Brazil Market Update and Opportunities in Infrastructure, 2014 FIFA World Cup, & 2016 Rio Olympic Games

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1 Brazil Market Update and Opportunities in Infrastructure, 2014 FIFA World Cup, & 2016 Rio Olympic Games Greg Wallis Consul-General & Trade Commissioner Australian Trade Commission São Paulo, Brazil 28 March 2011

2 Brazil Overview & Update

3 Images

4 Reality Source: Invest Brasil Brazil has a combined geographic size, population and economy shared by only the USA and other BRICs

5 Why Brazil? 29 million new consumers in past 8 years; 2/3 Brazilians now middle/upper classes World s 7th biggest economy (recently overtaken Italy; soon to overtake UK and France) Stable and growing: 7.5% growth in 2011; 4.6% predicted for 2011 No. 1 global exporter and/or producer of sugar, coffee, orange juice, ethanol, iron ore, soya beans, chicken, beef World s largest unused arable land Rated 3rd most attractive investment destination by UNCTAD 2 major factors that define Brazil today vs. yesterday: Consistent long-term decline in interest rates, which has stabilized businesses and established a long-term business culture Consistent decline in income inequality Consumers have an increasing capacity to purchase imported goods coupled with an (until recently) unprecedented access to credit. Auto financing, home mortgages, credit and debit cards are penetrating previously "unbanked" sectors of society

6 Main Growth Drivers Changing demographic rising middle class Global demand for commodities, especially China Growth Acceleration Programme (PAC) launched in 2007 (R$ 500billion). PAC 2 calls for an even larger combined public and private investment of almost R$1.6 trillion to Massive investments in energy, transportation FIFA World Cup 2014 and 2016 Olympic Games

7 Current Australian Exports/Investments in Brazil Currently some 430 Australian merchandisers export to Brazil 55 Australian companies established in Brazil Pacific Hydro s $160 million wind power investments in NE Brazil BHP Billiton, Mirabela, Troy Resources, and 11 other juniors have investments in gold, iron ore, bauxite, oil and gas Nufarm has a $350 million investment in crop protection products Wellard and Sanger have both invested in Brazil to produce meat for global markets QBE provides micro insurance Populous involved in the master plan design of Natal Soccer Stadium for 2014WC MI Associates has contracts with Rio 2016 Organizing Committee for Organizational Consultancy, Games Foundation Plan and National Olympic Training Centre

Political Update New Dilma administration is generally agreed to have made a promising start, with a business focus and reining in of spending (restricted minimum wage rise) Foreign policy move

8 Political Update New Dilma administration is generally agreed to have made a promising start, with a business focus and reining in of spending (restricted minimum wage rise) Foreign policy move towards closer relations with USA Recognized importance of delivery of successful World Cup & Olympics Efficient administrator, not charismatic leader Challenges: can she manage her coalition? can she effect political and taxation reforms can she make public services more efficient, costeffective and responsive to the needs of the population? can she manage an overheated economy? Overriding message - continuity

9 Infrastructure

10 Brazil s Infrastructure Challenges Road, Rail and Metro transportation Airports Ports Sewage systems Water management Solid waste management Power Information and Communication Systems

11 Plan of Accelerated Growth 1 (PAC1) Recognition that infrastructure in Brazil is inadequate and that needs extend beyond what is required for the World Cup & Olympics A federal government program with planned investment of around R$ 500 billion between 2007 and The priorities were sanitation, housing, transportation, energy, power and water resources, among others. The final assessment of the PAC1 s performance, made by the federal government, indicates that 88% was carried out at a cost of R$ 444 billion. R$115 billion was spent in the Oil & Gas sector

12 PAC2 Introduced in 2010, investments of $R959 billion between 2011 and 2014 and $R1.59 trillion in total Sectors Improving our Cities Citizen Community My Home, My Life Water and Electricity for All Transportation Power TOTAL R$57.1 billion R$23 billion R$278.2 billion R$30.6 billion R$104.5 billion R$465.5 billion R$958.9 billion

14 Rio-São Paulo High Speed Train

15 Olympics & World Cup

Australian Sports Events Expertise The 21014 FIFA World Cup and

build relationships at a number of levels because of the

management of the games, and as an Olympic sporting power.

