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- A. Jonathan Buhalis

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V Winner Post #1- People of Brazil

More about Brazil.

Brazil's population is very diverse, comprising many races and ethnic groups. In general, Brazilians trace their origins from four sources of migration: Amerindians, Europeans, Africans and Asians.

Brazil has conducted a periodical population census since 1872. Since 1940, this census has been carried out decennially. Scanned versions of the forms for each census distributed in Brazil since 1960 are available on-line from IPUMS International.

Cities in Brazil, except for the state of São Paulo, are usually not arranged in a single network, but rather on various export paths to seaside ports. Some geographers have called this an "archipelago" of cities, and the most important cities are on the coast or close to it. State capitals are also each the largest city in its state, except for Palmas, the new capital of the recently created state of Tocantins, and Florianópolis, the capital of Santa Catarina. There are also non-capital metropolitan areas in São Paulo state (Campinas, Santos and Paraíba Valley), Minas Gerais (Steel Valley), Rio Grande do Sul (Sinos Valley), and Santa Catarina (Itajaí Valley).

São Paulo and Rio de Janeiro are far larger than any other Brazilian city. São Paulo's influence in most economic aspects can be noted in a national (and even international) scale; other Brazilian metropolises are second tier, even though Rio de Janeiro (partially due to its former status as the national capital) still hosts various large corporations' headquarters, besides being Brazil's cultural center with respect to soap operas and film production.

Immigration has been a very important demographic factor in the formation, structure and history of the population in Brazil, influencing culture, economy, education, racial issues, etc. Brazil has received the third largest number of immigrants in the Western Hemisphere, after the United States and Argentina.

Brazil's structure, legislation and settlement policies for arriving immigrants were much less organized than in Canada and the United States at the time. Nevertheless, an Immigrant's Hostel (Hospedaria dos Imigrantes) was built in 1886 in São Paulo, and quick admittance and recording routines for the throngs of immigrants arriving by ship at the seaports of Vitória, Rio de Janeiro, Santos, Paranaguá, Florianópolis and Porto Alegre were established. The São Paulo State alone processed more than 2.5 million immigrants in its almost 100 years of continuous operation. People of more than 70 different nationalities were recorded.

Following the trend of several other countries in the Americas, which encouraged immigration from many countries, Brazil quickly became a melting pot of races and nationalities, probably the second largest in the world after the USA, but being peculiar in the sense of having the highest degree of intermarriage in the world. Immigrants found a strong social and cultural tolerance toward inter-racial marriage, including large numbers of Mulattoes (white and black), Caboclos (Indian and White) and mixed European, African and Indian people, though it was not accompanied by an entire lack of racism.

Correspondingly, the same mentality reflected in low psychological and social barriers regarding intermarriage between Europeans, Middle Easterners and Asians of several origins, as well as between people of different religions.
In part, the population descends from early European settlers — chiefly Portuguese; African (Yoruba, Ewe, Bantu, and others), and assimilated indigenous peoples (mostly Tupi and Guarani, but also of many other ethnic groups). Trans-ethnic marriages and concubinage have been common and well accepted ever since the first Portuguese settlers arrived. Starting in the late 19th century Brazil received substantial immigration from several other countries, mainly what are now the countries of Italy, Germany, Spain, Poland, Lebanon and Syria (mostly Christians), Ukraine, Japan, the People's Republic of China and Korea. Jewish people, both from Ashkenazi and Sephardi origin, form considerably large communities, especially in Rio de Janeiro and São Paulo.

The descendants of more recent European immigrants, particularly the Germans, Italians and Poles, are mainly concentrated in the southern part of the country, in the states of Rio Grande do Sul, Santa Catarina, Paraná, and the most populate, São Paulo; these states have a large majority of people of European descent. In the rest of the country, most of the white population is of older Portuguese settler stock. In the mid-southern states of Rio de Janeiro, Espírito Santo, Minas Gerais, Goiás, Mato Grosso do Sul and in the Federal District of Brasilia, the number of whites is somewhat equal to the number of Afro-Brazilian and mixed race Brazilians.

In the Northeast, which received large masses of African slaves to work in sugarcane, tobacco and cotton plantations, people of African and mixed-race descent are dominant. The city of Salvador da Bahia, for example, is considered one of the largest black cities of the world. In the Northwest (covering largely the Brazilian Amazon), a great part of the population has distinguishable ethnic characteristics that emphasize their Amerindian roots. Other ethnic groups have merged with the Indigenous tribes there. This region is not densely populated, and "caboclos", people of mixed native and European descent, are a small part of the entire Brazilian population.

The Japanese are the largest Asian group in Brazil. In fact, Brazil has the largest Japanese population outside Japan, with 1.5 million Japanese-Brazilians, most of them living in São Paulo. Some Chinese and Koreans also settled Brazil. Most Chinese came from mainland China, but others came from Taiwan and Hong Kong, and also from Portuguese-speaking Macau—these Chinese from Macau could speak and understand Portuguese, and it was not hard for them to adjust to Brazilian life. Those immigrant populations and their descendants still retain some of their original ethnic identity, however they are not closed communities and are rapidly integrating into mainstream Brazilian society: for instance, very few of the third generation can understand their grandparents' languages.

There are also a large number of Brazilians of Arab descent (estimated at 10 million people), most of Christian Lebanese or Syrian descent.
According to the 2006 census, White Brazilians make up 49.7% of Brazil's population, or 93.096 million people.

Whites are found in the entire territory of Brazil, although the main concentrations are found in the South and Southeastern parts of the country. White Brazilians are all people who are total or mostly descended from White immigrants.

Up to 1800, close to one million Europeans had left for Brazil, most of them colonial settlers from Portugal. The boom of the immigration occurred in the 19th and 20th centuries, when nearly five million Europeans immigrated to Brazil, most of them Italians, Portuguese, Germans and Spaniards.

Although White Brazilians make up the majority of the population, a large number of them have some Amerindian and/or African ancestry (similar admixture are found in White Americans and White Argentines). Today, White Brazilians come from a very diverse background, which includes:


The Arab Brazilian population is estimated at about 10 million people, mostly Syrians and Lebanese people.

The Dutch were among the Europeans settling in Brazil during the 17th century. From 1630 to 1554, the Dutch controlled the northeast coast of Brazil, establishing their colonial capital in Recife. However, they had a minor influence in Brazil's ethnicity.

The first Germans arrived in Brazil in 1824. Most of them established themselves in rural communities across Southern Brazil, such as São Leopoldo, Novo Hamburgo, Blumenau and Pomerode. In states of the south, such as Santa Catarina and Rio Grande do Sul, they may represent as much as 35% of the population. [17]

Italians started arriving in Brazil in 1875. First they settled in rural communities across Southern Brazil. In the early 20th century, they mostly settled in the coffee plantations in the Southeast. 25 million Brazilians are of Italian origin, the largest numbers outside of Italy itself, most of them descended from Northern Italians.

Poles came in significant numbers to Brazil after 1870. Most of them settled in the State of Paraná, working as small farmers.

Most Brazilians are full or partly of Portuguese ancestry. They started arriving in 1500, the immigration grew in the 18th century and the boom occurred in the late 19th and early 20th centuries.

Spaniards came in large numbers to Brazil, starting in the late 19th century. Most of them were attracted to work in the coffee plantations in the State of São Paulo. Today there is an estimated 15 million Brazilians of direct Spanish descent.

According to a survey, the main ancestries claimed by White Brazilians are:
§ 45.53% Brazilian ancestry (mostly people of distant Portuguese background).
§ 15.72% Italian
§ 14.50% Portuguese
§ 6.42% Spanish
§ 5.51% German
§ 4.80% Amerindian (self-declared Whites who claimed to be part Indian)
§ 1.88% African or Black (self-declared Whites who claimed to be part Black)
§ 0.72% Arab
§ 0.62% Japanese (self-declared Whites who claimed to be part Japanese)
§ 0.25% Jewish
§ 4.05% others

- A. Jonathan Buhalis

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V Winner Post #2- Tourism to Brazil

A rich popular music, the best soccer in the planet, beautiful people, happy and hopeful, almost 8000 kilometers of beaches blessed by sun most of the year. During decades, Brazil didn’t pay attention to the tourism, imagining that, naturally, sooner or later, tourists would be in huge lines waiting to visit Brazil. But this didn’t happen and was necessary a long period to realize two facts why the area wasn’t successful. The first one is that Brazil doesn’t have exclusivity about the beauty of the planet and the second one is that without serious investments in tourism – promoting the image abroad for the improvement of the infrastructure to host the tourists. - The country takes the risk of staying for always in a second division in of the richest areas, dynamics and competition of the global economy.

The shock of reality helped Brazil to wake up in the tourism market. In the last years, thanks to the effort of a group of public and private areas, the country left the condition of promises to transform into a serious competitive market . The statistics already show the results, and are very relevant. According to the OMT- World Organization of Tourism, while the number of passengers of international trips raised around 50% in the planet between 1995 and 2005, the growth registered in Brazil at the same time was 170%. The reason of the rise of visitors, the exchange generated by the tourism got a record number of 4.3 billions of dollars. Result: Tourism is the fifth major commercial product of Brazil, behind only of iron minerals, oil, soy and automobiles.

