50 business groups were interested in the sector. There are currently 56 Brazilian municipalities with public lighting service concession contracts for the private sector, with estimated investments of around R$18.3 billion.

According to the Brazilian Association of Private Public Lighting Concessionaires (ABCIP), 12% of the Brazilian public lighting park is being updated by private companies under public-private partnerships (PPP) regime. More than 400 projects are underway in the country, including about 220 municipalities that intend to form consortia.

“The modernization of public illumination parks with LED luminaires has generated savings of up to 70% in electricity consumption,” says Pedro Iacovino, president of ABCIP. “When the park is equipped with telemanagement resources, savings can exceed 80%”.

Source: Valor International

https://valorinternational.globo.com

16 de February de 2022/by Gelcy Bueno

Murray News

ArcelorMittal Brasil announces investments package of R$7.6bn

ArcelorMittal vê lucro apesar das dificuldades de vendas - FabrikTec Conceito de Força em trituração de resíduos gerais

ArcelorMittal, the global steel giant commanded by the Indian businessman Lakshmi Mittal and his son Aditya Mittal (CEO of the company), has decided to bet high on the Brazilian market. In 12 months, the group, based in Luxembourg and headquartered in London, has approved investments of R$7.6 billion (almost $1.5 billion) in four projects to expand supply in the country.

The last of them was announced on Thursday, with investments of R$1.3 billion ($250 million), for expansion and adding value to products from the Barra Mansa mill, in Rio de Janeiro state. This facility was acquired from Votorantim group in 2018 and is strategic for being in the middle of the largest steel consumer market in the country – the Rio-São Paulo corridor – and availability of ferrous scrap, the raw material of the plant.

“Our investment is the largest announced from a steel company in the country and this shows our confidence in Brazil and the market growth in the coming years,” said Jefferson De Paula, president of ArcelorMittal Brasil and CEO of the group for LATAM Long Steels and Brazil Mining, in an interview with Valor. The investment package covers the flat and long steel and iron mining segments, in operations located in SC, MG, and RJ.

“It will not stop there,” said Mr. De Paula, who has been in charge of AMB since the beginning of November. He justifies this confidence with the expected demand from various sectors – civil construction, infrastructure, sanitation, renewable energy (wind and solar), oil and gas, and agricultural implements, machinery, and trucks, all goods in great demand by agribusiness.

After an atypical growth in 2021 – more than 20% compared to the previous year –, the apparent consumption of steel in Brazil should return in 2022 to normal levels, from 3% to 5%, said the CEO. For him, it will consolidate in an average increase of 4% per year as of 2023. Last year, the company saw its sales rise more than 24%. In total, it sold 11.7 million tonnes, being 7 million of flat steel and 4.7 million of long steel.

“With these investments, which will be made over three years [from mid-2021 to mid-2024], we seek to consolidate our position as a leader in the Brazilian market in the long steel segment”, adds Mr. De Paula. Around 80% is for servicing local customers and 20% for exports. The company is the largest steel producer in the country, ahead of Gerdau, CSN, Usiminas, and Simec.

According to the executive, ArcelorMittal Brasil was responsible last year for 21% of the operational result (by EBITDA criteria) of the group’s total, with $4.15 billion. “With these investments, just in long steel, we will add 1.5 million tones (1 million in the Monlevade-MG mill and 500,000 in Barra Mansa),” says Mr. De Paula. As for flat steel, the Vega mill (in São Francisco do Sul, state of Santa Catarina) will produce more than 700 thousand tonnes of rolled material for application in the automotive, white line, and civil construction sectors.

In the Barra Mansa plant, the investment will contemplate a new rolling mill for bars, of many sizes, of 400,000 tones, the expansion of the capacity of the current one, from 300,000 to 380,000 tonnes, improvements in the manufacturing processes to offer material of high added value, especially for the automotive and oil markets. In addition, the company will start producing medium profiles, a product with strong demand in metallic construction. For example, warehouses and silos.

“We are a world leader in medium profile manufacturing and now we are entering here,” said Mr. De Paula. With the investment, the mill “will be very modern in terms of long steel technology, operating with two steel units (melt shop). And its capacity for rolled products will be increased by 500,000 tonnes, reaching 800,000 tonnes. The project is to be concluded in the first quarter of 2024, generating 200 direct jobs, 120 indirect jobs, and 1,200 on the construction site.

The estimate is that the expansion, with its new line of long products, will add EBITDA of $70 million per year when the mill is fully operational.