The Safe Way to Buy Property in Brazil

 Ruban Selvanayagam has written an informative piece on safely purchasing land in Brazil:

However, it should be noted that great care should be undertaken when buying land in Brazil to avoid what is ubiquitously referred to as a golpe (a false transaction created around corrupt/illegal business practices).  The prominent risk is via the purchase of an irregular plot of land – such as in areas which are environmentally protected and not permitted for residential and/or commercial construction.  The article illustrates the case of the Billings, Guarapiranga and Cantareira mountainous regions of São Paulo – when in the 1970s, the government decided to ban construction due to environmental protection obligations.  Although many owners have since been able to negotiate their legal positions of property and land rights, their battles have been long and arduous.

The recommended first step to buying Brazilian land is to request a matrícula individual do lote (individual registration of the lot) – which will show the origin of how the plot was formed; ensure that there are no encumbrances and will effectively guarantee that it is not irregular.  With this document, the buyer can avoid 95 percent of the problems that can often be discovered when purchasing Brazilian land.  It can be obtained at the local cartório (notary office) which has a legal obligation to furnish this information to those who are interested in purchasing.  Another suggestion is to contact the local prefecture (prefeiture) in order to verify any building restrictions which may be in place such as with height (such limitations may affect the future development value of the plot).  Providing this information is also a legal obligation on the part of the local authorities.  In addition to the necessary permits (alvarás) and licences (licenças), checks should be made to ensure that there are no issues related to surrounding infrastructure and utilities (water, gas, electricity, waste disposal, transport etc.). 

Brazil's 2011 Foreign Direct Investment Jumps 20%

FDI is increasing more than expected:

Brazil will likely see foreign direct investment jump to $70 billion this year after reaching $48.5 billion last year, the central bank's monetary-policy director, Aldo Mendes, said Tuesday.

This compares with a previous government estimate of $55 billion in foreign direct investment

Foreign investment in Brazil has jumped as overseas investors seek growing markets due to a global economic slump. 

According to the Instituto de Pesquisa Econômica Aplicada (IPEA), the flow of FDI is not likely to continue:

The IPEA reported last Wednesday that Brazil stands to be a major destination for foreign investment in 2012. The International Perception of Brazil Monitor study found that the likelihood of Brazil receiving foreign investment rose from 35 points in May to 43 points in August.

Further, the percent of interviewees worldwide who consider Brazil one of the top five destinations for foreign investment rose to 70 percent in August – a 14-percent increase from May.

Brazil a World Leader in Clean Energy

Brazil's abundant water, wind, and sun are providing remarkable opportunities for clean energy industries:

According to the Intergovernmental Panel on Climate Change, up to 77 percent of the world's energy needs could potentially be supplied from renewable sources by 2050, despite the current figure being a much more modest 13 percent.

Many heads of government around the world wondering how they can play their part in such a dramatic transformation could be forgiven for looking enviously at Brazil, where the figure already stood at 44.8 percent in 2010 and is forecast to rise to 46.3 percent in 2020.

While this increase may seem small in percentage terms, it fails to take into account the huge growth that will be seen in the country's raw energy demands — and the fact that the next decade could see the foundations laid for renewable energy to quickly become even more dominant in the years that follow. 

 The windy northeast region promises to become a center for the wind power industry:

...there are a variety of reasons to be optimistic. Given the substantial investment from both within Brazil and overseas, the nation's vast and almost entirely untapped wind potential is also beginning to attract attention to the fact that few other countries are as well-blessed in terms of solar power prospects.

Despite the installation of Belo Monte and various other hydroelectric plants, the proportion of Brazil's electricity supply coming from hydropower will be expected to actually fall from 75 percent of the total in 2010 to some 67 percent in 2020.

Meanwhile, other renewable sources, such as biomass, small-scale hydropower and, principally, wind will see the 9 GW they accounted for last year triple to 27 GW in 2020. This will take their contribution to the country's electricity supply from eight to 16 percent, keeping the overall contribution of renewables to electricity at 83 pecent.

By far the biggest jump in contributions will come from wind power, which currently supplies around one percent of Brazil's electricity but would supply seven percent by 2020 under the current plans.

Institutional Investors Bullish on Brazil

JP Morgan recently released a survey that shows institutional investors to be bullish on Brazil's investment opportunities during the next three years:

A majority of these investors, who together hold approximately $57.3 billion of actively managed equity in Latin American companies, view Brazil as the country with the highest investor-relations standards.