The money brought by the tourists helped to move the market that earns more than 100Billions of Reais a year and employs more than 2 millions of people in the country. Isn’t coincidence that Brazil got the eyes of the big international hotel’s groups. Since a decade to now, more than 100 internationals chains got in Brazil. They are responsible for 2 of the 10 new establishments that are being built. Brazil was in the 5th place in the list of the 10 best country to the tourists, behind China, US, Morocco and Argentina, being in front of Spain and Greece.

Today, according to the OMT, Brazil is the 36th major destiny of the world in terms of visitors, and the 39th in terms of profits in the area. The development of national tourism faced a lot of problems with the infrastructure, for example the air blackout. That generated between the year of 2005 and 2006 a down number of visitors to Brazil from 5, 4 millions of people to 5, 1 millions. The first World Rank of tourism was analyzed 124 nations, being judged fundamental topics in the tourist industry, for example safety and infrastructure. The winners were Switzerland, Austria and Germany. Brazil got the 59th place, behind of countries like Bahrain, Costa Rica and Estonia. According to the analysts the problems with violence, the road’s bad conditions and the delays in airports are the causes that were more negative to the evaluation. The crises in the airports its only one topic of the long historic problems. The air transportation is the most used by the foreign tourists that visits Brazil, three in four visitors gets there by airplanes. Moreover, there are huge concentrations in the airports of Sao Paulo and Rio de Janeiro: 87% of the international flights happens in the airports of Cumbica, in Sao Paulo, or The Galeao in Rio. At the moment, however, the deficiency of the infrastructure its what have more created problems in the airports. With the growth of the demand in the last years, the airport aren’t able to support it all. Since 2003, the Brazilian Company of Infrastructure area (INFRAERO) invested 2, 4 billions of Reais in operations and constructions to the improvements of 19 terminals in the country.

* Our first two posts covered people and tourism- the next two will cover politics and economy.

Stay Tuned- and feel free to post your own article or comment on any posted thus far.

- A. Jonathan Buhalis

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V Winner Post #3- Politics of Brazil

Disclaimer: As is the case in many of our Brazil posts- much of the content is Brazilian-based research. As such, ignore grammatical imperfections.

Politics of Brazil takes place in a framework of a federal presidential representative democratic republic, whereby the President of Brazil is both head of state and head of government, and of a pluriform multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the two chambers of the National Congress. The Judiciary is independent of the executive and the legislature. Brazil is divided in 26 states and a federal district. Throughout its history, Brazil has struggled to build a democratic and egalitarian society, despite its origins as a plantation colony and the strong influence of slavery.

In 2002, on his fourth try, Lula was elected president. In part his victory was derived from the considerable unpopularity of Cardoso's second term, which failed to decrease the economic inequality, and in part from a softening of his and the party's radical stance, including a vice-presidential candidate from the Liberal Party, acceptance of an International Monetary Fund (IMF) accord agreed to by the previous government and a line of discourse friendly to the markets.

Despite some achievements on solving part of the country's biggest problems, his term was plagued by multiple corruption scandals that rocked his cabinet, forcing some members to resign their posts.

In 2006 Lula regained part of his popularity and ran for re-election. After almost winning on the first round, he won the run-off against Geraldo Alckmin from Brazilian Social Democracy Party (PSDB), by a 20 million vote’s margin. Brazil is divided into two types of sub national units: states and municipalities.

Brazilian states are semi-autonomous self-governing entities organized with complete administration branches, relative financial independence and their own set of symbols, similar to those owned by the nation itself. Despite their relative autonomy they all have the same model of administration, as set by the Constitution. The states are:

§ Acre
§ Alagoas
§ Amapá
§ Amazonas
§ Bahia
§ Ceará
§ Distrito Federal
§ Espírito Santo
§ Goiás
§ Maranhão
§ Mato Grosso
§ Mato Grosso do Sul
§ Minas Gerais
§ Pará
§ Paraíba
§ Paraná
§ Pernambuco
§ Piauí
§ Rio de Janeiro
§ Rio Grande do Norte
§ Rio Grande do Sul
§ Rondônia
§ Roraima
§ Santa Catarina
§ São Paulo
§ Sergipe
§ Tocantins

States hold elections every four years and exercise a considerable amount of power. The 1988 constitution allows states to keep their own taxes, and mandates regular allocation of a share of the taxes collected locally by the federal government.

The Executive role is held by the Governador (Governor) and his appointed Secretários (Secretaries); the Legislative role is held by the Assembléia Legislativa (Legislative Assembly); and the Judiciary role, by the Tribunal de Justiça (Law Court). The governors and the members of the assemblies are elected, but the members of the Judiciary are appointed by the governor from a list provided by the current members of the State Law Court containing only judges (these are chosen by merit in exams open to anyone with a Law degree). The name chosen by the governor must be approved by the Assembly before inauguration. The 1988 Constitution has granted the states the greatest amount of autonomy since the Old Republic.

Each of the 27 governors must achieve more than 50 per cent of the vote, including a second round run-off between the top two candidates if necessary. In contrast to the federal level, state legislatures are unicameral, although the deputies are elected through similar means, involving an open-list system in which the state serves as one constituency. State level elections occur at the same time as those for the presidency and Congress. In 2002, candidates from eight different parties won the gubernatorial contest while 28 parties are represented in the country’s state legislatures. The next set of elections took place in 2006.

The most important Brazilian states (in terms of population and economic power) are São Paulo, Rio de Janeiro, Minas Gerais, Rio Grande do Sul, Paraná, Bahia, Pernambuco and Pará.Brazil has no clear distinction between towns and cities (in effect, the Portuguese word cidade means both). The only possible difference is regarding the municipalities that have a Law Court and those that do not. The first are called Sedes de Comarca (Comarca being the territory under the rule of that Court). Other than this, only size and importance differs one from another.

The municipality (município) is a territory comprising one urban area, the sede (seat), from which it takes the name, and several other minor urban or rural areas, the distritos. The seat of a municipality must be the most populous urban area within it; when another urban area grows too much it usually splits from the original municipality to form another one.

A municipality is relatively autonomous: it is allowed to have its own constitution which is called organic law (Lei Organica), to collect taxes and fees, to maintain a municipal police force (albeit with very restricted powers), to pass laws on any matter that do not contradict either the state or the national constitution, and to impersonate itself with symbols (like a flag, an anthem and a coat-of-arms). However, not all municipalities exercise the entirety of this autonomy. For instance, only a few municipalities keep local police forces, some of them do not collect some taxes (to attract investors or residents) and many of them do not have a flag (although they are all required to have a coat-of-arms).Municipalities are governed by an elected prefeito (Mayor) and an unicameral Câmara de Vereadores (Councilors Chamber). In municipalities with more than 200,000 voters, the Mayor must be elected by more than 50% of the valid vote. The executive power is called Prefeitura.

Brazilian municipalities can vary widely in area and population. The municipality of Altamira, Brazil, in the State of Pará, with its 161,445.9 square kilometers is larger in area than many countries of the world. Several Brazilian municipalities have over 1,000,000 inhabitants, with São Paulo, at more than 9,000,000 being the most populous.

Until 1974 Brazil had one state-level municipality, the State of Guanabara, now merged with Rio de Janeiro, which comprised the city of Rio de Janeiro.

The Federal District is an anomalous unit of the federation, as it is not organized the same manner as a municipality, does not possess the same autonomy as a state (but is ranked among them), and is closely related to the central power.

It is considered a single municipality, divided into the seat (Brasilia) and some urban districts (the so-called satellite cities). Satellites cities are created (in right) and governed directly by the governor of the federal district and possess no true identity.

- A. Jonathan Buhalis

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V Winner Post #4- Economy of Brazil

Brazil's GDP (PPP and Nominal) is the highest of Latin America with large and developed agricultural, mining, manufacturing, and service sectors, as well as a large labor pool. The country has been expanding its presence in international financial and commodities markets, and is regarded as one of the groups of four emerging economies called BRIC. Major export products include aircraft, coffee, automobiles, soybean, iron ore, orange juice, steel, ethanol, textiles, footwear, corned beef and electrical equipment. According to the International Monetary Fund and the World Bank, Brazil has the ninth largest economy in the world by purchasing power parity (PPP) and tenth largest at market exchange rates. Brazil has a diversified middle income economy with wide variations in development levels. Most large industry is agglomerated in the Southern and South East states. The Northeast is the poorest region of Brazil, but it has attracted new investments in infrastructure for the tourism sector and intensive agricultural schemes.

Brazil had pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Brazilian central bank has temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999. Brazil received an IMF rescue package in mid-2002 in the amount of USD 30.4 billion a record sum at that time. The IMF loan was paid off early by Brazil's central bank in 2005 (the due date was scheduled for 2006).

