INSIGHT: Brazil’s Lula visit to China bears fruit with multi-billion deals

SAO PAULO (ICIS)–Brazilian President Luiz Inacio Lula da Silva had already got several investment deals in the bag midway through his five-day state visit to China – among others, Envision Group has committed $1.0 billion in Latin America’s largest economy to produce sugarcane-based sustainable aviation fuel (SAF).

• Green hydrogen, ammonia also within Envision plans for its ‘Net-Zero Industrial Park
• Energy production, energy storage on focus in Brazil, China firms talks, deals
• China’s insatiable hunger for grain sees Brazil as the counterweight to US supply

SAF: LARGE SCALE
While Envision Group’s announcement did not disclose any financial details about its Brazilian SAF plans, Brazil’s Planalto Presidential Palace press services said in a separate statement the firm’s investment would stand at around $1.0 billion.

The announcement came soon after Lula met Envision’s management in Beijing.

“Envision will develop Latin America’s first Net-Zero Industrial Park in Brazil. Anchored by the production of SAF, the park will establish a complete green fuel value chain while advancing the development of green hydrogen and green ammonia,” said the company.

“We will build Latin America’s first Net Zero Industrial Park in Brazil, creating a green ecosystem centered on SAF, green hydrogen, green ammonia, and renewable energy systems,” said Envision on a post on social media network LinkedIn.

“By leveraging Brazil’s abundant renewable resources to drive sustainable growth and continuously innovating to lower the cost of green fuels, this collaboration [is to] contribute positively to Brazil’s green transition and reindustrialization.”

IT’S ALL (MOSTLY) ABOUT ENERGY
The Brazilian president is due to meet “several companies” this week while in his visit to China, eyeing not only investments in Brazil but also partnerships with Brazilian institutions and the creation of research centers.

The main objective for the latter would be to generate “technological development” in the energy sector, said the cabinet’s chief of staff, Rui Costa, who is travelling with the President.

According to the Brazilian government, agreements with Chinese companies will involve projects in renewable energy – wind and solar energy but also some hybrid projects which will focus primarily on energy storage in Brazilian territory.

“Brazil is one of the countries that has invested the most in wind and solar energy, but today it lacks the ability to store this energy,” said Costa.

Apart from Envision, CGN Power also said it would invest Brazilian reais (R) 3.0 billion ($535 million) in a wind, solar, and energy storage hub.

Lula also met the chairmen of automotive group GAC and the chairman of Windey Energy Technology Group. Within automotive, electric vehicles (EVs) major Great Motor Wall (GMW) said it would invest R6.0 billion in car manufacturing facilities in Brazil.

Finally, another deal to highlight would be China’s semiconductor company Longsys commitment to invest R650 million to expand capacity at its Brazilian subsidiary Zilia, potentially helping avoid US tariffs on China-made chips.

Meanwhile, Lula also found time in his first two days of state visit to meet with the CEO of Norinco, a conglomerate in the defense sector but whose reach expands also to infrastructure projects such highways, railways, hydroelectric plants, and water treatment plants.

On May 13, Lula and China’s President Xi Jinping also had a one-on-one, although the pair had already met a few days earlier in Moscow.

RELENTLESS GROWTH IN BILATERAL TRADE
According to figures by the Brazilian cabinet, China has since 2009 been Brazil’s largest trading partner.

Bilateral trade stood in 2023 at $157.5 billion, with Brazil exporting to China goods worth $104.3 billion and importing goods worth $53.1 billion from China.

The growth in bilateral trade continued up to the first quarter of this year. According to the same information by Brazil’s cabinet, between January and March trade between Brazil and China stood at $38.8 billion – Brazil exported $19.8 billion and imported $19 billion.

Among the main products exported by Brazil are crude petroleum oils, soybeans, and iron ore and concentrates. Brazil, in turn, mainly imports from China vessels, telecommunications equipment, electrical machinery and appliances, valves and thermionic tubes (valves).

MOSCOW STOPOVER CRITICISM
Before landing in China over the weekend, Lula had visited Russia and took part on 10 May in Moscow’s Red Square military parade in which the country remembers the victory of the Soviet Union against Germany.

Lula defended his presence in Red Square and argued that did not disqualify him as a potential peace mediator between Russia and Ukraine, the latter suffering a full-scale invasion by the former since 2022.

Lula has always sought to develop Brazil’s soft power influence and as a global mediator.

Since Russia invaded Ukraine in 2022, however, he has at times stated that Moscow and Kyiv bear equal responsibility for the war, calling them both to settle their differences through dialogue.

Front page picture: Lula (left) meeting with Chinese officials in Beijing 
Picture source: Brazil’s Planalto presidential palace press services

Insight by Jonathan Lopez

($1=R5.61)