Survey participants named Brazil and Colombia as the most promising countries for investment opportunities over the next three years; Brazil’s rapidly expanding middle class promises to yield tremendous growth, while Colombia’s pro-business government is attractive to investors.

Brazil Sees 18.8% Year-on-Year Growth in Tourism

According to the World Tourism Organization, Brazil has seen 18.8% increase in tourism during the past year, the largest increase in South America:

Thought to be a continent built for exploration, Brazil has fascinated travelers for at least 500 years with its offerings of powdery white sands, stunning natural beauty and some of the world's most colorful cities. Indeed, the data collected shows that the overall trend in tourism is positive, with Business Monitor International (BMI) forecasting a 21.5% increase in tourist arrivals to Brazil between now and 2015 helping generate around US$9bn in tourist revenue over the same period.

The 2014 World Cup and 2016 Olympics has Brazil urgently working to develop tourism infrastructure, including access, capacity, and quality of tourism centers. Brazil needs to build stadiums, improve transportation, and increase hotel capacity in and around major cities as well. 

With many projects behind schedule, the Brazilian government needs to act quickly, and invest significant funds. Through the next five years, tourist centers can expect steady flow of capital, new roads, improved sanitation, reformed common areas, and new major hotel investments. 

These improvements will provide additional momentum to a real estate market already in a strong bullish trend. Properties on and near beaches remain quite affordable as compared to the international market for similar real estate. 

Cumbuco, Ceará, Brazil

Thomas White comments on the housing shortage that is also driving new construction:

However, what Brazil has a severe shortage of is housing. In fact, the country has a housing deficit of 6 million to 8 million units, according to various estimates. On average, every year, the nation of 194 million people creates about 1.5 million households, while builders there construct only half that number of housing units. At the current rate of homebuilding, Brazil’s housing deficit is projected to last at least a decade.

Brazil as a Hedge on Inflation

CEO of Asset Management at HSBC Brazil, Pedro Bastos describes Brazil as a save haven in a difficult global economic climate:

The Brazilian market is a natural hedge for inflation on a global basis because of the heavy weight of commodity producers on equity itself. But again, Brazil is one of the few countries that offer a very appealing proposition of strong domestic consumption, infrastructure development, and also convergence of interest rates and commodities. So all four drivers playing at the same time.

He says the rapidly-growing middle class is a major driver of growth:

 As a result of personal income growth and low unemployment, there has been a huge migration of people - around 20 million over the past few years - from below the poverty line to the middle class.

Infrastructure is the second component of growth. Brazil is behind the curve with respect to national infrastructure. Fortunately, the government is in a financial position to spend. Along with the $600 billion Accelerated Growth Program (PAC2), Brazil has additional motive to build agressively in preparation for the 2014 World Cup and 2016 Olympics.

Bastos describes the interacting factors relating to commodities, energy, and trade:

Energy is also part of infrastructure and hence, I would like to talk about the oil sector. We have found pre-salt oil reserves along the coastline and that, in itself, will be a major driver for development and growth over the next few years. We will be producing 2.5 million barrels of oil by 2015 and the number will go up significantly by 2020.

Commodities: Though commodities contribute to only 6 per cent of Brazil’s GDP, it is the world leader in production of a number of hard and soft commodities - iron ore, sugar cane, coffee, to name a few.

Well-diversified export dependencies: Brazil is not dependent on the US or China alone for its exports. Hence, any impact on these economies does not impact Brazil significantly. Since 2009, China has replaced US as the largest buyer of Brazilian exports.

At CNNMoney, Penelope Wang discusses the importance of emerging markets to a well-diversified investment portfolio:

Developing nations are leading producers of raw materials and commodities, whose prices tend to keep pace with inflation. That makes emerging-markets stocks a good inflation hedge, says Pittsburgh investment adviser Lou Stanasolovich.

Developing markets can also provide diversification in the event of deflation, since fast-growing nations, such as China and India, are likely to keep expanding -- in part based on rising domestic demand -- even if the U.S. lags. Indeed, the Chinese economy is forecast to grow around 8% or more every year for the next decade, according to IHS Global Insight.

Currency trends also demonstrate the value of emerging market investments. With Europe and the United States burdened under heavy debt, and with stagnant economies, future trends will give advantage to countries like Brazil, with low debt levels, healthy growth, and an abundance of natural wealth. Further depreciation of the Dollar and Euro appear very likely. Brazil may find that one of its greatest challenges is managing the strength of the Real. 

