Brazilian iron ore giant Companhia Vale do Rio Doce, the world’s largest iron-ore producer, plans to invest $6.2 billion over the next five years to meet rising demand from China. The company is looking to add 140 million metric tons of capacity by 2010, accounting for 37% of global demand. China, the world’s biggest steelmaker, may increase iron-ore imports by 15% this year to 240 million tons.
Category: Daily Brief
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Bielsa: G7 Supports Argentina
Argentina’s Foreign Minister Rafael Bielsa said a majority of the Group of Seven industrialized nations backs the country’s debt exchange plan. This comes as the IMF is pushing Argentina to start talks with creditors who rejected the swap offer. Bielsa said the restructuring plan is backed by Germany, the US, France and Canada, while the UK and Japan have given “mixed” signals. Italy opposes the offer. Argentina persuaded 76 percent of its bondholders to exchange their holdings for new securities, while holders of about $20 billion in bonds rejected the offer.
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IMF Lifts Forecasts
The International Monetary Fund raised its growth forecasts this year for Mexico and Brazil, predicting that both countries’ economies will expand 3.7 percent, more than the previous 3.2 percent forecast for Mexico and 3.5 percent outlook for Brazil. The IMF called on Latin American countries to take advantage of the economic expansion in the region to reduce debt and broaden the tax collection base to help keep budget deficits under control.
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Varig Reports Results
Brazil’s troubled airline Varig registered net revenue of $3.4 billion in 2004, up 11 percent year-on-year. The company reduced its net loss 95 percent to $34 million, while gross profit totaled $980 million, up 10 percent. Varig finished 2004 with debts worth $2.2 billion, most of which are owed to the Brazilian government.
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Brasil Telecom CEO Charged
Brasil Telecom Chief Executive Carla Cico was charged with racketeering as part of a Brazilian probe into whether she hired security firm Kroll to spy on the government and executives at Telecom Italia, a business rival. The charges must be confirmed by a court, which could take months. The 44-year-old executive is the first executive to be charged in a police investigation into whether Kroll used illegal methods such as wiretapping to gather information on both the government and Telecom Italia.
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Jay Collins Gets New Post
Citigroup has appointed Jay Collins as head of its Public Sector Group, a division of the bank originally created for Stan Fischer, the former first deputy managing director of the International Monetary Fund. Fischer left Citigroup to become president of the Central Bank of Israel. Collins was previously a banker at Nikko-Citigroup’s investment banking division and was chief operating officer for Latin America.
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Venezuela Sells Bonds
Venezuela sold $1.6 billion of 20 year dollar-denominated bonds to domestic investors last week. President Hugo Chavez is tapping domestic banks and other investors who have excess cash because of two-year-old restrictions on dollar purchases in Venezuela. The government has sold $4.5 billion of 15-year, seven-year and six-month dollar bonds to local investors over the past two years, the first ever such sales in the domestic market.
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Brazil’s Inflation Rises
Brazil’s inflation rose .61 percent in March, up from .59 percent in February. The annual inflation rate rose to 7.54 percent, within 0.1 percentage point of a 14-month high. The central bank wants to bring inflation down to its target of 5.1 percent. It’s set to make its next decision on interest rates April 20.
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Lavagna Stands Firm
Argentina’s Economy Minister Roberto Lavagna rejected calls by the International Monetary Fund to hold further talks with bondholders who turned down the country’s debt restructuring offer. An IMF spokesman on April 8 said Argentina should “develop a realistic strategy” to resolve the demands of non-participating bondholders. Argentina earlier this year agreed to swap $62.3 billion in defaulted debt for new securities, which the country says ends its three-year default. About 20% of bondholders rejected terms and some are suing the government in US courts to demand full repayment.
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People
The Brazilian government has confirmed Elifas Gurgel do Amaral, 49, as president of Anatel, the federal telecom regulatory agency. Gurgel, an engineer and reserve army colonel, had taken over on an ad hoc basis in January. He is a close ally of Communications Minister Eunício Oliveira and member of the PMDB party, a member of the ruling coalition. The government picked Gurgel over senior career Anatel officials, despite opposition from Finance Minister Antonio Palocci and telecom operators concerned that nominally independent Anatel is losing its autonomy. Brazil has one of the largest and fastest-growing telecom markets in the developing world.