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Wednesday, August 29, 2012

Brazil, infrastructure, world cup, olympics and finance

A great piece on the FT showcases the construction boom in Brazil... Stadiums, roads, airports, trains... You name it, they will have to build it... All of the above need a lot of metal

A rising tide lifts all boats, shouldn't Vale be an obvious winner?


What is most telling, for me at least, Brazil loses 10 - 15% of GDP yearly because of bottlenecks in its poor infrastructure... If you think this is an exaggeration, think about this; a trucker on his/her way to the port may spend up to 3-4 days waiting to unload its cargo... A railroad, a port, a road in Brazil, privately built can have a great multiplier effect.

Better yet, Brazil's government does not need to spend the money. Private capital will.

Can this be true? Aren't we reminded by our authorities over and over, the US is in great need to upgrade its infrastructure. The choices we are given are taxes or "no" (as in we will just not do it).


With the World Cup (soccer) and the Olympics around the corner, Brazil's needs are so much greater than the problems we face. How will they do it? Rousneff should be jealous of Obama's problems.

Not quite.

Brazilians are much more pragmatic. They have just auctioned the rights to build and operate new "Sao Goncalo do Amarante" airport. A Brazil-Argentine consortium has 3 years to build an airport and then 25 years to operate it. Read article here.

How much will Brazilian tax payers pay for this?
Nothing, the consortium actually paid the government for the rights.

Are Brazilian unique?
Not quite, Argentina and Chile have had privately operated major airports and ports for many years. In Mexico, consortiums that operate roads are publicly traded companies

Who pays? Those who use airports and roads and ports.

Imagine the possibilities.



Tuesday, August 28, 2012

From exporter to FDI, Mexico moving into the US

A very nice account by Adam Thomson of the Financial Times on how Mexican businesses are overcoming obstacles to establish themselves in the heart of America.

No longer exporting cheap materials alone.

Read and pass along.