Brazil chemical industry missing out on investment boom

Bnamericas Published: Friday, April 05, 2013
Although the global chemical industry is currently enjoying a wave of new investments in the US, the Middle East and China, Brazil is missing out because it is not moving fast enough to make the most of its offshore oil and gas discoveries. That's the opinion of João Luiz Zuñeda, director of leading local chemical consultancy Maxiquim, based in the southern city of Porto Alegre. According to Zuñeda, the sector's weak performance in 2012 and Brazil's annual trade deficit of around US$28bn in chemicals are the culmination of years of underinvestment and reflect the lack of competitiveness of Brazilian raw materials. Because of the shale gas discoveries in the US, Brazil no longer has competitive raw materials, he told BNamericas. "Brazil has a similar wealth of natural resources in the form of the pre-salt discoveries, but it is waiting far too long to do anything about it. Brazil is being left behind the US because of the pre-salt delays," Zuñeda said. "Brazil is taking too long to use its resources. It needs to address this issue. The chemical industry is very intensive in capital and in raw materials, so obviously because of the lack of supply investors are choosing to invest elsewhere, in the US for example." To restore competitiveness, Zuñeda says the government needs to ensure that there is competitively priced feedstock for the chemical industry. "The government also needs to cut the taxes on raw materials to improve competitiveness, so that companies have some incentive to invest in production. The government doesn't understand the problem of the lack of competitiveness of raw materials in Brazil. If taxes aren't cut, the chemical industry in Brazil won't be able to compete and won't be able to take advantage of the pre-salt reserves." Read the full interview with Zuñeda in Monday's bulletin, for subscribers only.

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