Chemical Industry in Brazil: Brazilian Chemical Industry Association

Interview with Fernando Figueiredo, CEO of ABIQUIM (Brazilian Chemical Industry Association)

How would you evaluate the chemical industry sector in Brazil?

The chemical sector in Brazil is going through a very complicated period. The Brazilian chemical market has been growing by approximately 7% each year since 1990, but imports are growing exponentially. This year the Brazilian production grew by 1.7% and imports grew by 7.3%. This results in imported products occupying one third of the Brazilian market.

ABIQUIM defends the idea that we need to adopt measures to increase competitiveness.

ABIQUIM’s focus is on the work of the “Conselho de Competitividade da Indústria Química” (Chemical Industry Competitiveness Council) set up within the plan “Brasil Maior”, which is a governmental program, with the idea that we should concentrate all measures we need to increase our competitiveness. This plan has been progressing well; in 2013 we achieved the exoneration of raw material for the first and the second chemical generation, and that was very important in order to recover a little bit of the sector’s competitiveness.

We have two concrete studies that will probably be completed in May: the Chemical Industry Survey that is being conducted by BNDES to identify investment opportunities in Brazil, and a research done by ABDI called Technologic Agenda for Renewable Chemicals, where they’ve tried to identify the technologies that could work worldwide in terms of chemicals for renewable sources. They are now finishing the research, identifying those that could be applied in Brazil, so that it will be possible to determine public policies.

Our focus is on increasing the competitiveness of the Brazilian chemical industry. I would like to point out that trade defense is something exceptional that must be adopted by the government. Brazil should take action against bad practices that are occurring on the international market like, for example, the exchange dumping that is being practiced by certain Asian countries.

As the guiding line of the competitiveness increases, we think we should have a policy to add value to Brazilian raw materials.

Brazil and the USA are the only countries in the world that have a great market and a great petro-chemical raw materials basis. In gas and oil, for example, specialists say that Brazil will be self-sufficient and that it will be able to export in the next 10 to 15 years. We are probably going to be the 4th biggest oil and gas exporter.

If you think about rare earth, which is fundamental for high technology chemical products, China is the biggest producer, the 2nd place goes to the USA, and the 3rd biggest producer is Brazil.

If you think about minerals, for example, quartz, Brazil exports it and imports silicone-based products. When we talk about silicone, everyone thinks about silicone breast implants, but that is not our main application; we use it in the oil and deep-water exploration. We use silicone for sealing doors and windows, etc.

Talking about biodiversity, Brazil has the greatest biodiversity in the world. We think that Brazil should have a policy to add value to these raw materials. The model that we should follow is the US one. One third of the US recovery was due to the chemical industry.

Do you think Brazil is heading towards that model?

We made some progress with the Chemical Industry Competitiveness Council, but the focus of the Brazilian government, unfortunately, has been consumption, and this model is near exhaustion. We need to rapidly change and go off the beaten path.

Competitiveness is a recent focus of ABIQUIM. What was the original focus of the association?

ABIQUIM is 50 years old. Brazil was able to build 3 petro-chemical centers, which were very modern at the time, without having oil or gas. We need to rethink and profit from the opportunity we now have with the renewable chemicals and mineral reserves. We need to plan the chemical industry for 20 to 25 years ahead; we need a long-term planning.

How can ABIQUIM best contribute to the chemical sector and companies within the area?

ABIQUIM has 2 very important attributes: it is very respected by the government and it has a high representativeness in the chemical industry. We have 180 members. We estimate there are around 800 medium sized companies in the chemical sector in Brazil. All big companies are members of ABIQUIM, all multinationals participate in it.

You have several interesting programs such as “Responsible care”. Could you to talk a little bit about them?

The chemical industry is seen as a problem by many. Most people forget about the extremely important part of the industry.

