Port of Pecem & EPZ
A few years ago, The Economist magazine referenced that the Port of Pecem was one of the highest potential development areas in all of Brazil. Pecem–a commercial port 40 km north of Fortaleza and just 10 km north of Cumbuco, is now poised to become a world-class integrated manufacturing hub.
In May 2010, the Brazilian Federal Government approved the ZPE (Zone for Processing Exports,) a free trade zone adjacent to the port. The government is following through on its commitment to incentivize balanced regional development. The major ports in the south, like Rio de Janeiro and São Paulo are at full capacity, therefore the Northeast is playing catch-up with an explosive pace. Ultimately, this will have a deep, positive and long lasting effect on the overall economy for all of Brazil.
Brazilian President Dilma Rousseff is looking to private companies and investors to help provide the capital, expertise and agility the high growth area requires.
She has encouraged open bidding for the right to build and operate new ports and to install private terminals inside existing government dockyards. In a major change, port licenses will be granted to the groups that offer the lowest handling cost for the greatest volume of cargo. Previously, the rights were sold to the company willing to pay the government the most for them.
"We want to increase the efficiency of Brazilian ports with this partnership, which will make our exports more competitive and increase production," said Ms. Rousseff. "We want an explosion of investment through this partnership with the private sector."
The bulk of the investment would be made between 2014 and 2017, Ports Minister Leonidas Christino has stated. To stimulate competition, both public and private groups will operate ports.
"Our initial read is that this package is positive and it is clear the government is keen on boosting global and local trade, creating the right conditions for an economically sustainable future for Brazil," said Peter Gyde, Chief Executive of Maersk Line Brazil.
In Ceará, Adail Fontenele, the state secretary of infrastructure, says that the municipalities around Pecém are preoccupied with finding homes for the city's new workers.
Vale, the Brazilian mining giant and largest producer of iron ore in the world, released its investment plan for 2012 with US $ 563 Million marked for the new steel Mill at Pecém, Ceará. Vale will own 50% of a joint venture called CSP, Pecém Steel Company, together with two South Korean firms, Dongkuk with a 30% stake, and Posco, holder of 20%. Vale ́s $563 Million is to fund Vale ́s share of the partnership only, the total being twice that. By the time of completion the new plant is budgeted to cost a total investment of US$ 4.4 Billion, with half of that in the form of foreign direct investment from the South Korean partners.
Petrobras, the Brazilian oil giant, will follow Vale almost immediately with a 300,000 barrel per day refinery called Premium II. Together, the Steel Mill, with related industry that has joined the cluster, and with Petrobras ́ Premium II refinery, they will have a profound effect accounting for an estimated 60% of the value of all manufactured goods produced in the state of just 8.5 million population.
The new Export Processing Zone (EPZ) provides companies with powerful financial incentive, exempting those located in the zone from value added and other domestic taxes. The government has streamlined the bureaucracy and custom procedure for its exporters, creating enhanced efficiencies. Approximately, 200+ new exporting companies are expected to begin operations in the near future.
Pecem & EPZ Highlights
- Pecem is strategically located, the port is Brazil's closest trade hub to North America, Europe, Africa and China.
- A series of canals are being built to bring water north from Bahia to improve agricultural productivity in the hinterland. Pecem will be the hub for a new national railway system. New shipping routes are opening up with Africa, Europe and Asia. A new cargo airport will be constructed in Pecem to facilitate exporters, enabling them to ship goods all around world.
- There are four enormous conveyor belts that run for seven-and-a-half miles through the facility.
- Another major project is the Transnordestina railroad system. It will bring cheap transport to and from anywhere in Brazil. Direct sea access from Fortaleza to Cape Verde has recently opened, creating a transit hub for the export of goods to Africa and Europe.
- With the huge steel mill, the Premium II refinery, and Export Processing Zone, Ceará is destined to become a global player.
To summarize, hundreds of thousands of jobs will be created in this area over the next few years with a large percentage being highly skilled and well paid. Quite simply, this enormous industrial hub currently being built will transform this area into a powerhouse that will create substantial growth over the next decade.