16 Australian Sports Events Expertise The FIFA World Cup and 2016 Rio Olympics is an opportunity for Australia and Brazil to build relationships at a number of levels because of the perceived expertise of Australia in both the preparation and management of the games, and as an Olympic sporting power. Khalifa Stadium, Doha Watercube, Beijing Olympics Etihad Stadium, Melbourne

Upcoming Sports Events in Brazil 2011 2013 2014 2015 2016

17 Upcoming Sports Events in Brazil Military Games Confederations Cup World Cup Copa America Olympic Games

18 2014 FIFA World Cup Brazil The 2014 World Cup will be conducted in 12 Brazilian cities in the five geographic regions. Public works projects of some US$59 billion are planned in order to develop the necessary infrastructure (stadiums construction, transport system, roads & highways, airports, electric power network expansion, telecommunication networks, water & waste) in addition to contracts for the staging of the event. Biggest challenge: Airports

19 Host Cities Infrastructure Investment US$ 1.7 bi US$ 3.2 bi US$ 2.9 bi US$ 2.4 bi US$ 0.9 bi US$ 4.7 bi US$ 2.6 bi US$ 5.6 bi US$ 19.3 bi US$ 8.8 bi US$ 3.4 bi US$ 3.9 bi

20 Investments by type Sector US$ Million Responsibility Urban Mobility 35,042 States & Municipalities Airports 3,938 Federal Ports 425 Federal & Private Sector Electric Energy 1,530 Federal Basic Sanitation 7,139 Federal Hotels 7,256 Private Sector Hospital 674 Federal Security 720 Federal Stadium/Arenas 3,111 Total 59,839 Source: ABDIB Brazilian Association of Infrastructure and Basic Industries States & Municipalities / Private Sector

21 Sustainability in the World Cup 2014 FIFA and the Local Organising Committee (COL) of the Brazilian Football Confederation (CBF) have decided that the World Cup 2014 should be the Green Cup Consequently, all stadium projects (new and remodelled) are being designed in accordance to sustainability guidelines, including: Recycling and use of demolition materials; Permeable flooring and roofing throughout the complex; Green roofing; Use of solar panels for harnessing energy; Use of efficient lamps and energy-efficient equipment; Rainwater collection; storage and re-use; Material specifications taking into account sustainability criteria; Waste management during construction and throughout the arena s life cycle.

22 2014 World Cup Stadiums Overview Investments needed in all of the 12 selected cities. The bids related to the public arenas are structured in two different models: 5 Public-Private Partnerships (PPP) - Mineirão Complex Minas Gerais - Fonte Nova Bahia - Castelão Stadium Ceará - Arena Recife Recife - Dunas Arena Rio Grande do Norte 4 Public Arenas to be operated by public authorities - Amazonas Arena Amazonas - Pantanal Arena Mato Grosso - Maracanã Rio de Janeiro - Mané Garrincha Brasília 3 Private Arenas - Corinthians Arena São Paulo - Beira Rio Rio Grande do Sul - Baixada Arena Paraná

23 Decision Making 2014 FIFA World Cup Organising Committee The overarching structure that is liaising with the 12 host city organizing committees. It reports to FIFA headquarters and it is responsible for delivering the World Cup. Host City Work Groups (Local Organizing Committees) State and Municipality authorities that will be responsible for procurement and to deliver the event in each city.