Brazil has a diverse and sophisticated service industry as well. During the early 1990s, the banking sector amounted to as much as 16% of GDP, and has attracted foreign financial institutions and firms by issuing and trading Brazilian Depositary Receipts (BDRs). One of the issues the Brazilian central bank is currently dealing with is the excess of speculative short-term capital inflows to the country in the past few months, which might explain in part the recent downfall of the U.S. dollar against the real in the period. Nonetheless, foreign direct investment (FDI), related to long-term, less speculative investment in production, is estimated to be USD 193.8bn for 2007. Inflation monitoring and control currently plays a major role in Brazil's Central Bank activity in setting out short-term interest rates as a monetary policy measure. The IPCA index, measured and calculated by the IBGE on a monthly basis, is the most commonly used index for inflation, although other indices such as the IPC-Fipe and IGP-M (FGV) are also widely used. According to the 2006 census, White Brazilians make up 49.7% of Brazil's population, or 93.096 million people.

Thanks to the review of the politic economy inserted in the country in 1993, Brazil construed the base to a strong economic development. It’s true that are some addictions and mistakes to these days, that’s why some adjustments are necessary so the right path can be followed. High expenses with The Public Force, high bureaucracy in his public service, and corruption are problems that the government should target it immediately.

The major consequence with high expenses with the Public Power is the high levels of taxation paid by the Brazilians. If we want to make a growth in the Brazilian economy, the government will have to adopt the reduction in the public spend. Otherwise the country will be inferior compared to other emerged markets. After having controlled the inflation, minimized the interest rates and resolved the problems of the extern debts, the priority now is to improve the business environment.

The International Monetary Fund (FMI) requested Brazil to minimize the autocracy and taxes paid by the companies for each employee, so that is a way to achieve a growth. It was also advised to the consolidation of the macroeconomics stability with the political economy in the institutional level, the rise of the efficiency of the public area and improvements of government’s bills.

Still referring with to the bureaucracy, the business environment in Brazil is in the 25th between the 31st of economies of Latin America and Caribbean Islands analyzed by the World Bank. Not counting the Caribbean Nations, making business in Brazil is not just worse than Ecuador, Bolivia and Venezuela. In first place it’s Chile, followed by Uruguay and Mexico. In the world rank, that lists 175 economies, Brazil stays in 120th place. Brazil was in 2005 the second country most expensive to live in South America, only losing for Chile. Paraguay and Bolivia were considered the cheapest ones.

In countries with a lot of differences like Brazil, the prices of products and the high concentration of income limits the access of the population to the richness. Brazil is the 6th position in family’s spending, besides, Brazil has the most develop economy in the region in terms of South America.

The information presented above show that the Tributary Reform and the Work Reform are crucial priorities in order to a bigger development.

*Ongoing disclaimer- Many of our posts are from Brazilians- please ignore grammatical errors and focus instead on content. We will make an attempt at editing posts when time permits.

- A. Jonathan Buhalis

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V Winner Post #5 Economic Activity and Land Use

Click on maps for a larger image.

- A. Jonathan Buhalis

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V Winner Post #6- Diamonds are a Brazilians Best Friend

Alluvial mining in Brazil was a labor-intensive vocation, and as such, negro slaves imported from Africa, were used extensively for mining operations. The capital city of Salvador De Bahia (est. 1549),on the Bahia de Todos os Santos (All Saints Bay) in Bahia, was a global hub for the Portuguese slave trade, and to this day, the state of Bahia has the highest concentration of blacks in Brazil. Diamantiferous sands and gravel, (cascalho or cascalhão) were hand-dug from river ledges and beds, scooped out of the river bottom by divers (escafandro), or dug from hillsides (engrunada or gruta). Then the diamond-bearing alluvium was washed in sluices of running water, washed again in wooden basins (faísca or lavagem), and finally picked through by hand. The cascalhão occurs in high river-bank ledges, as a combination of gravel and sand, but river-bottom gravel deposits were beneath a bed of clay and silt.

At first, Brazilian diamonds were not as desirable as their Indian counterparts and the fist few years of mining yielded smaller sized stones. As the supply of Indian diamonds dried up, Brazilian stones gained in popularity. In the mid 1700s, Brazilian diamonds were flooding the European market, and prices fell precipitously, but this was reversed as supplies began to dry up in the early 1800s. Brazil's largest rough diamond to date is the "Star of the South," a 254 carat stone found in 1854. Alluvial deposits in Brazil were created by Diamantiferous material being transported from its primary source, within kimberlite intrusions along the Amazonian cráton to the north, and the San Francisco Cráton in Minas Gerais. There are also diamond-bearing kimberlite bodies in the regions of Mato Grosso and Rondônia.

Diamantina in Minas Gerais

Miners prospecting for gold along the Rio Jequitinhonha river, near the town of Tejuco (now Diamantina) in the Minas Gerais region, made Brazil's first diamond discovery in 1725. By 1740, there was a major diamond rush to Minas Gerais' Rio Abaete and Rio Jequitinhonha alluvial deposits, and mining in the region reached its peek between 1785 and 1807.

Mato Grosso's Alluvial Diamond Fields

The Portuguese government took possession of the territory in 1748, creating a Colonial Captaincy so as to fully exploit Mato Grosso's mineral wealth. Mining exploration was heavily regulated by the Portuguese Crown during the 1700s, and all extracted minerals were subject to high taxation.

Mato Grosso's alluvial diamonds were first discovered in the 'Morro Vermelho' formation, near the mining town of Diamantino. By 1847, both diamonds and gold were mined-out in the area, and by 1852, the Diamantino prospect was abandoned, bankrupting the Mato Grosso Mining Society.

Chapada Diamantina in Bahia

In 1842, large diamond deposits were discovered along the banks of the rio Mucugê in the mountainous region of Chapada Diamantina (Diamond Highlands), in the Brazilian state of Bahia. This created a diamond-rush to the region, causing a new glut in the European market.

Diamonds in Chapada Diamantina's Serra da Sincorá (Cincora) region (aka Lavras Diamantinas) occur in river gravels and sands (cascalhão) along the banks of the rio Mucugê, which is a tributary of the rio Paraguaçu (Paraguassu river). Within the Chapada Diamantina sits the Circuito do Diamante (Circuit of the Diamonds) surrounded by the towns of Andaraí, Mucugê, Palmeiras, and Lençóis.

By 1901 around 5000 slaves worked in the Bahia mines at Serra da Sincorá. The Sincorá region is one of the few locations on earth that carbonado is found. Carbonado (aka 'carbon diamond' or 'black diamond') is a rare, semi-porous black polycrystalline variety of diamond.

The Chapada Diamantina has a dramatic landscape with high plains, table-top mesas, and steep cliffs or towers known as 'tepuy.' Before the arrival of the Portuguese in the 1800s, the only local inhabitants of the region were indigenous Indians from the Maracas and Cariris tribes. In 1985, the Chapada Diamantina region was made into a National Park, with its headquatrers in Palmeiras.

Brazil's Recent Diamond History

In the 1960's, near Mato Grosso's capital of Diamantino, the 'Mato Grosso Diamond Project' (a 63,000-hectare claim block) created a 'diamond rush' to the area. To date, more than 50 kimberlite pipes have been located, many of which are the most likely source for the region's historic alluvial deposits.

In 1999, nearly 3000 itinerant miners (diamond diggers, or garimpeiros) illegally entered the protected, Cinta Larga ("broad belt") Indian reservation to mine for diamonds. This area lies between the states of Rondônia and Mato Grosso, along the Bolivian boarder. Mining was forbidden within the 'Roosevelt Reservation' in order to preserve the indigenous 'Cinta Larga' people's homeland, but the Cinta Larga are allowed to engage in 'small scale prospecting' (garimpagem), if the labor is done exclusively by indigenous Indians. Federal Police evicted the garimpeiros, but the government estimates that as much as $50 million were smuggled to Belgium.

The Cinta Larga attacked a group of illegal prospectors in April of 2004, killing 41 of them. Since the incident, tensions in the region have eased, and in October 2004, Brazil received accreditation to obtain a Certificate of the Kimberley Process. Diamond mining within the Roosevelt Reservation could be worth an estimated $3.5 billion annually.

Future Diamond Mining in Brazil

The most promising locations for any future Brazilian diamond mining activity are in the states of Matto Grosso and Bahia, and in recent years diamond mining activity has picked up in the region. Diagem Inc. in cooperation with Rio Tinto (Rio Tinto Desenvolvimentos Minerais Ltda) is still surveying for new diamond finds in Brazil. There have been several promising finds at its 'Collier-04' kimberlite pipe, located in the Juina diamond district of Mato Grosso, Brazil.

Exploration in the Diamantina, Regis, Santo Antonio, and Serra da Canastra regions of Minas Gerais is currently being conducted by Brazilian Diamonds Limited, CODEMIG, and Mineração Rio Novo Ltda.

Word Resources and Supply-2006

According to data of the Mineral Commodity Summaries – 2007, the world reserves of diamond changed little as compared to 2005, but it is worth highlighting that the data on the world availability of diamonds are still inaccurate and that the world source for consultation is limited solely to the reserves of uncut diamonds, of the type industry. Congo is the country that holds the largest reserve of diamond, contributing 27.4% of the world reserve.

Brazil contributes only 2% of the world reserve and according to consolidated data of the Annual Extraction Report 2007 – base year 2006, out of the 24 Mct (millions of carats) declared by miners, 19 Mct are from secondary deposits and 5Mct from primary deposits. The State of Mato Grosso has the largest declared reserve of Brazil, and contributes 77% of the secondary reserve and 100% of the primary reserve.