Fundamentals Look Good for Brazilian Real Estate

At National Real Estate Investor, David Lynn reports on the fundamentals underlying the Brazilian real estate market. While overall economic growth is moderating, Lynn says, "Brazil exhibits positive fundamentals for short- and long-term real estate performance."

While some are voicing concerns about inflation and the potential for an overheated economy, projected GDP for the next year remains between 3.5-4 percent, exhibiting healthy, not overheated, growth. Moreover, inflation has been moderating month-to-month during 2011. Rising wages prices account for much of the inflation pressure, along with elevated prices for raw goods. While inflation is on the high side, Brazil remains in a state of nearly full employment, with wages continuing to rise.

A strong employment environment is providing Brazilian workers with more disposable income. The financing environment has also become more accessible, with legal reforms in 2005 and the government-sponsored Minha Casa Minha Vida program for low income homebuyers. The result is a growing pool of homebuyers in market that currently lacks adequate supply of suitable housing.

According to Mr. Lynn, the fundamentals for real estate look good for the next decade:

In the first half of 2011, the real estate markets have gained speed and Brazil was among the top 10 markets in the world by transaction volume in the first quarter. Through the first six months of 2011, real estate transactions in Brazil were 79% higher than during the first half of 2010.

This is evidence of a “flight to quality” and the strong demand for quality properties in Brazil. In the medium term, the Brazilian national growth acceleration program is supposed to develop R$104.5 billion in logistic infrastructure throughout the country from 2011-2014. 

The Olympics in 2016 are expected to attract at least R$8 billion in transport infrastructure, which may create new attractive locations for industrial infrastructure.

The homebuilding industry continues to boom, and demand continues to outstrip supply. The housing deficit of the country remains and is not expected to be resolved in the next decade.

With global economic growth waning, Brazil continues to outperform with solid projections for the coming year. Even so, in the current global environment, investors need to be selective in order to protect capital and maximize return.

In the northeastern state of Ceará, MDMY Investment sees tremendous opportunities for residential housing investments near major new infrastructure developments. Their Altavila project in Caucaia is designed to cater to middle-income homebuyers in a rapidly-growing district of Ceará state.

Altavila in Caucaia

As with David Lynn, MDMY Director Jamie MacDonald-Murray foresees solid growth in the area throughout the next decade. "In this area of Brazil, large-scale investment has already been committed and is assured for the next five years at a minimum. We have tens of billions of reais coming into Pecém and tourism development at the beach centers. For international investors, the situation is ideal. Local real estate provides extremely high probability of return. Moreover, in the current global environment, considering the Brazilian government's investment plans, I would even call Ceará real estate a safe haven investment."

Brazil's Oil Reserves

Brazil was already rich in natural resources before the discovery of vast deep water oil reserves located off the southern coast. The Campos and Santos Basins contain the western hemisphere's largest new find in the past 30 years. The oil lies under approximately two miles of water, and a further three miles of salt, sand, and rock.

As of 2011, Brazil claimed proven oil reserves of 14.25 billion barrels. The quantity held in the new deep water reserves are the subject of considerable speculation.

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.

“We started with a skeptical view and finished with bigger numbers,” Chaves said in an interview at the university in the city of Rio. “When we got the first results I said: ‘Something is wrong, it’s too big.’”

While many consider these figures inflated, there is no doubt that Brazil has emerged as a major global energy power. Petrobras is looking to double production to 4 million barrels a day by 2020.

Under a law passed last year, Petrobras has been given exclusive rights as lead operator for exploration and development of the big offshore fields. Other companies can play only a strictly limited role as junior partners.

Some think the job is more than Petrobras can handle on its own. The company is experienced at deep-sea exploration. But this is an unusually tough job, drilling down through four miles of ocean and rocks and a thick layer of salt. Putting the burden on a single company will inevitably slow things down, Garmin says.

"People who have worked for years for Petrobras will tell you we're asking them to do too much," says Sotero, the Woodrow Wilson Center scholar.

Politicians in Brazil are still haggling as to how the spoils will be divided. In the meantime, much of the infrastructure spending under the government's growth acceleration program (PAC2) will be dedicated to energy and transportation. Investors can benefit by locating areas receiving PAC2 funds. One such area is the Pecém port and industrial development in the northeast state of Ceará. The local GDP is likely to double over the course of the next four years, giving rise to new local businesses, and driving property values higher.

