Chinese Soy Project in Brazil: Just an Empty Field

MarineLink.com
Friday, April 04, 2014

No signs identify a barren field in northeastern Brazil that was meant to be the center of one of China's most ambitious agricultural forays into South America.

In 2011, Chongqing Grain Group Corp announced plans to build a soy crushing plant, railways and a giant inland storage and transportation hub to export goods back to China. The total price tag: $2 billion.

Yet today, the company has only managed to bulldoze a 100-hectare area on which the crushing plant might one day stand. Even that project is on hold, though, and shrubs are starting to grow back on the cleared terrain.

The stalled plans are an example of the difficulties facing once-promising Chinese investments here. Brazil's notorious bureaucracy, its slowing economy and a deep-seated mistrust of China's hunger for land and commodities all appear to explain why the field is still empty.

A Reuters investigation last year found that after a rush of investment announcements in recent years, as many as two-thirds of Chinese projects in Brazil face lengthy delays or never get off the ground.

The government of Bahia state says the Chongqing Group's plans are still moving forward - slowly.

"It's just in bureaucratic processes," said Josalto Alves, spokesman for Bahia's agriculture department. He said the plant needed approval from a municipal government as well as environmental licenses.

It's unclear whether Chongqing has abandoned the other elements of the project. Representatives for the company in China and at its subsidiary in Bahia, called Universo Verde, declined repeated requests for comment.

Alves said the company is still evaluating infrastructure projects, although other local officials told Reuters that Brazilian companies are likely to build a railway and transportation hub.

Margaret Myers, program director for China and Latin America at the Inter-American Dialogue, a Washington-based think tank, suspects the delays are about more than red tape.

Chongqing Grain Group originally planned to not only build the plant, but also acquire large expanses of surrounding farmland, according to Brazilian media reports.

At the time, Brazilian legislators expressed worries that China was interested in securing as many natural resources as it could, with little benefit to Brazil, one of the few countries in the world with new land available for agriculture.

Myers said the Chongqing project was widely perceived as a "land grab."

As negotiations for its terms were underway in 2010, the Brazilian government tightened restrictions on foreign land ownership - a move that officials privately said was mostly aimed at China.

Scaling Back
Brazil's slowing economy has also prompted many foreign investors to scale back their projects here.

In 2010, Brazil's economy grew 7.5 percent and some believed it was set to join the ranks of developed nations by the end of this decade. But because of poor infrastructure and a stagnant government reform agenda, the economy has averaged just 2 percent growth since then.

Hungry to revive growth, other officials have been much more welcoming of the Chinese. Bahia's state government spent years wooing Chongqing Group and even has an office in China.

China buys the bulk of soy shipped from Brazil and neighboring Argentina and is Brazil's top trading partner.

Chinese agricultural companies appear to be changing their approach following recent challenges, however. Instead of controlling the entire soybean production chain, as they aimed to do in Bahia, they have focused recently on acquisitions of existing trading houses.

On Wednesday, China's largest grain trader COFCO Corp agreed to pay $1.5 billion for a majority stake in Singapore-based Noble Group Ltd's agribusiness. The purchase followed COFCO's February agreement to buy a 51 percent stake in Dutch grain trader Nidera, in what was the first major purchase in a trading house by a state-owned Chinese agricultural company.

COFCO will now be able to purchase soy supplies from Brazil and other top producers directly, and process them into animal feed at home. That would allow the Chinese to avoid working with the big four grain brokers ADM, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp.

That may be more viable than trying to get into the farming game in Brazil, where U.S. and European based trading firms have crushed and brokered soybeans for decades.

In western Bahia state, plants owned by Cargill and Bunge already have deals to buy soybeans from local producers.

"The industries are very well established and it is hard for newcomers to come in, even those as persistent as the Chinese," said Carlo Lovatelli, head of Brazil's crushing association Abiove.

The town of Barreiras will analyze Universo Verde's proposal for the crushing plant plan soon, Adalto Soares, a spokesman for the mayor's office, said this week.

The plant would be integrated with a new industrial district planned for the city that would include a dry port and railway - now likely to be built by Brazilian firms, he said.

)By Caroline Stauffer; additional reporting by Dominique Patton and Niu Shuping in Beijing; Editing by Brian Winter and Kieran Murray)

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Bulk Carrier Trends

Goldenport Bleeds in Red

Goldenport Holdings Inc reported a net loss of USD14.7 million in the first six months of 2015, significantly wider than the USD1.4 million net loss a year earlier

Strong Returns for Sovcomflot

Russia’s biggest shipping company PAO Sovcomflot (SCF Group) surpassed its own expectations and went forward on both revenue and net profit in the first six months.

CSDC Profts Soar

The bulker and tanker unit of state conglomerate China Shipping Group, China Shipping Development Co (CSDC) has delivered a first half performance which saw its profit spike,

News

Obama Defends Arctic Oil Drilling

United States' President Barack Obama defends his decision to allow Royal Dutch Shell to drill for oil in the Arctic Ocean.   He insisted that there was no contradiction

Optimistic on VLCC Market

Shipbroker Charles R. Weber is quite optimistic on the future prospects of the VLCC market for 2016 onwards.   The demand is expected to remain elevated with

Eni Finds Giant Egyptian Offshore Gas Field

The Italian energy major Eni SpA discovered a “super giant” natural gas field offshore Egypt in what the Italian oil company said is the largest find in the Mediterranean Sea.

Government Update

Britain Pumps GBP500mln into Scottish Naval Base

The Royal Navy’s submarine base at Faslane – home to Britain’s nuclear deterrent – is to receive a more than 500 million pounds investment grant from the Government, reports Reuters.

Iranian Ship, Crew Escape Captivity off Somali Coast

An Iranian fishing vessel and its crew have escaped after being held captive for five months by Somali fishermen, maritime piracy experts said on Friday, but it

Migrant Boat Sinks off Libya; 200 Feared Dead

A boat packed with mainly African migrants bound for Italy sank off the Libyan coast on Thursday and officials said up to 200 might have died. A security official in the western town of Zuwara,

 
 
Maritime Security Maritime Standards Navigation Offshore Oil Pipelines Pod Propulsion Ship Electronics Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.5298 sec (2 req/sec)