The world supply in 2006 was of about 176 Mct, with a small decrease as compared to 2005 of 0.6%. According to data of the Kimberly Process Certification Scheme, the biggest producers were Russia (21.84%), Botswana (19.53%), Australia (17.05%), and Congo (16.51%), which together contributed 74.9 % of the world production of diamond in 2006.

It is estimated that Brazil, in 2006, produced circa 0.2 Mct of diamonds, contributing only 0.11% of the world production.

DOMESTIC PRODUCTION

According to the official records, the Brazilian production of uncut diamonds (industry and gem) in 2006 was of 181.350 ct, and the State of Mato Grosso produced 96.4% of the diamonds, Minas Gerais 3.4% and Goiás only 0.2%. It is possible to notice a drop of approximately 41% in the production of diamond as compared to 2005, which occurred due to the interdiction of exports of uncut diamonds, in the period from February to September, 2006, brought about by “Operation Carbon”.

In the corporate segment, the major producers of diamond were Chapada Brasil Mineração Ltda (Chapada dos Guimarães – MT) that produced 10.312ct; S.L. Mineradora Ltda (Juína – MT) that produced 8.457ct and Mineração Rio Novo Ltda (Diamantina – MG) with a production of 5.514ct. But most of the Brazilian production still comes from artisan mining, from areas object of PLGs – Regime of Permission of Artisan Extraction. In 2006, only in Juína, the PLGs produced circa 151.000ct of diamond, which corresponds to approximately 84% of the Brazilian production.

Foreign Trade

Exports

In 2006, the Brazilian exports of uncut diamonds were of 90.017ct, producing revenues of US$ 5,415,769.60. As well as in production, exports featured a drop for the already mentioned reasons. The drop recorded in volume (ct) was of 25% as compared to 2005 and the drop recorded in the revenue (US$) was of circa 72%. (In 2005 Brazil exported 280.519.38ct, producing revenues of US$ 19,052,767.86).

The countries of destination were: the European Community (86.16%), Israel (9.95%) and the United States (3.9%). The DNPM issued 16 certificates, 10 for the European Community, 4 for Israel and 2 for the United States.

Ongoing and/or Forecast Projects

In Brazil there are several diamond provinces at research stage, mostly in the states of Mato Grosso, Rondônia, Mato Grosso do Sul, Bahia and Minas Gerais and this factor will probably contribute for an increase in reserves.
Vaaldiam Resources Limited develops eight projects in Brazil, 3 advanced projects (Pimenta Bueno – RO, Brauna – BA, Duas Barras – MG), 4 Projects under evaluation (Taboco – MS, Traira – MT, Barra Rica and Gruta – MG) and 1 new project (Aroeira – BA). Project Duas Barras is scheduled for production in 2007, with a capacity of 38.000 ct/year.
DIAGEM International Resources Corporation (Juína-MT) has detected primary sources of diamond and is intensifying research activities, in addition to beginning extraction in 2007 in areas already researched.

- A. Jonathan Buhalis

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V Winner Post #7- Brazil is Golden

Brazil, which was the biggest gold producer when it was Portugal’s colony in the XVIII, is still investing in increasing its gold mining industry to offset the dramatic fall in the production of ‘garimpeiros’. Entrepreneur Eike Batista leads the project started last November by Mineração Pedra Branca do Amapari in Amapari, 200 km from Amapa, which means a new development cycle for that state which has suffered the impact of the manganese mines’ shutdown in Serra do Navio, formerly operated by ICOMI.

His associate partner is Canadian Gold Corp and the project has been implemented in 18 months to produce 5 t/y of gold as the third biggest mine in Brazil. In its first phase of the open-pit mine and heap-leaching plant to treat oxidized ore, R$150 million were invested. In the second phase, to take place from 2009 to 2012, R$150 million more will be invested to open an underground mine and build a CIL plant to treat sulphide ore. Reserves amount to 1.53 Moz of gold, at a grade of 2.3 g/t, sufficient for 12 years of production.

Yamana Gold is another Canadian mining company, with two mines in Brazil – Fazenda Brasileiro, in Bahia, and Bacilandia, in Goiás. It has an extensive program involving three new projects, São Francisco, in Vila Bela da Santíssima Trindad, Mato Grosso, with a 4 Mt/y ore capacity requiring $45 million in investment; and the Chapada project, whose production is expected to start in October 2006 generating 16 Mt/y of ore, which will demand a $100 million investment. The third project is São Vicente, in Nova Lacerda, Mato Grosso, an operation expected to start in December 2006, producing 1.8 Mt/y of gold ore.

Yamana Gold is predicting its gold production exceeding 340,000 oz in 2006, increasing to more than 500,000 oz in 2007 from mines currently in production and under construction. For 2008, total production is expected to
increase to almost 600,000 oz.

Estimated production to 2008 from Yamana properties (shown pro forma assuming the completion of the acquisition of RNC Gold, which includes the acquisition of the San Andres mine in Honduras and La Libertad in Nicaragua, by March 1, 2006) is detailed below. The other mines below are all in Brazil.

Potential gold production from São Vicente has not been included in the table as the project is subject to completion of feasibility studies. Gold production at Chapada in 2006 will mainly depend on whether or not mine construction is completed in September 2006.

AngloGold Ashanti announced investment of $125 million in 2005, 70% of which is to increase the production Cuiabá mine in south-eastern Brazil to open new galleries underground and access ramps to deeper levels than the current 700 m, going down to 1,300 m. The project focuses on deepening the mine to access the Serrotinho and Fonte Grande ore bodies, located below the existing mine, which account for 60% of the total mineral resource at Cuiabá. Production will increase from the current level of 190,000 oz/y to 250,000 oz/y at a cost of $169/oz over the life of the project and will extend the life of mine profile by six years to 2019.

To accommodate the resulting increase in mining volume, the project will include upgrading shaft hoisting capacity and constructing new milling and flotation facilities at the Cuiabá shaft area. Flotation concentrate will be transported via the existing aerial ropeway to the treatment plant at Queiroz, located 16 km from the mine, both located in Minas Gerais, where another roaster and acid plant will be built and the current leaching facilities upgraded.

The existing milling and flotation facilities at Queiroz will be decommissioned. The expansion should be commissioned in December 2006, ramping up to full production by the end of the second quarter of 2007.

In addition to significantly increasing production at Cuiabá, the completed
deepening project may also provide a new opportunity to exploit narrow-vein ore bodies below level 11 at Cuiabá as well as the Lamego deposit in the area. Conceptual studies have highlighted the potential to extract significant value from these areas, which would otherwise be sterilized, using the infrastructure that the Cuiabá expansion will provide. Commenting on the expansion, AngloGold Ashanti CEO Bobby God sell said:

The company also holds interests in Crixás gold mine, in Goiás and is studying the gold ore body in Córrego do Sitio. Investments for 2006 have been estimated at $90 million.

Jaguar Mining is a Canadian gold mining and exploration company that produces gold in Brazil and is expanding production and expects to produce at a rate of 200,000 oz/y by 2008.

Jaguar’s focus is on gold properties in the Iron Quadrangle, which is a compact but prolific gold-bearing greenstone belt in close proximity to the well-serviced mining city of Belo Horizonte, in the State of Minas Gerais.

Belo Horizonte is the mining capital of Brazil. The Iron Quadrangle is a geological sweet spot which has hosted several multi-million ounce gold mines that exhibit strong vertical continuity to depths exceeding 2,000 m.

Jaguar describes Brazil as “a pro-mining country offering outstanding minerals resources and infrastructure, commitment to sustained mining development and respect forth environment. It is active in four local regions in the Iron Quadrangle: Paciência, Sabará, Santa Bárbara and Turmalina, where last year it worked to upgrade approximately 1.3 Moz of measured and indicated resources to proven and probable reserves in its four regions by completing feasibility studies that preliminarily indicate production of between 1,200 and 4,000 t/d, depending on the property.

At the beginning of this year, Jaguar commissioned its new 25,000 oz/y gold oxide heap leach facility and recovery plant at Sabará. The plant is crushing and stacking ore at a rate of 450,000 t/y and has produced its first gold. This surface production advances Jaguar’s development plan of becoming a mid-tier producer by generating near term cash flow while it completes development and construction of its underground mines. Underground operations are projected to make up 75% of Jaguar’s production profile of over 200,000 oz/y by2008. Jaguar also confirmed the measured and indicated resources feeding the new plant at 2 Mt at 2.8 g/t.

In the Sabará Region, Jaguar now has production capacity of 75,000 oz/y. It is producing gold at two oxide plants and is developing its underground Catita sulphidemine. Catita mine began supplying 400 t/dof ore to the Queiroz plant of AngloGold Ashanti in the first quarter of 2006. Jaguar will sell 65,000 oz of gold this year. Jaguar is also building the 60,000 oz/y Turmalina mine and ended 2006 with 150,000 oz/y of production capacity. Rio Paracatu Mineração (RPM), controlled by Kinross, started its expansion project III for the Morro do Ouro mine at an estimated cost of $110 million, which will allow it to grow, beginning in 2007, its gold production from 7 t to 10 t/y, by commissioning a SAG mill to process harder ores (Wi above 9). The plant will increase its throughput from 20 to 30 Mt/y.

