Tuesday, May 19, 2009

China and Brazil seal $10 billion deal

[South-South Cooperation] -- China, Brazil

Lula da Silva & Hu Jintao

Chinese President Hu Jintao and his Brazilian counterpart, Lula da Silva, finished writing the latest chapter in Sino-Brazilian Cooperation earlier today in Beijing.

ChinaSouthAmerica has been following this story for a few months now, and I must say, it is nice to see a classic example of South-South Cooperation / Emerging Market Cooperation (whatever you want to call it) develop and eventually get finalized.

Here are a few excerpts from a WSJ article that a great job of summing up the details.


State-owned Brazilian oil giant Petroleo Brasileiro SA said it finalized a $10 billion loan agreement from China in return for a long-term supply of oil, another victory for China's new strategy of using its cash-rich banks to help secure the natural resources the country needs to keep its economy growing.

Petroleo Brasileiro, known as Petrobras, said under the terms of the 10-year loan from China Development Bank, which has been at the center of China's resources policy, Brazil would supply China Petrochemical Corp., known as Sinopec, 150,000 barrels of oil a day for the first year, rising to 200,000 barrels a day for another nine years.


Mr. Gabrielli said the loan's interest rate was under 6.5%, and the loan used oil revenue as collateral but would be repaid in cash -- not oil. Although the deal didn't include guarantees to buy Chinese products or services, other deals will work on exploring closer cooperation, such as moving Chinese equipment factories to Brazil.


China's mission to secure commodities does not stop with Brazil--as you are well aware if your a frequent reader at this site.

Beijing has struck similar agreements with energy producers world-wide in recent months, including a $10 billion deal with Kazakhstan and a $25 billion deal with Russian oil and pipeline companies.


Stay tuned for further developments and ChinaSouthAmerica's analysis this deal and growth of Sino-Brazilian Cooperation.