Mastermind of Brazil's Largest Bank Robbery Captured

Antonio Reginaldo de Araujo, allegedly one of the leaders of the 2005 robbery of the Banco Central in Fortaleza, was captured last month in Sao Paulo. The thieves tunneled under two city blocks to break into the bank, taking over US$7o million, or an estimated 3.5 tons of cash.

So far 28 of the participants have been arrested and condemned in some cases to 53 year sentences, as could be the case of Araújo who is considered one of the brains of the operation.

However in spite of having captured a significant number of the original members of the gang, the authorities have only been able to recover ten percent of the money stolen.

Sam Zell on Brazil

Bloomberg has an interview with billionaire investor Sam Zell. He discusses his views on the US economy, and opportunities in emerging markets, including Brazil:

This is a country with enormous natural resources. It is self-sufficient in food, oil, water... these are enormously beneficial scenarios.

 Zell is also very bearish on the US dollar long term. He echoes some of the comments of PIMCO's Bill Gross earlier this week. Gross is straying away from Europe and the US, preferring countries with "higher yields and cleaner balance sheets," such as Canada, Australia, Mexico, and Brazil.

Meanwhile, Jim Rogers says, "The only areas of the world economy I see that are going to be dynamic are natural resources; farming is going to be one of the best professions of the next 10 or 20 or 30 years."

And just for fun, surfing bulldogs:

Photos of Ceará

A few photos of areas in and around Fortaleza:

Rainbow at Praia do Futuro, Fortaleza

View from the top of a dune

Sunset in Jericoacoara

The beach at Cumbuco

Taking a Look at Brazil's Mortgage Market

For international investors considering Brazilian property, an evaluation of the mortgage lending environment can provide clues as to the health and direction of the Brazil real estate market. Currently, foreigners are unable to receive mortgage loans in Brazil. At the same time, the domestic mortgage market in Brazil is very young, with considerable room for future growth.

Currently, mortgage lending represents just over 4% of GDP in Brazil. As a comparison, mortgage debt in the United States hovered between 55-65% through most of the nineties, and rose to a peak of over 70% during the credit crisis in 2008.

Brazil's mortgage market is growing rapidly due changes in the legal framework of lending in 2005:

“The changes revolved around real estate guarantees,” says Jose Carlos Oliveira, professor of economics at the Unb (University of Brasilia.) “In past cases of non-compliance, the person responsible for the financing did not recover an adequate amount. Starting with 2005, the government permitted institutions to work with ‘fiduciary alienation,’ an arrangement where the buyer of the property becomes the owner of the property only after he has just paid it off. Although this option creates a highly risky situation for the borrower, it makes it possible for the person who provides the funds to have an additional motivation because it permits him to recover the property in case of non-payment."

Economist José Roberto Mendoça thinks the upward trajectory of real estate values is sustainable:

"Our prices have increased as a result of liberated demand supported by a number of macro-economic factors such as higher incomes which are limiting the risk of artificial prices rises."

The report starts with examining the theoretical behavior of a housing bubble, pointing out that the US subprime crisis that primarily led to country’s downturn possesses a very different situation to that of Brazil. Mendoça outlines, "The Brazilian economy today is on a sustainable trajectory without short term macroeconomic risks’ going on to state that there are no signals of political or economic changes that will indicate further liberalisation of finance or excessively low interests rates."

Throughout the report, Mendoça discusses a range of issues including the risk averseness of the Brazilian banking system with regards to home lending; the lack of non-speculative data sources; the fact that the degree of leverage of overall house finance levels remains low and that the secondary mortgage market is very much at its infant stages, particularly in comparison to other international real estate industries. Furthermore, mortgage delinquency rates (finance agreements with payment delays of over 3 months) have decreased from 12.02 percent in 2000 to 2.52 percent in 2010.

Through most of the country, a growing middle class will continue to support property values. The low level of mortgage debt is combined with a very high level of home equity among existing homeowners, most of whom own their homes outright.

Mendoça notes that specific geographic areas have seen outsized appreciation, for instance in Sao Paulo and Rio de Janeiro. The extreme cases tend to be due to lack of supply, and can distort perception regarding valuations elsewhere in the country. The northeast in particular is outperforming the rest of Brazil economically, and has considerable room for upward price movement.

Caucaia Economy Benefitting from Pecém Development

The prefeitura of Caucaia in Ceará is already seeing significant benefits from the port expansion at Pecém:

Since the start of operations of the Port of Pecém in Sao Gonçalo do Amarante, adjacent cities are experiencing a development cycle. In the last three years, trade is one of the sectors benefitting most from this period of economic expansion. About 180 new stores moved into the center seat of Caucaia. Providing infrastructure support to the "booming business" is one of the challenges to public management. 