The expansion of the mine and its reserves resulting from lowering the underground water will increase its lifecycle to 11 years.

Canadian junior Desert Sun Mining has invested $40 million to resume gold production at Jacobina Mineração in Jacobina, Bahia, which was closed at the beginning of 1999.

In January 2005 the first mill was activated and the second, in February. The underground mine João Belo is already producing 120,000 t/month on average. Jacobina’s potential is 4 Moz of gold, but further deposits may be found in the so-called 160 Km long ‘Gold Belt’. Eldorado Gold assumed 100% ownership of the São Bento mine in July 1996, in Minas Gerais. This 20 km2 property hosts an underground mine, conventional mill with flotation, pressure oxidation, BIOX plant and CIL. It produced some 65,000 oz in 2005.

The Amapari heap leach and processing plant, at Amapá, in the north of Brazil.
There is also the Vila Nova gold project in Amapa State, where Eldorado holds an option to acquire 84% of the project. The 2005 diamond drill programmed began in November and totaled 764 m in nine holes. The drilling occurred in two areas where the targeted gold mineralized zone has been exposed: Gaivota and Croado.

Brazil ranks twelfth in world production (and second in Latin America) according to GFMS, with output in 2001 at 51 tonnes (1.6 million oz), of which roughly 38 tonnes (1.2 million oz) came from formal mines and the balance from alluvial operations (garimpos) worked by prospectors (garimpeiros).

Greenstone belts in Brazil's extensive Achaean shield, similar to those in Canada and South Africa, host extensive gold deposits. Gold was first discovered in 1552, but significant production did not begin until after 1700 at alluvial deposits in Minas Gerais, Goias and Mato Grosso provinces.

Output was around 16 tones (0.5 million oz) by 1750, making Brazil the world's largest producer, but then declined.

In 1835 the Mineracao Morro Velho mine opened in Minas Gerais; it is the world's oldest continually worked mine, now owned by AngloGold, who also have a 50% share in the Serra Grande mine.

Apart from Morro Velho and limited alluvial output in the Amazon basin, output did not rise above 10 tones (0.3 million oz) until 1980. Then the high gold price prompted an immense gold rush of garimpeiros, who located rich alluvial deposits along the Rio Tapajos and Rio Madeira and in the regions of Cuiaba, Cumaru, Alta Floresta and, above all, at Serra Pelada ('Hill of Gold' in Portuguese) south of Belem in the Amazon delta. Serra Pelada alone produced 13 tones (0.4 million oz) in 1983. Production peaked at a record 102 tones (3.3 million oz) in 1988. The best alluvial deposits, however, were soon worked out and through the 1990s the balance shifted to formal mining as Brazilian groups, such as CVRD, and foreign mines such as Rio Tinto, TVX Gold, and Eldorado Gold developed mines. By 1993 their output exceeded garimpos.

Gold production was at 50,393 kg in 2000, including 8,368 by garimpeiros. Deposits found at Serra Pelada in 1980 raised gold production to 103,000 kg by 1989; production averaged 90,380 kg in 1987–91, and output in 1996 was 60,011. Higher production costs, depletion of shallower deposits, lower world prices, and much higher environmental standards caused the drop-offs. Gold output could increase significantly with the growth of copper production and increased interest by domestic and foreign investors in largely unexplored areas; more than 2000 gold occurrences were known, mostly Precambrian vein deposits and alluvial placers.

Brazil in 2000 was the largest recipient of foreign direct investment in the region for the fifth consecutive year—because of the sale of previously state-owned assets. The governmental Company for Mineral Resources Research has sought to expand existing mineral industries and to establish new ones—the Amazon region has been a particular focus of the company's efforts. The government took steps to encourage private capital investment in the development of phosphate reserves, the exploitation of oil-bearing shale, and the expansion of iron ore output. Brazil's petroleum and mining industries and utilities attracted investors' interest because of the government's macroeconomic policies, the country's diversified minerals endowment, and a skilled labor force. Most important in the non fuel sector were the Minas Gerais iron ore joint venture (CVRD and China's Shanghai Baosteel Group Corp.) and the Sossego copper-gold joint venture (CVRD and Phelps Dodge Corp., of the United States); both were to begin in 2002. Because of increased world demand for stainless steel and better nickel prices, $1.4 billion was invested in the nickel industry, with plans to triple output to 107,000 tons per year starting in 2003. The Carajás mining project, in Pará, was expected to lead to the mining of manganese, copper, tin, silver, gold, nickel, molybdenum, bismuth, and zinc.

The discovery of gold in Minas Gerais ("general mines") in 1693 made Brazil the world's leading gold producer; rapid exploitation under the Portuguese colonial system exhausted the mines in less than a century. The dissipation of the nation's gold wealth for the benefit of a foreign power instilled in Brazilians a protective attitude toward mineral reserves, resulting in government control. The 1988 constitution forbade foreign majority participation in direct mining operations. Lack of capital has long restricted development by domestic firms, and Brazilian mining laws and adverse geographic conditions have discouraged foreign capital. The major portion of the mineral industry was partially or wholly owned by private Brazilian investors, Brazilian corporations, and/or foreign companies, the exceptions being the natural gas and petroleum industries. The structure of the industry continued to change to a privately owned/government-regulated regime. Two 1995 constitutional amendments opened the way for participation of the private sector (domestic and foreign), through privatization, joint ventures, and deregulated investment, in the sectors of coastal and river shipping, mining, natural gas, petroleum, telecommunications, and transportation. By the mid-1990s, investment was on the rise, as a result of aggressive economic policies, the diversity of mineral resources, and the constitutional reform that eliminated restrictions on foreign investment in mining. In 2000, the import tax for minerals was reduced, with varying rates, and the export tax would no longer apply to exported mineral products, nor would the tax on industrialized products apply to mining activities.

Disclaimer- As metals in general, and gold specifically - has changed dramatically, many of the figures mentioned (monetary/production) are significantly different today. Take this piece as a general overview. We will provide more accurate numbers in the near future.

- A. Jonathan Buhalis

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V Winner Post #8 More on the Brazilian Economy

Note- as with all of our posts- we rely on Brazilian research, some of which is slightly dated. The purpose of this site is to provide general overview.

The Brazilian economy

Is the tenth largest in the world and its processing industry, the seventh. The income of Brazilians is $ 3.200,00 a year. Until 1994 the Brazil had high rates of inflation, when the Real Plan implemented the 10th exchange of currency during the period Republican, transforming the currency of Brazil Real, divided into 100 cents, a stable currency.
The drastic reduction of the inflationary indexes contributed to a small improvement in distribution of income. The Central Bank of Brazil, set up in 1965, with headquarters in Brasilia, gave the currency of the country, but from the Real, this function is performed by the Monetary Council Nacional (CMN), composed by the Ministers of Finance and Planning and the President of the Central Bank. Other large banks are The Bank of Brazil and the BNDES (National Bank of Economic and Social Development), in addition to numerous other state and private banks. The main sources of income are the EU Tax on Income, Taxes on Industrial Production (IPI) and Contribution to Social Security (Cofins). The Federal Government still collects taxes on imports, exports and financial operations, from the PIS / Pasep and the Net profit. The number of enterprises by 1993 in Brazil is estimated at 3.5 million, according to the Sebrae and 0.4% for large, 1% of mid size, 8% of small 90.6% and micro-enterprises, with 52.5% in the sector of trade, 32.5% in services and 15% in industry.
By 1995, 916 companies had the certificate ISO 9000. Micro enterprises are the most numerous in the services sector, accounting for 94%. The sector that is the fastest growing is agricultural. To cope with globalization, Brazil becomes, based on freedom of Market and privatization. The main buyers of Brazilian products are the United States, Germany, Japan, Italy, Argentina, France, the Netherlands and Britain.
The largest exports were: soybeans, coffee, iron ore, steel, transport equipment, meat, machinery, shoes and fabrics. The United States remain the main source of imported products by Brazil followed by Venezuela, Germany, Japan, Argentina, France and Canada.
Major imports included crude oil and refined, machinery, metals, chemicals and wheat. There in Brazil 3.4 million rural properties, which correspond to 325 million of Ha, of which only 0.9% of landowners hold 35% of the properties. Among them, 35,083 are considered unproductive land, with an area exceeding 1,000 ha, a total of 153 million of ha. This means that 47% of the land rural Brazil is part of unproductive land. Brazil is part of MERCOSUR, treaty signed by Brazil, Argentina, Paraguay and Uruguay, in 1991, in the city of Asuncion, capital of Paraguay, aiming at the establishment a common market between these four countries, which is already giving fruit. The rationalization agricultural activities, aimed at greater productivity and higher profits, modified a panorama existing previously.
Currently it is the development of agribusiness and the emergence of medium and small owners who use modern technology. Approximately one quarter of the world's coffee is grown in the plantations of Sao Paulo, Parana, Espirito Santo and Minas Gerais.
Brazil is among the main World producers of sugar cane. The main agricultural products are sugar cane, orange, corn, soybean, cassava, rice, coffee, tobacco, potatoes, cotton, wheat and bananas. The Brazilian livestock, traditionally, is the type extensive. With the adoption of modern criteria and incorporating itself breeds imported, the herd has been diversified. Currently the trend is that the livestock becomes intensive. The herd is a homogeneous distribution of the land, especially in Sao Paulo, Minas Gerais, Goias, Mato Grosso do Sul and in the South, where There are a lot of dairy cattle, pigs (36 million), poultry, sheep (20 million), goats (12 million), horses (6.5 million), donkeys (1.9 million), buffalo (1.2 million) and mules (1.3 million). Brazil has one of the largest herds cattle in the world (161 million head). The production of milk is the mount of 15,784,011,000 liter and the slaughter of 1,263,108,084 head per year. The production of eggs, chicken is 2,199,083 thousands of dozens, of quail,30,035 and thousands of dozens of honey bee, 18,841,386 kg per year.