In the early 1990’s, the Canadian chemical industry created a program that we call “Atuação responsável” (Responsible care) and ABIQUIM adopted that program in Brazil. To be a member of ABIQUIM, you first need to sign the program “Atuação responsável”. You need to establish criteria for a continuous improvement in terms of environmental, health and safety work. We monitor that through indicators that we issue every year (and we disclose them to the chemical industry worldwide). This year we also made a benchmark, because it’s a fundamental instrument for the chemical industry worldwide to maintain its reputation.

We also have two more programs which are of interest to worldwide society: SASSMAQ (Sistema de avaliação de segurança, saúde, meioambiente e qualidade – Evaluation system for safety, health, environment and quality), that qualifies the chemical products’ transporters in order to avoid road accidents. Transport in Brazil is another problem since it’s mainly still made by road. Afterwards, if the companies want to, they can obtain certification, which is an endorsement to enter and be hired by the chemical industry. We now have around 200 transport companies that are qualified through SASSMAQ. The other service we have is called PRÓ-QUÍMICA, which helps in case of an emergency. If there is an accident in any place in Brazil, the company can call us (there is a specific number) to be instructed about what should be done at the time and to know where it can go for resources.

Could you talk about your participation in the plan “Brasil Maior”?

We made a project with BNDES and ABDI with fundamental measures to be implemented in short and medium term.

In the short term, the biggest priority was the exoneration of raw materials and that was achieved in 2013. However, there were 2 more important measures in the short term: the investments tax release and the fiscal stimulus for research in renewable chemicals.

As far as the investments tax release goes, we recently received an indication from the Ministry of Finance, saying that the result might not be as impactful or positive as we had imagined. We are now re-evaluating the issue to verify if we eventually made some kind of mistake in the concept.

In terms of renewable chemicals, the government calculated and said that the way it is now it will not be approved. We need to rethink what to do.

What is important in Brazil is that today there is a lot of money for research and innovation. A company that wants to do research and innovation in Brazil has financial resources. It has resources from BNDES, FINEP, SENAI Inovação, from the state institutes for research and innovation, etc. There is a lot of money, but the problem is that there are too many people managing it.

The 4th point of the program was the price of gas, which in Brazil costs 3 to 4 times more than in the USA. We are working together with PETROBRAS in search for a solution to this problem and we are very optimistic about it.

We also have a medium term agenda. This agenda, surprisingly, was able to go forward faster than we thought. The chemical industry survey and the research concerning renewable chemicals are going to be finished in April-May 2014. Our idea is to use these two researches to suggest to the government the adoption of public policies for the development of the chemical industry in Brazil.

In terms of infrastructures, our External Commerce Committee here in ABIQUIM prepared an exhaustive study about the railroad, harbors and roads needed for the chemical industry. We delivered this study to the government.

We have been making suggestions and I think many of them are progressing above our expectations, but they need to be thought in the long run (20 to 25 years from now).

What kind of relationship does ABIQUIM have with the foreign markets?

ABIQUIM is an association that defends interests. It is not an association to stimulate business. We defend the interests of the Brazilian producers and manufacturers.

Our international participation is very limited; by an invitation of entities that organize events. We are invited to participate in lectures and I have already travelled 6 times abroad to participate in these events.

We are thinking about being much more active next year on the international promotion of the study concerning the diversification of the chemical industry and the study concerning the technological agenda for renewable chemicals. Our objective is to try to attract investors into Brazil. The studies will show what needs to be done in our country and, eventually, it will have an attractive public policy.

All big multinational companies have been present in Brazil for many years now. It tells us that this industry has always had great potential.

What would be your final words for our readers?

The chemical industry is a transversal industry. If you think of a car, for example, you will have a plastic car with an aluminum motor and a lithium battery, because the chemical industry is all over.

A chemical product is a dangerous product. The biggest secret of this sector is to manage well the risks of the chemical products.

The chemical industry was the science that contributed the most to improve and increase the quality human life. It’s also the science that contributed the most to make human life more pleasant.

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