RIO DE JANEIRO—Chinese Premier Li Keqiang kicked off a
tour of South America on Tuesday by unveiling billions of dollars
in financing and trade agreements for Brazil's biggest companies,
part of a broader effort to deepen ties with the region despite an
economic slowdown.
The investments are largely aimed at strengthening Brazil's
aging infrastructure and at helping the commodity-dependent nation
weather lower prices for metals, crude oil and other commodities.
After riding the coattails of China's breakneck growth in the last
decade, Latin America's largest economy is widely expected to fall
into recession this year—partly due to softening demand
from China.
Ceremonious announcements of big Chinese investments have become
more frequent in Latin America during recent years as the Asian
nation sought to secure access to the raw materials needed to
expand its economy.
But often, the plans don't pan out. A study by the Brazil-China
Business Council, a local think tank, found that little more than a
one-third of the $68.5 billion in Chinese investments announced
between 2007 and 2012 were actually realized.
The latest recipients of Chinese largess included Brazilian
mining giant Vale SA and state-controlled oil company
Petróleo Brasileiro SA. Officials also confirmed an
agreement between Industrial & Commercial Bank of China Ltd.,
or ICBC, and Brazilian state-run bank Caixa Econômica
Federal to create a fund of up to $50 billion for infrastructure
projects.
Vale, the world's largest iron-ore producer, concluded the sale
of four large iron-ore vessels to China Ocean Shipping Co., or
Cosco, for $445 million, and signed a deal to sell four more ships
to China Merchants Energy Shipping Co. The company also reached an
agreement for up to $4 billion in financing from ICBC and stands to
benefit from up to $2.4 billion in credit to the two shipping
companies from Export-Import Bank of China.
Brazilian President Dilma Rousseff said Chinese state banks
offered some $10 billion in financing to Petrobras as well, as the
oil company struggles to fund major investments amid an uncertain
outlook in oil markets and a major corruption scandal. Details of
those agreements weren't immediately disclosed, and it wasn't clear
whether the total included a $3.5 billion financing deal announced
in April.
"The $10 billion credit offered to Petrobras, besides reflecting
the confidence that our oil company attracts, will help very much
the strengthening of pre-salt activities, where we already have a
substantial presence of Chinese companies," Ms. Rousseff said. The
term pre-salt refers to vast oil fields off the coast of Brazil
that Petrobras is rushing to develop.
Vale, meanwhile, accounted for the biggest chunk of Brazil's
nearly $41 billion in exports to China last year. A key supplier to
China's steel industry, the company has suffered more than most
from the hangover that followed an infrastructure and housing boom
in the Asian country. Vale's earnings have plummeted alongside
iron-ore prices, leaving it strapped for cash to complete a $16
billion expansion of mines and infrastructure that was largely
inspired by Chinese demand.
That made Vale an ideal example for Mr. Li's efforts to calm the
nerves of China's Latin American partners.
"China will be a long-term buyer of Brazilian
minerals…and also of farm products," Mr. Li said in a
speech alongside Ms. Rousseff in Brasília. The two
leaders watched as Vale Chief Executive Murilo Ferreira signed
memorandums of understanding with his counterparts at the Chinese
banks and shipping firms.
Aircraft manufacturer Embraer SA signed a final agreement with
China's Tianjin Airlines for the sale of 22 planes worth $1.1
billion. The company also would benefit from a $1.3 billion
export-finance agreement to Hainan Airlines from the Brazilian
National Development Bank.
Big Brazilian meatpackers such as JBS SA should gain a new
market, as well, as Mr. Li and Ms. Rousseff ended a Chinese trade
embargo on Brazilian beef that had been in effect since 2012.
Brazil's Agriculture Ministry said it expects to have 26 plants
ready to ship meat to China by June, freeing up some $520 million
in exports.
Write to Paul Kiernan at paul.kiernan@wsj.com and Paulo
Trevisani at paulo.trevisani@wsj.com
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