24 Rio 2016 Olympic Games First South American host in the history of the Games has generated great popular support and enthusiasm Three levels of Government working together Games staged in four clusters around the city (Barra, Deodoro, Maracana and Copacabana). 11 permanent and 4 temporary sport installations will be constructed plus modernization of existing ones A BRT (Bus Rapid Transport) system will be implemented in the city to connect the planned clusters as well as modernization and extension of metro lines Main driver/concern: Urban Legacy

25 Rio 2016 Olympic Clusters & Sports Venues Temporary 20% Existing 54% Deodoro Maracanã Additional (New) 26% Copacabana Barra

26 Investments by type Sector US$ Million Airport & Port 1,001 Highways & Railways 4,451 Accommodations 56 Sports Facilities (Competition & Training) 490 Olympic Village 427 Barra Media Village 812 Electricity Infrastructure 770 Environmental Management Systems 1,205 Health 10 Security 813 IBC/MPC 203 Urban Legacy 820 Total 11,059 Source: ABDIB Brazilian Association of Infrastructure and Basic Industries

27 Olympic Games Organizational Structure Rio Local Organising Committee Equivalent to 2000 SOCOG; responsible for games organization and operations Olympic Public Authority (APO) Equivalent and inspired in the London ODA just created and to be headed by Henrique Meirelles (ex President of Central Bank). Peak organization for delivery of the Olympic Games Brazil 2016 Procurement body and operational arm of the APO, for contract coordination & procurement

28 Games Organizational Structure APO interacts with all government institutions (3 levels: Federal, State and City) IOC / IPC Rio 2016 APO Brazil 2016 Procurement of non- Olympics specific infrastructure also done at 3 levels of government GOV

29 Opportunities for both events Master planning and project management Urban infrastructure improvements - legacy planning Design, development and construction of venues and related games infrastructure Overlay temporary venues, modifications to existing venues and temporary requirements for operations Games services, accessibility, catering, cleaning and waste Games management, planning and coordination, training staff and volunteers ICT technology operations and telecommunication Transport (air, road, rail, metro), accommodation and service infrastructure Major event security and risk management

30 Opportunities for both events Arena Management Branding, communication & marketing Environmental consultancy Security consulting (crowd control and risk management) Delegations accommodation planning Opening and Closing Ceremonies

31 Other Infrastructure Projects In addition to funding allocated under the PACs and projects planned for the World Cup & the Olympics, states in Brazil have their own infrastructure investment programs In Sao Paulo alone, there are currently R$22bn worth of PPP infrastructure projects underway or planned in the next few years

32 Key Messages Brazil is undergoing an unprecedented period of investment in infrastructure Much of this is related to the World Cup and Olympics, but there is also the PAC2 and states programs Project opportunities range from PPP engagement level down to the nuts and bolts of specific technologies for a wide range of sectors including construction and transportation Key contacts may be engineering companies, Rio 2016, Brazil 2016 or host city authorities we can help identify Most World Cup stadium design and refurbishment contracts already let but many opportunities remain

33 Brazil Challenges Still Remain Oversized and convoluted tax system Distorted labour market Poor educational system Slow judicial system and bureaucracy Weak infrastructure Low Ease of Doing Business ranking but the market is huge, growing, and becoming more accessible every year, and foreign companies are welcome and successful

34 Planned Activities: 2011/2012 Austrade and ally government and industry bodies are planning several activities (including trade missions; networking events; seminars) to engage Australian companies and Brazilian public and private entities: SportAccord International Convention (London 3-8 April 2011) Rio s Mayor Visit to Australia (TBD) Business Club Australia (London 2012 Olympic Games) Visit of Minas Gerais State Government 2011

35 Register your interest! Austrade is working closely with allies (including ICN, AISES, ALABC and ABCC) in developing contacts with a wide range of Brazilian companies and organisations with a connection to the World Cup and the Olympics. We are keen to promote specific Australian capability, and would be interested to receive profiles from relevant Australian suppliers since our aim is to present portfolios of specialist capability to clusters of related contacts. To register your interest please access: For latest news and updates on the procurement processes please access:

36 Austrade Contact Details in Brazil Greg Wallis Fabio Nave Consul General & Trade Commissioner Business Development Manager Tel: Tel: For more information please access:

37 Thank you! Greg Wallis Consul-General & Trade Commissioner Australian Trade Commission São Paulo, Brazil

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