Brazil greenlights over US$2bn to support shipbuilding and ports

The Brazilian government’s merchant marine fund (FMM) authorized the release of 12 billion reais (US$2.14bn) to support the port sector.

The financing will be for 32 private initiatives from shipbuilding to the modernization and expansion of port terminals, the ports and airports ministry said in a statement.

"The government's initiative is positive, but in fact we still see these investment announcements in the port sector with almost no practical effect, because export and import operations in Brazil continue to face high costs and there are also delays in procedures, keeping trade activity in Brazil very expensive," José Augusto de Castro, president of foreign trade association AEB, told BNamericas.

The funding from the FMM is the first operation approved after the ports and airports ministry published a framework earlier this month allowing more financing from the fund for projects that use more local content and generate more local jobs in the shipbuilding and repair industry.

The banks responsible to intermediate in the financing are development bank BNDES, Banco do Brasil, Caixa Econômica Federal and Banco da Amazônia.

The government did not unveil details of the projects to benefit but in a separate statement BNDES said that it approved, via the FMM, 3.7bn reais for local firm LHG Logística to invest in waterways used to transport iron ore and manganese.

With the proceeds, LHG Logística plans to construct 400 barges and 15 towboats to transport iron and manganese ores along the Paraná and Paraguay rivers.

The vessels will be built over the next four years in six shipyards, located in the north, northeast, south and southeast regions of Brazil.

"This is an operation that contributes to the development of national production, generating thousands of quality jobs, boosting decarbonization with cleaner transport and reactivating the shipping industry, which faces difficult international competition from countries like China and Singapore," the development bank’s president, Aloizio Mercadante, said in a statement.

“By investing in local production, the country not only reduces dependence on imports, but also boosts exports and the Brazilian trade balance," he added.

The ores are extracted in Corumbá, in Mato Grosso do Sul state, and loaded onto barges before traveling 2,500km along the waterway, crossing Paraguay, until reaching the seaport of Nova Palmira in Uruguay, where they are loaded onto long-haul ships.