In addition to the shops of the Center, the population will get another shopping option for the consumer's end. The first mall in the city is expected to open later this year. Located opposite the city's main square, the development will have 78 stores, including four anchors and four medium-sized, three movie theaters and food court. 

Another initiative, according to the secretary, with the aim of leveraging the commerce of the municipality, is the Cidade do Atacado (Wholesale City). The R$200 development, built at the junction of highways 020 and 222, will have 16 sheds and should generate three thousand jobs. 

In 2010, the Gross Domestic Product (GDP) of Caucaia was R$1.9 billion. The Secretary for Economic Development ensures that with the full operation of the Cidade do Atacado, the figure will double.

Brazil's Emerging Middle Class

At Daily Reckoning, Ronan McMahon points out the oppportunities in Ceará real estate:

One of my hottest locations for real estate opportunities right now is Fortaleza, on Brazil’s northeast coast. I identified two strategies at play when I first scouted this city more than two years ago, and they still hold true today.

A new, emerging middle class means new consumers. These new consumers buy cappuccinos, refrigerators, cars, vacations, new homes and second homes. This started happening in the US in the 1950s.

We can profit by owning the condo this new middle class lives or vacations in, or the building that houses the coffee shop where they sip coffee.

McMahon, an expert on international real estate, is on record saying, "As far as I'm concerned, Fortaleza is the best beach-front buy on the planet right now."

International Investing: Look for Infrastructure Developments

The recent and potentially ongoing drop in global stock markets has reminded international investors that the global economy is still on shaky footing. The nature of the decline, fast and with heavy trading volume, is reminiscent of the crisis period in 2008, leading many investors to consider alternatives to equities.

Following years of appreciation, emerging market currencies remained strong during the recent equity selloff. If the US Federal Reserve institutes a third round of quantitative easing, expect further appreciation of commodity currencies such as the Brazilian Real. As Barron's notes, the resilience of the Real during a period of risk aversion is "one sign or the newfound respect being paid to emerging markets."

And looking back at the past several years, emerging economies sustained healthy growth despite the credit crisis. Turning our eyes to the future, emerging markets appear likely to outperform developed economies in Europe and North America for many years to come.

For one thing, countries like China and Brazil have the capacity to stimulate economic growth with public domestic spending, something lacking in Europe and the United States. Moreover, to maintain healthy GDP growth, these countries must continue to develop infrastructure at a rapid rate. Morgan Stanley estimates that Brazil should raise infrastructure spending from 2% to 4% of GDP to optimize growth.

For international investors, infrastructure and related investments provide the safest and most lucrative investment environments at a time when the global landscape appears questionable.

In Brazil and other developing economies, the energy, materials and commodity sectors remain promising. For instance, the mining sector:

Surging investment in Brazil's mining sector will help the country to double iron ore output by 2015 and triple copper production in the same period, the head of Brazil's mining institute, Ibram, said Monday. Ibram expects Brazil's iron ore output to more than double to 772 million tonnes by 2015, from 372 million tonnes of the steel ingredient produced in 2010. That is well above the mining ministry's estimate for 585 million tonnes by 2015.

Investment is expected to quicken in the 2011-2015 period to $68.5 billion compared with the $62 billion in investments in the previous forecast for the 2010-2014 period, despite a shaky global economic outlook. Ibram's president, Paulo Camillo Penna, said the world market would easily absorb the extra output.

"Even with the slowing down of the economy, the (iron ore) supply is well below the demand that exists around the world," he told Reuters at Ibram's Brasilia headquarters. "Developing countries like China and others have sustained this strong demand," he said. He said he expected iron ore prices to stay above $150 a tonne for up to five years despite anticipated larger supplies that would be available by then.

Meanwhile, recent offshore oil discoveries mean years of related infrastructure development, as exemplified by the Petrobras refinery currently under construction in Pecém, Ceará.

Under Brazil's Accelerated Growth Program (Programa de Aceleração de Crescimento, PAC), approximately US$800 billion will be spent on infrastructure between 2008 and 2013. While half will go to develop the country's energy sector, large-scale funding will be allocated to transportation and the Minha Casa Minha Vida social housing program as well.