Industrialization Brazil started after the construction of the first roads of iron in the century XIX. The first installed was the textile industry, which remained for more than 80 years as the main activity in the country. After 1960 settled in the manufacturing modern and diversified and the processing industry currently occupies the seventh position in the world. The main industry are: textiles, steel, consumer electronics, tobacco, automobiles, ships, planes, food and chemical. Sao Paulo is the main rule industrial, with factories that produce about one third of the total volume of the industries in Brazil, the cities of Rio de Janeiro (RJ), Belo Horizonte (MG),Porto Alegre (RS) and Fortaleza (CE) are also large industrials .A industry of Wood much timber has developed in the decades of 1970 and 1980 and the forests were cleared quickly, arriving to be threatened with extinction, such as Araucarias of Paraná. At Amazon continues to unbridled exploitation by from illegal logging which exclude the mahogany, particularly on Indian land, without any effective supervision. In Xapuri, in the Acre, rubber were organized and are upgrading the techniques of extraction of it, without recourse to the devastation of forests. In recent years, techniques favored to freeze the operation of Amazonian fruit as allow its exportation. Its exports, in addition to winning space on the domestic market. The mineral resources of Brazil are great. Brazil is one of the largest producers world's gold, iron, tin, of crystals of quartz, monazite and beryllium. From the Continental Platform are extracted 60% of the oil production, having the biggest part coming from the Basin of Campos (RJ).

- A. Jonathan Buhalis

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V Winner Post #9- Brazilian Industries

Paper and pulp industries

South-America's total output of paper and board in 1995 was 12.5 million tons and total output of pulp 9.3 million tons. Average increase in output has been approximately 7% per year. Brazil produces 48% of South-American paper and board and 62% of pulp. Brazil has 45 pulp mills of which 13 sulfate, 1 semi mechanical, 1 sulfite and 30 mechanical and 220 paper and board mills.
Brazil is the biggest producer of paper and pulp in South-America. It is the eleventh largest paper and board producer in the world (5.8 million tons in 1996) and seventh largest pulp producer (5.9 million tons in 1996). The main geographical areas in the paper and pulp industry are the states of São Paulo, Paraná and Santa Catarina.

Sulfate and soda chemical pulp form 90% of total pulp production. Brazil is self-sufficient in pulp and produces it also for export. Brazil also uses recycled paper as a fiber source for pulp production. In 1995 1.76 million tons were collected, of which 60% was packing paper and board.
The Brazilian paper and pulp sector is comprised of nearly 200 companies, which together employ over 64,000 people in the paper and pulp industry and a further 40,000 people in forestry. Most companies in this sector are privately-owned. Foreign-owned companies account for about 6% of the output.
Three major groups in the paper industry are Klabin, Suzano and Votorantim. Their production is approximately 37% of Brazil's total paper production. The largest integrated pulp and paper producer in Brazil is Klabin. Klabin's Monte Alegre Mill in Paraná is the largest forestry complex in Latin America. The biggest pulp manufacturers in Brazil are Aracruz with 1 million tons per year, Suzano, Klabin and Votorantim. They produce 60% of Brazil's total pulp production. The Klabin group is the leader in packing grade papers (29%) and tissue paper (25%). Suzano produces newsprint, printings and cartonboard. It also manufactures writings and tissue papers. Votorantim is the leader in printings and writings and specialty papers.

The Brazilian ecosystem is quite sensitive and because of this, the paper industry's production is based on the use of wood from plantations. At the same time, the paper industry also safeguards supplies and ensures consistent quality. Brazil has increased its forested area for commercial plantations from 47 million in 1986 cubic meters to 107 million cubic meters in 1995. Simultaneously they use 36% less natural forests.
The total area of forest plantations used by the pulp and paper industry is 1.5 million hectares, of which 61% is eucalyptus and 36% pine. Brazilian paper consumption in 1995 was 5.34 million tons with an increase of 17% from the previous year. Imports of paper and board have almost doubled from 415,000 tons in 1994 to 808,000 tons in 1995.

As a result of improvements in the purchasing power of Brazil's citizens, consumption of hygiene and sanitary products has increased by 16% annually.

The newsprint market grew about 18% in 1995. In the same year, 21% of paper and board and 33% of pulp production was exported.

Consumption of paper and board in Brazil is currently about 35 kg per capita. Differences are enormous between the north and south-east parts of the country. For instance, consumption of newsprint is 10kg per capita in São Paulo but only 200g per capita in the Amazonas. In Western Europe, consumption of paper and board is 173 kg and in North-America 321 kg per capita.

Agriculture
The rapid expansion of agriculture has led to problems such as soil degradation, water pollution and pest-control imbalances due to the heavy use of fertilizers and pesticides. There is a significant market for modern biocides, new-generation agro toxins and improved irrigation techniques.

Legal and Institutional Framework
The backbone of Brazilian environmental policy is found in the 1988 Constitution and the 1981 National Environment Policy Act. The Constitution of 1988 instituted for the first time in the country's history a specific chapter on the environment.
At the federal level, planning and coordination responsibilities are vested in the Ministry of the Environment and Amazon Affairs. Operational and monitoring responsibilities rest with IBAMA, the Brazilian Environmental Agency, under the Ministry of the Environment. CONAMA - the National Environment Council - include representatives from the federal, state and local agencies, as well as from the private sector and the non-governmental organizations.
CONAMA drafts the basic guidelines for environmental protection and regulations for the preparation of environmental impact assessments and reports.

The government demands a report on the environmental impact of any proposed activities that are potentially harmful. Environmental consulting is likely to become a promising market, due to more strict environmental regulations and the environmental licensing requirement for economic activities with an impact on the environment. However, the level of common interest in environmental issues in Brazil cannot be compared to what it is in more developed countries.

The Amazon Region
Brazilian environmental problems have attracted international attention with pollution and deforestation endangering the Amazon, the world's largest tropical forest. The amount of rainforest in Brazil is around 200 million hectares and is estimated to decrease by 0.5% to 1.0% annually. The main reason for this is said to be the burning of forests and land for cattle rising and other purposes. The pulp and paper industry uses mainly its own planted forests that are located in southern parts of the country. However, many of these forests may earlier have been natural forests.

The desertification is spreading in some areas of the north-east Brazil due to deforestation and mining activities. In the Amazon River, the mercury used to extract gold is also causing damage to nature. During the 90's, the Brazilian government has launched ambitious programs to protect the Amazon region from illegal forest and mining activities. However, much remains to be done to ensure the sustainable development of this area in the future.

ENERGY
The availability of cheap, imported energy provided the impetus for Brazil's economic transformation, which began in the 1950's and accelerated during the late 1960's. However, the 1970's oil crisis sparked a drive for energy self-sufficiency, with hydroelectric schemes, the production of sugar-based fuel alcohol, the development of nuclear resources and the stepping-up of oil and gas output.

Now Brazil is moving steadily towards a reform of the energy sector. Brazil is not pressed by the risk of an immediate energy shortage or a critical deterioration of services. At the moment the energy production is in the hands of state-sector organizations, but there are plans for extensive privatization in power generation; whereas power distribution is not to be privatized.

Electric Sector
The electricity production in Brazil is highly concentrated in hydroelectric power stations. Total installed electrical generating capacity in 1995 was 54.8 GW, excluding the self producers. More than 95% of this is generated by hydroelectric plants. Total electrical consumption in Brazil in 1994 was 226 TWh. More than half of this, 52%, is consumed in the southeast region. The southeast region also accounts for 46% of the nation's electric power production.

There are two separate integrated transmission systems. One for the north and northeast and other for the south, southeast, center, east of Brazil. Most of Brazil's territory is still not covered by an integrated electric grid; it therefore faces an inadequate supply from local generators, most of them using diesel and fuel oil.

The Itaipu power plant is a specialty in Brazil's power generation. It is the largest hydroelectric plant in the world. The Itaipu power plant is located on the Paraná River on the Paraguay-Brazil border close to Iguacu Falls. Brazil and Paraguay divide equally the 12.6 GW power production from Itaipu. An other significant hydroelectric power plant is Tucuruí Dam, capacity of 3.9 GW, located in the south-east of the Amazon basin.

Natural Gas

At present, the Brazilian gas market is served by domestic production. However, an everlasting Bolivia - São Paulo - Curitiba - Pôrto Alegre gas pipeline project will apparently come true this century. Petrobrás is constructing this USD 1.8 billion project in cooperation with foreign oil companies and has promised that the pipeline will be in operation by the end of 1999. Also, the northeast is soon to be linked by a pipeline from Salvador - Bahia to Fortaleza - Ceará and in the south and southeast a new pipeline will link Belo Horizonte - Minas to the Campos - Rio de Janeiro - São Paulo trunk line. With these new pipelines, the share of gas in the supply of energy will increase from 2.4% up to as much as 10%.

