Infra 2009 - Apresentação Michael Meagher - China e Brasil

8/2/2019 Infra 2009 - Apresentao Michael Meagher - China e Brasil

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23 - 24 April 2009


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China e Brasil:

Potenciais Parceiros em Projetos

de Energia Alternativa

Michael Meagher

C.W.Downer & Co.

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Background

Chinese Infrastructure Development

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Transportation Infrastructure

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Highways, waterways, and airports are being improvedacross the country

All of these projects bring opportunities to constructionequipment, engineering, and electronics and safetydevices companies, especially for projects funded by

the World Bank, Asian Development Bank and OECF

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The Chinese Government is in the midst of a massiveupgrade of its transportation infrastructure


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In the past few years, China has beenrapidly developing its highway system

The government has added about 3,000km of expressway a year to the existingnetwork

China has already built a 30,000 kmnetwork of highways, second only to theU.S. in total kilometers

Highways


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One major project is a 29 km bridge acrossthe mouth of the Pearl River in the southeastern province of Guangdong to link Hong

Kong and Macau, and then on to Zhuhai

Work on this US $730 million project isexpected to start this year

Bridges


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China has sixteen major shipping ports with acapacity of over 50 million tons per year

Combined Chinas total shipping capacity is inexcess of 2,890 million tons

By 2010, 35% of the worlds shipping isexpected to originate from China

Ports


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0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Shangha i Shenzhe n Hong Kong Guangzhou Ningbo Qingdao Tianjin

2006 Throughput

2011 Throughput

Selected Chinese PortsUnit: 1,000 TEU


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The new Shanghai Port of Yangshan is an example ofthe type of investment the Chinese are making in portinfrastructure

The first two phases of the US $14.5 billion Yangshandeep-sea port are now open, with a 2020 target yearfor achieving the full capacity of the port (33 to 50deep-sea berths) at 25 million TEUs per year

The port is located about 32 km (20 miles) offshoreand is connected to the mainland by a highway bridge

Port of Shanghai


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2006 2010 Five Year Plan:

Six new railways for passenger transportation,including one between Beijing and Shanghai

Five inter-city railways, including one betweenBeijing and Tianjin that has trains running at atop speed of 350 km/h

Upgrading of five existing railways including onebetween Datong and Qinhuangdao

Chinese Railway System


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Shanghai Metro

Shanghai Metro opened in 1995

By 2010 it will have 250 km of track

By 2012 it will 500 km of track with350 stations citywide


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Chinas Response to the Economic Crisis

At a time when major infrastructure projects are

being put off around the world, China will spend an

estimated US $586 billion over the next two years

roughly 7 percent of its gross domestic product

each year to construct new railways, subways

and airports and to rebuild communities devastated

by an earthquake in May 2008


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Rural infrastructure:

Efforts will be made to speed up rural

infrastructure construction

Roads and power grids in the countrysidewill be improved, and efforts will be stepped

up to spread the use of methane and toensure safe drinking water



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Transport:

Accelerating the growth of the transportnetwork, including more passenger rail links

and coal routes

Trunk railways will be extended and moreairports will be built in western areas

Urban power grids will also be upgraded



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China's Government announced it will spend anextra CNY 100 billion (US $14.5 billion) on keyprojects in the fourth quarter of 2008

About CNY 28 billion (US $4.06 billion) hasbeen allocated to railways, roads and airportinfrastructure, CNY 15 billion (US $2.18 billion)for railways, CNY 5 billion (US $2.18 billion) forhighways, CNY 5 billion (US $2.18 billion) forrural roads, and CNY 3 billion (US $726 million)for the country's central and western airports

Additional Projects Announced 04 Dec 2008


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(Tianjin is the port city nearest Beijing)

Chinese City Example: Tianjin


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From 2004 China began to secure raw materialsthrough investing in Chinese businesses thatoperated in Latin America

Many Latin American business leaders thought they

could look forward to a sharp increase in Chineseforeign direct investment

Chinese did not invest in their companies, but

sought to buy them instead

There were some exceptions, such as Chile'sCodelco copper mining company, which saw asignificant investment from China

Chinese Infrastructure Projects in Latin America


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China offered to make a US $4.82 billion investmentin Brazil's rail lines but the deal died because Chinawanted to bring in its own workers, while theBrazilian government wanted those jobs forBrazilians

Brazil's saw its trade balance with China reverse,resulting in a deficit largely driven by cheap Chinesetextiles flooding Brazilian markets

Some business sectors accused the Chinese of"dumping" textiles on Brazil, selling them far belowmarket prices



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In September 2008, in response to the boycottstaged against its price hike by Chinesesteelmakers, Brazilian iron ore miner Valerefused to provide ore to China

Jia XiangRong, vice-chairman of JiangsuShagang Group, China's largest private steelenterprise, also spoke of the ships stranded in

Brazil:

We are angry with Vales behavior and ourbottom line is no way for even a penny

increase."



