China looking to buy Brazilian construction firms, railway concessions

Major Chinese contractors are shopping for Brazilian engineering firms and commercial railway operations as a deep recession grips the country and domestic companies are crippled by an unprecedented corruption scandal, the head of the Brazil-China Chamber of Commerce has said.

The Chinese firms are also willing to finance projects, which gives them a powerful advantage over local groups hamstrung by tight local financing conditions, Charles Tang told Reuters yesterday.

"They have asked me to help them find suitable targets, (such as) builders who are not involved in the ‘Car Wash’ probe," Tang said, referring to the cascading Lava Jato ("Car Wash") corruption investigation begun by prosecutors in 2014.

However, that probe has ensnared most of Brazil’s top construction companies and many politicians, and is still gathering pace.

In terms of rail, Tang said the Chinese firms are interested in the railways Ferrovia da Integração (Fiol) and Ferrogrão, which together would require around $4bn in investment.

The Fiol railway is intended to link distant areas in the Brazil’s northeast to a port off the Bahia state coast. The Ferrogrão project is aimed at transporting agricultural produce from Mato Grosso to ports in Pará state.

Tang said state-owned companies such as China Railway Engineering Corporation and China Communications Construction Company (CCCC) could be interested in these projects, Reuters reported.

"In the past, Chinese firms would never be able to enter Brazilian infrastructure projects, because the large local engineering groups were dominant. But today those groups are in the Car Wash, projects have been abandoned and need capital. Everything is cheap," he said.

Image: Interurban tramway in Campos do Jordão (Majtec/Creative Commons)

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