Oil

At the beginning of the 1980's, Brazil created a quite utilitarian energy plan, to restrain the intolerable burden of oil imports on the trade balance. In addition to replacement of gasoline by alcohol and oil by electricity, coal and biomass, the energy plan included improving national oil production. These facts helped to reduce oil imports radically. In 1995 Brazil produced 712,200 barrels per day. This was about half of the nation's consumption.
Privatization of Petrobrás is not being envisaged, but any private, national or foreign company will be able to go into partnership with Petrobras.

Nuclear power

Nuclear power has a minor role in Brazil's energy supply. Today, there is only one nuclear power plant in operation. Angra I, 624 MW, in Rio de Janeiro State's supplies less than 20% of the Rio de Janeiro States power needs.

Economic Growth and Energy Consumption

The stabilization of the economy anticipates a new surge of economic development which may induce a rise in the energy consumption growth rates. Most estimates are that to meet the growth of demand, it will require investments of the order of USD 10 billion per year until the year 2000. Investments are necessary to increase generation capacity from 54.8 GW to 80 GW. Without this expansion the country runs the risk of reaching the next century faced with a serious energy shortage.

Main Business Opportunities

Lack of public investment capability, almost certain economic expansion and adjustments during the restructuring period of the energy sector, will open a large field for investments on new power projects and privatization. Light, distributor in Rio de Janeiro, and Escelsa in Espríto Santo have already been privatized. Other state utilities will be privatized in Rio de Janeiro and São Paulo and hydropower plants will be tendered. Two big gas pipeline projects, Amazon Project and Brazil-Bolivia Natural Gas Pipeline, offer business opportunities.

- A. Jonathan Buhalis

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V Winner Post #10 - Brazilian Industries - Continued

HEALTH CARE
Brazil's major health authority is the Ministry of Health (MOH). The ministry is involved in a host of activities, including the provision and regulation of health services. The decentralization of the country's medical system has given more autonomy to states and cities in the planning and control of local health care programs. The SUS, (Sistema Unico de Saude - Unified Health System), was created to transfer hospital products procurement to the states and municipalities.
About 120 million people are reported to depend exclusively on public health care, provided through state, municipal, and private contracted hospitals throughout the country. Despite strong social security financing for health care, serious disparities remain among regions and different income groups. The Government of Brazil wishes to improve the capability of its health system by rehabilitating and re-equipping its decaying SUS, and has launched a project named REFORSUS. The project is assisted by the World Bank and during the next three years, altogether a sum of USD 650 million will be directed to hospital equipment investments.
About 35 million people are currently covered by private health insurance which ensures them the possibility to use otherwise extremely expensive private health services. The insurance is usually paid by the employer and typically covers the rest of the family, too. The number of insured people is expected to increase to nearly 50 million as a result of the constantly growing standard of living. Currently a portion of 90% of the medical device sector market is formed by private hospitals.

All health care products, including equipment, must be registered at the Brazilian Ministry of Health prior to commercialization. Also, ISO 9000 certificate is considered to be mandatory, and a FDA certificate usually helps to gain reliability in the market. The imported products must be innovative, ergonomic and of high quality as domestic medical equipment production also exists. The bidding process for the public sector goes strictly according to predefined general rules set by the government. Private sector marketing is similar to marketing to any private company.
The role of a qualified, on-site Brazilian agent is extremely important in gaining access to end-users of imported medical equipment. Personal visits to directors of surgery centers, who make the purchasing recommendations, are considered essential. Direct mail and advertising campaigns in specialized publications may also be effective, in addition to exhibiting at specific trade events/surgical congresses or catalog shows. The annual Hospitalar seminar held in June in São Paulo is the biggest event of the market, gathering nearly 40,000 visitors yearly.

The products which should have the best long-term prospects in Brazil are medical imaging equipment, electro-diagnostic apparatus, and technologically advanced disposable medical products, and implants/prostheses. In the pharmaceutical sector, long-term prospects for over-the-counter (OTC) drugs and vitamins are excellent because of the high cost of private medical assistance and a growing trend toward home treatment. The medical equipment market is growing at a rate of nearly 20%; meanwhile the import toll for these products is decreasing from 14%. Consequently, the Brazilian healthcare market will be one of the most interesting in the world in the near future.

CHEMICAL SECTOR

Chemical Industries
Brazil's chemical and petrochemical sectors are ranked the eighth largest in the world, the current market being about USD 11 billion. Total production of chemicals and petrochemicals is estimated at 23 million tons. There is a large repressed demand in the area of agricultural chemicals. Trade liberalization is forcing the Brazilian chemical industry to upgrade efficiency and pricing of its production. Import duties, which reached 80 percent in 1990, are now at an average of 20 percent. The chemicals and plastics industry is responsible for around 15.7% of Brazil's manufacturing directly and indirectly, and contributed 3.6% of Brazil's GDP in 1996. The sector will continue growing at a rate of 8%-15%.

Fine Chemicals
The Brazilian Fine Chemicals Association estimates the market for the fine chemicals segment at USD 8 billion, representing 3.2% of the world market of USD 256 billion. The fine chemicals industry is new, with most investments made in the last decade. Technologically, the fine chemicals sector is among the most developed of the Brazilian economy and it has operational costs from 50 to 70 percent lower that its competitors worldwide. The domestic fine chemicals sector employs 134,000 persons. The pharmaceutical and pharmo-chemicals sub sectors alone employ over 100,000 persons.

There are approximately 600 fine chemical companies in Brazil - 80% of which are Brazilian owned. However, foreign companies maintain a dominant market share in most sub sectors. The participation of Brazilian firms in terms of sales varies from 10 to 30 percent of the total market except in the area of catalysts, where the Brazilian companies are responsible for 80% of total sales.

Major foreign groups in Brazil are Hoechst, Sandoz, ICI, Bayer, Union Carbide, Henkel, Dow and Akzo. Among the Brazilian companies are Ultra Quimica, Getec, Aquatec, IQT and Bann. The US is a leading importer with a 32% share, followed by Germany (17%) and Switzerland (12%).
The pharmaceutical industry is responsible for 33% of the imports of fine chemicals and 21% consist of agricultural chemicals. Other sectors (food additives, plastics, lubricants, pigments, cleaning products and fragrances and essences) are responsible for 46% of imports.

Industrial Inorganic Chemicals

The market for the inorganic chemicals segment reached USD 2.6 billion in 1994, with imports accounting for USD 428 million. The US supplies 29% of the inorganic chemicals import market, followed by Surinam (9%), and Germany (7%). The sector comprises about 260 companies, producing over 300 different products. International firms manufacturing in Brazil include Dow, DuPont, Monsanto, Union Carbide, and Rohm & Haas. These companies together employ more than 150,000 workers and have annual sales of about USD 14 billion. The Brazilian domestic market is large and it is expected to grow at a steady rate of 4 percent annually according to the Chemical Industry Association.

The major end-users of inorganic chemicals are Brazilian industry and agriculture. Industrial inorganic chemicals generally serve as major inputs to a wide range of industries. As such, they are used in products for agriculture and in numerous sectors of Brazilian industry, particularly textiles, plastics, pharmaceuticals, paints and varnishes, and the chemical industry itself.

Inorganic chemicals are sold in Brazil through an established network of distributors, manufacturers of complementary products acting as distributors, and direct sales from the manufacturer to industrial end-users. Direct sales are normally aimed at large industrial plants. Distributors often have in-house packaging operations to supply small and medium-size clients, and these in-house operations usually result in high price mark-ups. The larger distributors usually have branches throughout the country, particularly in the main consumption areas. Brazilian distributors, for the most part, represent local and foreign companies, and deal with a wide variety of products. The appointment of a well-known distributor who already handles the products of major companies is highly re-commended, as it provides the support for maintaining a steady market presence in Brazil.

Petrochemicals

The state owned company Petrograd has been granted exclusive rights for oil exploration and production. Petrobrás quickly set about identifying commercially viable oil deposits to become a self-sustaining, large-scale enterprise. By the early 1990's, spurred on by the world's first oil crisis in the 1970's, Brazil had more than tripled its oil production, reaching in July 1994 a record of 736,322 barrels per day.

It also became self-sufficient as regards refining. Brazil's petrochemical industry has experienced rapid expansion. Currently, Brazil has three petrochemical complexes, located in the states of Bahia (northeast), Rio Grande do Sul (south) and São Paulo (Southeast) with an overall total ethylene production capacity of 1.4 million tons per year.

Pharmaceuticals

Brazil has a powerful medicine manufacturing sector. At the beginning of 1993, about 1,300 pharmaceutical drugs were produced by 177 companies and 400 drug producing laboratories. Most are situated in the southeast of the country. Although 80% of the laboratories are Brazilian owned, they account for only 25% of pharmaceutical sales.

The government hopes to reduce pharmaceutical retail prices by promoting production in state-owned laboratories, which are operating at 50% capacity on average. The domestic production industry is dependent on the purchase of foreign active ingredients and raw materials. Three-quarters of the inputs are imported.