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In February 2009 Petrobras announced ithad signed two Memorandums ofUnderstanding with Chinese institutions andan export oil contract with UNIPEC Asia Co.

Ltd. -- a subsidiary of China PetrochemicalCorporation, or SINOPEC to export around100 thousand barrels of oil per day

The Memorandum between ChinaDevelopment Bank Corporation, SINOPECand Petrobras presents has the followingsdetails :



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* Credit supply to Petrobras, including the option to

off-set the debt with the export of oil, as per

Chinese institution option and in a volume to be

defined in the future

* Increase the oil export of Petrobras to China

* Partnerships between Petrobras and Chinese

companies to develop projects in several oil

industry segments

* Supply of service, material and equipment by

Chinese companies to Petrobras

* Promoting contacts between Chinese and

Brazilian companies for the purpose of creating

joint ventures


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The amount of the deal is estimated as US$10 Billion in loans for Petrobras which is inexchange for future oil exports

The loans will be used by Petrobras tocontinue its investment programs to developa huge oil field in the pre-salt basin



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In January 2009, Draga Brazil, a consortiumheaded up by Chinese dredging firm ShanghaiDredging Company, bid for a share of theReais1.46bn ($729.8m) dredging contractsbeing offered throughout by the Braziliangovernment

Draga Brasil has already won the Reais17.5maward to carry out Emergency Dredging for the

port of Itajai

Many people believe Draga Brasil is well placedto win further contracts in Brazil



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Draga Brasil has already confirmed to SAO thatit will be bidding for Tender $78.3m, numbertwo, which is for Brazils Santos port

Draga Brasil announced that it will not bebidding for Rio Grande (tender number threeworth $91.5m), in the south of Brazil

A Draga Brasil spokeswoman added that the

consortium will put in bid offers for a goodpercentage of the other six contracts coming upthis year



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In 2004, Chinese leader Hu Jintao traveled toLatin America, promising US$100 billion in tradeby 2010 on the heels of the APEC summit inChile

His promise was reached in 2007, with tradebetween China and Latin America passing someUS$102 billion

Bilateral trade between China and Brazilreached around US$23.37 billion



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Alternative Energy in China

China rapidly has moved along the path ofrenewable energy development

About 16 percent of China's electricity came

from renewable sources in 2006, led by theworld's largest number of hydroelectricgenerators


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In 2007, China had the world's largest totalinvestment in renewable energy sources(excluding large scale hydropower plants) withexpenditures of US $10.8 billion, up 91 percent

over the year before and the largest installedrenewable capacity at 152 GW

In 2007, China invested US $12 billion, almostlevel with world leader Germany as apercentage of GDP


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For wind power, Chinese policymakers haveset an ambitious goal of putting in place 30,000MW of wind power by 2020

Biomass energy from agricultural waste, strawand waste from cities alone may exceed 500million metric tons of coal equivalents


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In the near-term China plans to develop 120GW of renewable energy by the year 2020; thiswould account for 12% of Chinas total installedenergy producing capacity. China's growth

target for renewable energy production willrequire an investment of approximately 800billion Yuan (~ US $115 billion) by 2020

China has set a renewable energy target of 5%of primary energy by 2010 and 10% of primaryenergy by 2020


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In the long term, China has set an objective of

having 30% or more of its total energy

requirements satisfied by renewable sources by2050


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Wind Energy

China is the fourth largest producer of windpower, after the United States, Germany, andSpain

China has identified wind power as a keygrowth component of the country's economy

It is anticipated that China will have 25-30 GWof windpower capacity or even more by 2010


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Wind Energy

In 2006, China had 1.3 GW of installed windcapacity

In 2007, China added 3.4 GW of wind power

In 2008, 5.5 GW of wind power was added

China projects to add 10 GW of capacity per

year by 2010


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Wind Energy

There are currently more than 40 windturbine generator manufacturers in China,

including 4 foreign invested enterprises, 7joint-venture companies and over 20domestic manufacturers


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Solar Energy

China has become a world leader in themanufacture of solar photovoltaic

technology, with its six biggest solarcompanies having a combined value of overUS $15 billion

Around 820 megawatts of solar PV wereproduced in China in 2007, second only toJapan


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Solar Energy

In China there now are six factories producing at least2 MW/year each of monocrystalline, poly-crystallineand non-crystalline Photovoltaic cells, including:

Wuxi Suntech Solar Energy Co., Ltd., which produces

approximately 50 MW/year of solar cells andphotovoltaic modules and is the worlds third largestsupplier of solar cells

Yunnan Semi-conductor Parts Plant, which

manufactures approximately 2 MW/year of mono-crystalline cells

LDK Solar Co

S l E


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Solar Energy

Baoding Yingli Solar Energy Modules Plant, whichmanufactures approximately 6 MW/year ofpolycrystalline cells and modules

Shanghai Jiaoda Guofei Solar Energy BatteryFactory, which produces approximately 1 MW/yearof modules

Shanghai PV Science and Technology Co., Ltd.,which produces approximately 5 MW/year ofmodules

H d


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Hydropower

In 2005, the following hydroelectric powerprojects were approved by the NationalDevelopment and Reform Commission andbegan construction:

The Jinsha River Xiluo Crossing (12.6 GW)

The Yellow River Laxiwa (4.2 GW)

The Yalong River Mianpi (First Phase) (3.6 GW)

H d


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Hydropower

In 2006, 10 GW of installed hydropower capacitywent into operation in China

The National Development and Reform

Commission also approved 13 additionalhydropower projects in 2006, which cumulativelywill have 19.5 GW of power generating capacity

H d


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Hydropower

New hydropower projects that were approvedand began construction in 2006 include:

The Jinsha River Xiangjia Dam (6 GW)

The Yalong River Mianpi (Second Phase) (4.8GW)

The Lancang River Jinghong (1.75 GW)

The Beipan River Guangzhao (1 GW)

Bi d Bi f l


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Biomass and Biofuel

China emerged as the worlds third largestproducer of ethanol bio-fuels (after the U.S. andBrazil) as of the end of the 10th Five Year PlanPeriod in 2005

At present ethanol accounts for 20% of totalautomotive fuel consumption in China

Bi d Bi f l


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Biomass and Biofuel

In the 11th Five Year Plan period (2006 through2010) China plans to develop 6 million tpy of fuelethanol capacity

Chinas fuel ethanol capacity is expected to growto 15 million tpy by 2020

Despite this level of production, experts say that

there will be no threat to food security, thoughthere will be an increasing number of farmerswho will be "farming oil" if the price of crude oilcontinues to increase

Bi d Bi f l


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Biomass and Biofuel

Work has begun on the 250 million Yuan KaiyouGreen Energy Biomass (Rice Husks) PowerGenerating project located in the Suqian CityEconomic Development Zone in Jiangsu

Province

The Kaiyou Green Energy Biomass Powerproject will generate 144 million kwh/year and

use 200,000 tpy of crop waste as input

Infrastructure Opportunities Involving


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There are many Chinese companies whomanufacture the following equipment related toinfrastructure:

Construction Equipment

Telecommunications and other electronicequipment

Steel and concrete

China is a world leader in the manufacture ofalternative energy equipment, including solar

panels and windpower turbines

Infrastructure Opportunities InvolvingChinese Companies

Infrastructure Opportunities Involving


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Some Chinese construction companies areseeking partners worldwide

Some Chinese companies make excellentjoint venture partners

Some Chinese companies are looking to

make overseas acquisitions, particularly inareas such as mining, telecommunicationsand manufacturing

pp gChinese Companies

How to do Joint Ventures and Conduct


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Chinese / Brazilian relationships have greatpromise, but many have failed due tomisunderstandings and bad strategies

There are thousands of Chinese consultantswho claim to have the relationships necessaryto help you do business

They are not professionals and will do muchmore harm than good

M&A with Chinese Companies


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SECTION IV

C.W. Downer & Co.

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C.W. Downer & Co. Specializes in Cross-Border M&A and Fundraising

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Boston

Paris

Dublin

Sydney

Frankfurt

Shanghai

40 client-side professionals across seven integrated offices

Mid-Market

Focus

Integrated

Firm

Over 30 Years

Experience

Beijing

C W D & C Si 2004


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C.W. Downer & Co. Since 2004

47 cross-border transactions

involving US, UK, Benelux,

French, German, Spanish,

Australian, Norwegian,

Finnish and Irish companies

56 transactions with

strategics,

17 transactions with

private equity groups

38 sell-side transactions,

35 buy-side transactions

Aerospace, Automotive,Food Ingredients, Material

Handling & Logistics,

Retail & Consumer

Products, Pharma,

and Industrials

73 completed transactions

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SECTION V

C.W. Downers Previous Clients

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Trusted Advisor to Leading Corporations and Private Equity Firms


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Trusted Advisor to Leading Corporations and Private Equity Firms

Private Equity

Clients:

Strategic Clients:

Infra 2009 - Apresentação Michael Meagher - China e Brasil

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