Brazilian real estate promises to be a primary beneficiary of infrastructure spending, particularly in areas adjacent to large developments. Real estate in Brazil is also accessible to international investors, providing an opportunity to diversify holdings as a hedge against potential currency devaluation in the United States and Europe.

In the northeastern state of Ceará in Brazil, the federal government is dedicating massive funds toward the port expansion at Pecém, with complimentary investments by Petrobras, Vale and numerous other large corporations in the energy and materials sectors. Ceará is also benefitting from tourism infrastructure development in advance of the 2014 World Cup and 2016 Olympics. The money is dedicated, and construction is underway. With over a hundred thousand new jobs coming to the port area, the time for investors to enter the market is now.

Strong Rental Market for Beachfront Developments Near Fortaleza

A strong economy and thriving tourism sector are creating ideal conditions for rental properties along the Ceará coast in northeast Brazil, particularly in and around Fortaleza and the expanding port development in Pecém. International real estate expert Ronan McMahon says, "Fortaleza is the best beachfront buy on the planet right now." With one of the best-performing economies in Brazil, and some of best valued Brazil real estate, Ceará is benefitting from a growing middle class along with large-scale investment by the federal government.

McMahon notes the supply shortage of short-term rentals. Ceará is Brazil's biggest domestic tourism destination. With hundreds of kilometers of beautiful beaches and pleasant climate throughout the year, this northeastern state is becoming quite popular with international tourists as well. In addition to vacationers, Ceará's beachfront properties are seeing increasing numbers of business travelers and expatriate workers on short work assignments.

Local property expert Jamie MacDonald-Murray of MDMY Investment says the long-term rental market is thriving as well, especially in corridor between Fortaleza and Pecém. With the Pecém port undergoing a multibillion dollar expansion, the area is seeing an influx of workers at every economic level. MacDonald-Murray comments, "We see particularly good opportunities for middle-income developments as well as beachfront developments between Pecém and Fortaleza. Quality middle-income housing is in short supply. We are also seeing large numbers of foreign workers on extended assignments who are able to pay healthy rents at premium properties like our Cumbuco Beach Sun development."

At Pecém, the port expansion has committed investments of over US$20 billion during the next five years, including new power facilities, a Petrobras oil refinery, and an international steel venture involving Vale and two Korean steel producers. The Pecém development is already providing a huge boost to the local economy and job market.

The beachfront areas are also benefitting from enhanced tourism infrastructure spending ahead of the 2014 World Cup and 2016 Olympics. Brazil's government has committed US$5.7 billion to the area around Fortaleza in preparation for the World Cup, with much of these funds directed to improving transportation infrastructure. With the government working actively to improve the accessibility and quality of beach areas, property values are sure to climb significantly.

For example, in Morro Branco, a small beach community south of Fortaleza, US$60 million will be spent to upgrade the roads. Local property owners will be the beneficiaries. MDMY's MacDonald-Murray is pleased with the government's plans. "Just as with our Cumbuco development, our Regatas de Morro Branco beach condominiums are gaining value due to government investment initiatives. Even better, these investments are committed, and will occur regardless of what happens in the global economy. Those interested in Brazil investment should take a long look at Ceará."

Power Plants in Pecém

Here is the MPX web page on the two power plants under construction.

In the construction stage,  Energia Pecém and MPX Pecém II thermoelectric power plants located in the municipality of São Gonçalo do Amarante, are expected to increase power generation in Ceará by 90%. Both plants will be running on pulverized coal, brought from MPX own mines in Colombia, via  Pecém Port.

Energia Pecém will feature two 360 MW modules, totaling 720 MW, of which MPX owns 50% and EDP 50%. At the new energy auction A-5, held in October,  2007, Energia Pecém contracted 615 average MW, assuring fixed earnings of approximately R$ 467,4 million (base: March/2009) indexed to the IPCA inflation index , for 15 years, as of 2012.

Recent news concerning the start of energy generation:

Brazilian energy company MPX Energia SA, which is controlled by Brazilian billionaire Eike Batista, said Friday it will start electricity generation at its Pecem I and Itaqui coal-based thermoelectric plants in northeast Brazil in the second half of 2011, an executive said Friday.
The Pecem I plant, with 720 megawatt capacity, is 50% owned by MPX and represents an investment of 1.635 billion Brazilian reais ($1 billion), which is being partly financed by Brazil's development bank BNDES.

Getting the first power plant running is an important step that allows for acceleration of other port developments. This huge increase in power capacity will result in thousands of new jobs in Ceará during the next few years.