Brazil Escalates Trade With Africa

Presidents Lula da Silva of Brazil and Jacob Zuma of the Republic of South Africa during Zuma's official visit to the South American state.
Originally uploaded by Pan-African News Wire File Photos

Echoes From Davos: Brazil Follows China Into Africa

February 8, 2010 - 7:42 pm
Paul Maidment is Editor, Forbes Media

Some corridor chit-chat at Davos 2010 comparing the commercial and diplomatic push of two of the BRICs, China and Brazil, into Africa and Latin America respectively. But Mozambique now offers an intersection of the two. Vale, the giant Brazilian mining company that vies with Rio Tinto and BHP Billiton around the world, is about to start operations at a $1.3 billion coal mining project in Mozambique's Tete province for which it was granted a 25-year license in 2004 (company release). The mines are expected to produce 11 million tonnes of thermal (for power generation) and metallurgical (for steelmaking) coal a year mostly for export, turning Mozambique into the continent's second-largest coal producer after South Africa.

China's scramble for Africa's resources, and to a lesser extent India's has taken the spotlight, but Brazil's interest is growing. Last year, Roger Agnelli, Vale's chief executive, said that while Tete was its first big project in Africa, it was looking to invest in nickel and copper mining in DR Congo, Zambia and Namibia. Brazil's imports from Africa have risen more than sixfold from 2000's $3 billion. Its exports, largely food, have grown by eightfold over that time from $1 billion. Brazil's President Lula da Silva has been a frequent visitor to the continent as part of a drive to encourage more inward Brazilian investment, which has already passed $10 billion.

Like China's natural resources companies, Vale is bringing hometown support. Brazilian construction company Odebrecht will be building a power station and rail links and a port for the Tete project. The pair will soon have a familiar neighbor, Companhia Siderurgica Nacional (CSN), a Brazilian steelmaker. For its part, Odebrecht already has a big presence in Angola, as does the Brazilian state oil company Petrobras. A commonality of language, Portuguese, may well make the Brazilians feel more at home in Africa than their not universally loved Chinese counterparts--and vice versa--in the BRIC's global pursuit for natural resources to fuel their growth.