Investment Opportunities in Northeast Brazil: Don’t Miss the Boom

Interview with Jorge Lopes, Strategic Projects Coordinator of Piauí Government & Financial Director at Telhas Mafrense/Blocomar

In current times, do you see more foreign investments and investment opportunities in Piauí?

In 2003 our GDP was 7,3 and in 2009 it was a little bit over 20. Mainly in the agrobusiness, there is a huge growth, due to our vast reserve of productive land in Cerrado.

My connection with the National Confederation of Industry, with SEBRAE and others makes it easier to draw investment to our State, and the growth is mainly seen in the agrobusiness sector with only 10% of the agricultural land being cultivated. Our late development of the business in Cerrado was beneficial, because we were able to develop and strengthen environmental laws. When we started to explore the Cerrado, we made it according to the rules and preserving all ecosystems.

In Brazil the legal reserve of land is 20% and in Piauí it was raised to 30% and that shows the care we are having.

This is no “El Dorado”, so we have our problems too, for example, our production flow, not enough roads, etc., but our Governor is committed to solve these issues.

Which are the main opportunities here in Piauí?

There is a growing sector concerning animal protein. Big companies are settling in the south of the state to produce it. We have a project to slaughter around 500 thousand birds/day to meet the demands of the domestic market, and also to be sold abroad. We are just starting the project, but the government is working on roads and electricity distribution, which are essential for the project to develop.

Most Governors are trying to draw private investment, because we can’t work just on the Union budget and others of the sort. One of the projects that was worked like that was the Forest Promotion Program, which drew private investment in the forestry activities sector.

We recruited, for one year, a consultancy company, because we had to open some doors: we went to Finland, England, France, etc., taking with us the message of that well elaborated project called PDFLO (Programa de Desenvolvimento Florestal – Forest Promotion Program). People interested in the cellulose sector started to appear.

Drawing private investment is the future.

What other potential projects can be implemented in Piauí?

With the possibility of railway construction called “Transnordestina”, there are several groups that have intensified their research about Piauí.

Since we have huge iron deposits, a company went to London to speak about it. What was interesting was that the client was more interested in Transnordestina than in the iron deposits. That whole area will develop in terms of mineral extraction and production flow.

An Export Processing Zone (ZPE Parnaíba) is going to be developed at the beginning of the railway and that will be the birth of the development and huge growth of the area.

Can other companies enter this new Export Processing Zone?

Of course they can. It’s open to companies connected with the mineral business and the agrobusiness. This EPZ is opened to national and international investment.

When will the Transnordestina be finished?

We believe that it will be ready in 2 years. We’ve had some difficulties around the project, but the government has a team of people to solve any problem in a fast way, because we think this railway will represent a brighter future.

To which type of investors Piauí makes most sense in terms of type of activity and company size?

Here in the “semi-arid” area we have the company Vale do Rio Doce working in the extraction of nickel, for example. I think that there is a huge potential in this sector: iron, aluminium sulphate, phosphate and limestone. Vale searched for nickel and found the biggest limestone reserve ever found here in Piauí. This sector will also benefit from the Transnordestina construction.

The area of fertilizer production will also be growing a lot to meet the existing demand and also the future demand of the expanding agricultural areas in the Cerrado.

Natural gas was found in Capinzal, in the centre of Maranhão. We have a project to build a gas pipeline from Ceará to Maranhão. At this point we already have enough resources, in terms of money, to build the pipeline.

This natural gas will be excellent for companies that want to produce ceramic floors here in Piauí, because the burning in the furnaces becomes even with the use of natural gas.

The investments in Piauí appear to be almost all made in commodities. Is that sustainable in the long run? What are the projects to develop a sustainable economy (IT, services, etc.) that could create job opportunities?

There is a project regarding the treatment of electronic waste. This is called reverse logistic; if someone has a licence to sell 10 000 phones, that someone will have to have the capacity to treat the electronic waste of 10 000 phones. In construction, for example, companies only obtain construction licences after stating where the building residues will be taken to.

Nowadays garbage is money. If a Municipality doesn’t have the capacity to treat its solid waste, it will not receive resources from the Federal State.

In terms of education, the system SENAI/SESI is there to meet the demands in terms of the companies needs.

We have donated some land to the Federal Government to build a federal institute related to forestry and cellulose. That is a Federal training facility.

The transformation from just selling commodities, to transforming them, is already starting. Soy, for example, leaves Piauí in the form of grain, but also in the form of animal protein.

Some of our export highlights are honey, nuts and carnauba wax. In our exports highlights we have products with added-value and products that fixate men in the land.

Can you tell us your reasons to be settled here in Piauí?

We are here due to the high quality of our clay. We are able to place our products here and in the Northeast. When natural gas comes, we’ll be able to have quality companies in the ceramic floors sector.

What are your projects for the future?

Normally, sidewalks and town squares are made from cement. In Colombia they use a sort of clay and we are able to do the same here.

Another project is to produce white clay. There are a few white clay tiles arriving here from the south. To produce it we need a sustainable reserve.

These new projects are going to be developed just with the company’s resources or are you looking for partners?

We already have a partnership with a German technology NGO, but companies from this sector are always looking for partners.

Which are your biggest challenges here?

We are the only company in Piauí that has a PSQ (Programa Sectorial de Qualidade – Quality Sector Program), so our greatest challenge is to produce white clay tiles and clay pavements with the highest quality.