A steel mill being built by 30,000 people and costing an astounding $8.2 billion is being announced at Brazil’s biggest private sector investment for 15 years. It is expected that this mill alone will boost Brazil’s annual steel exports by over 40%.
This is yet another electoral boost for President Lula, who was at Santa Cruz, which is just outside Rio de Janeiro last month to launch Atlantic Steel Company (CSA), a joint venture by ThyssenKrupp of Germany and Vale, the Brazilian mining giant.
CSA is located next to the port of Itaguaí, which is one of several industrial complexes taking shape along the length of Brazil’s coastline. So far this year they have increased the overall rate of investment in Brazil to 18.5% of GDP. This is up from an average of 16.6% over the previous eight years.
While for most this is cause for celebrating for Brazil this is still not enough. In order to make its current fast paced growth sustainable Brazil must invest between 20 and 25% of its GDP. What makes this a challenge is that this is election year and while President Lula has been giving the go ahead for projects such as CSA, he has also been giving generous pay rises to public sector workers. This has brought further pressure on public investment.
In the end something has got to give, Brazilians can’t have both sides of their bread buttered.
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