The value of imports to Brazil totaled USD 734 million in 1994, up 49% from 1993. Many of the products are imported by Brazilian subsidiaries of foreign MNCs. Leading sources of imports include Germany, Switzerland, Japan, the United States, and Belgium.

According to the president of the ABIFARMA trade association, the size of the pharmaceutical market at the retail level is USD 8.4 billion. The pharmaceutical research firm PMSI valued the size of the market (ex-factory prices) at USD 4.6 billion in 1994. At either level, Brazil is one of the fifteen largest markets in the world. Despite its size, per capita spending on medicine is only about USD 13 annually. Brazilians are becoming more health conscious and they are jogging, dieting, and consuming vitamins and health products. The growth of pharmaceutical consumption in Brazil tends to be correlated with the growth rate of the economy as a whole .Prescription drugs comprise 85% of the market, with OTCs making up the remaining 15%. Owing to the absence of patent protection, there is differentiation between brand name prescription and generic prescription drugs in Brazil (although usually several brands of similar drugs are available). The share of the market held by OTCs is projected to rise over the next few years. In particular, non-chemical remedies including herbal products are increasing in importance. Sales of pharmaceuticals are currently allowed only in registered pharmacies, although it is hoped that OTCs will soon be made available in supermarkets. There are more than 40,000 pharmacies in Brazil. Pharmacists are very important in the consumer purchasing process, as even OTCs are sold behind the counter.

Drugs that can be sold without prescription include vitamins, tonics, analgesics, digestive remedies, liver remedies, topical first aid products, herbal and homeopathic products, oral hygiene products, laxatives, chest rubs and inhalations, nasal sprays, topical contraceptives, and several other product types. Leading types of OTCs include brands of dipironas, C- vitamins, analgesics, anti-diarrhea, and cough and cold rubs.Brazilian prices for pharmaceuticals are among the lowest in the world . After many complaints of "abusive pricing" made by the Brazil government against pharmaceutical companies, the companies agreed to keep increases in prices at or close to the economy's inflation level. As a means to reduce prices, the Brazilian government is promoting more direct distribution channels; mark-ups represented 42% of the retail price paid by Brazilian consumers in 1992. Government and industry have also introduced a new price index, which resulted in about an 18% decline in prices


CHARACTERISTICS OF THE CHEMICAL INDUSTRY IN BRAZIL

- The Brazilian chemical industry consists mainly of producing large-scale units, intensive in capital, technology and raw materials
- The industry operates near the limits of the installed capacity
- The industry employs specialized and highly skilled manpower with the highest salaries in Brazilian industry.

- A. Jonathan Buhalis

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V Winner Post #11- Brazilian Industries- Telecom

TELECOMMUNICATION

Organizational Structure

Currently telecommunication services in Brazil are provided by 28 operators of the national Telebrás (Telecomunicações Brasileiras S.A.) system and by a couple of independent operators. The Telebrás System is responsible for operating about 90% of all 15 million telephones and 5 million mobile phones in the country. The holding company Telebrás is nowadays an authorized open capital company subordinated to the Ministry of Communications. Telebrás coordinates 27 state operators, one in each state, and Embratel (Empresa Brasileira de Telecomunicações S.A.) a company providing Brazil's interstate and international communication services. Each subsidiary operates with a certain amount of autonomy but Telebrás has, by now, been required to own at least 51% of the controlling interest in its state subsidiaries, by now, but the companies are expected to be privatized as the new law for telecommunications is expected to be set in 1997.

In Brazil the Ministry of Communications has a double role in the existing government structure. It is the agency regulating telecommunication and postal services, and also the agency supervising and controlling governmental business activities in both areas. The Ministry of Communications establishes national telecommunication policies; regulates, grants, and inspects telecommunication services as well as postal services. On the other hand, it controls business policies and the activities of Telebrás system and Brazilian Post and Telegraph company.

The subsidiaries provide local and long distance services as well as cellular and data transmission services within each of the 27 states of Brazil. The six largest subsidiaries include Telesp of São Paulo, Telerj of Rio de Janeiro, Telepar of Paraná, Teeming of Minas Gerais, Telebrasília of Brasília and Telebahia of Bahia.

The monopoly position of the Telebrás system has allowed the operators to gain over 50% profits. But, for example, American call-back services have been taken lots of customers from Telebrás' international services. However, these trends are fading as margins decrease due to privatization and tougher competition.

Technical Infrastructure

The centralized Telebrás system has resulted in a standardized communication system with uniform service standards throughout the national territory. The network is basically analog, but the biggest cities already have some digital connections and local operators are digitizing their networks at varying pace. Brazil is also one of the few nations having its own development and production technology for large size digital switching equipment. Over 20% of fixed lines are connected to automatic Stored Program Control (SPC) centers.

Brazil's telecommunication transmission relies very much on satellites and microwave radios. Rural areas cover two thirds of the country's territory and wireless systems are the only reasonable way to reach all regions. After the four Brasilsat satellites were launched in 1985-1995 Brazil has had a modern domestic satellite communication network that has made possible the extension of voice, video, data, and text services to remote areas integrating all municipalities. International services are provided through satellites, analog submarine cables, and fiber optic cable systems.

Mobile Systems

Brazil has the biggest mobile telephone network in Latin America with approximately 5 million users. The expanding rate is also remarkable, estimated to be 45% new users annually. The operator market within cellular systems is expanding almost 190% a year. At present, there are up to 2.5 million people on waiting lists for cellular lines. Cellular systems are typically run by a local state-owned operator which operates on A-Band. The new digital B-Band is to be licensed to private consortiums, typically formed by a financial, media and telecommunication company operating on one of the ten B-Band regions of Brazil.

American standards for mobile communications have strongly influenced the Brazilian cellular system. Analog 800 MHz AMPS system is the main mobile communication standard and also the digital system will be a North American standards: CDMA or TDMA. However, Brazil must also take other Mercosul members into account when considering new communication standards. The systems should be as compliant as possible. The national roaming service based on the IS-41B standard covers the whole country, being one of the widest automatic roaming systems in the world.

Paging services have always been rendered by private enterprise. At the moment there are four paging operators in the market: Mobitel, Teletrin, Powernet and Connectel serving altogether 1.5 million subscribers. Eighty new channels will be opened in 1997 and the paging market is expected to grow to nearly 4 million subscribers by 2003. Also, new voice pager devices will emerge on the market by 1999. Pagers in Brazil are alphanumeric, i.e. the message is sent to the receiver directly and not left in a voice mailbox. The reason might be in culture: Brazilians do not feel comfortable talking to a machine. The pager operator market has been open to competition for years and the companies are healthy and well-prepared for the future.

Data Communication

Data communication is also a free market as long as the transfers do not cross state borders. Interstate and international data communications are still Embratel's monopoly. Data services consist of data-, voice-, and video services. So far, the biggest user groups for data communication services are banks, multinational companies and national organizations but the market is growing at a rate of 30% a year.

Development Plan

Brazil's telecommunication sector has a huge improvement potential. Communication resources have not been capable of meeting the needs of rapid economic growth. There are far too few telephone lines available, approximately 11 lines per 100 inhabitants, and they are expensive. Queuing time for a telephone line can range from half to three years, while the nation's economic expansion increases the network load on existing lines. A dense public telephone box network combined with paging and virtual telephone services have offered a cheaper alternative for telecommunication. The most urgent need for communication services is within the triangle region of São Paulo - Belo Horizonte - Rio de Janeiro.

The Ministry of Communications has elaborated an ambitious plan for developing telecommunications and postal services in Brazil. The project is named The Recovery and Expansion Plan Program for Telecommunications and Postal Systems (PASTE). To meet the country's needs, huge investments are planned to be directed to the sector by 2003 - a sum of about USD 75 billion. The government is also intensively opening markets for foreign investors to gain a surge of capital inflow for building a massive communication system in the country.

Opportunities

If privatization of the communication sector will materialize as planned and Brazilian economy stays stabilized, business opportunities are numerous for foreign companies. Privatized markets are easier to enter and the market grows rapidly, especially among cellular and data transfer systems. Brazilian telecommunication operators are willing to invest intensively on new technology, but usually it requires cooperation with some domestic company. Thus, a cooperative R&D work would be one good way to start a high-tech business in Brazil. All value-added services around cellular communications and data networks are a good opportunity especially for small and medium sized companies.

MAIN OBJECTIVES OF THE NEW TELECOMMUNICATIONS CODE

To provide conditions for all telecommunication services to be developed in a competitive environment.
· To create conditions for the full participation of private sector initiative in the telecommunication service sector, ensuring equal opportunities.
· To stimulate the capabilities of sectors from the telecommunications industry to participate in domestic and foreign markets creating attractiveness for Brazil to become an international telecommunications center.
· To institute an objective and transparent process to grant licenses to exploit services to ensure the efficient utilization of the radio electric spectrum and of the orbital positions of satellites.
· To establish a tariff and pricing system that will lead to the allocation of resources in the sector, stimulating the achievement of productivity gains and consequent transference to society, also making feasible an appropriate offer of telecommunication services throughout national territory.

Source: Ministry of Communications

- A. Jonathan Buhalis

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