Alexandre Rocha
São Paulo – Egyptian businessman Hazem Omar, of sugar importer Otco Sugar, confirmed in an e-mail interview to ANBA, that Egyptian businessmen are "seriously" considering the possibility of investing in construction of a new maritime cargo terminal in Brazil. This terminal will be for sugar export and the development of technological systems for product shipping.
"During the Sugar Dinner I was asked whether Egyptian businesses could invest in sugarcane plantations and agricultural land in the country. I answered that this type of investment is not forecasted in the short or medium term. What I see being seriously studied by Egyptian and Arab businessmen, is the possibility of investment in new terminals", stated Omar.
He was in São Paulo in the second week of October, participating in the Sugar Dinner – a traditional dinner that brings together producers, buyers, traders, sugar mill owners, and banks that trade sugar. The event was preceded by five days of talks and seminars.
Omar did not want to name the businessmen interested in this enterprise, as the deal is still in its "preliminary phases".
According to Omar, among the reasons making investors interested in the construction of advanced terminals is, in the first place, the "relatively low investment for high return".
Apart from this, he went on, most of the ships that are used for sugar transport, with capacities between 30,000 and 40,000 tons, are very old, and many are scheduled to become scrap within the next five years. Hazem added that the new vessels will be larger than the "panamax" line, with capacities over 50,000 tons, therefore having greater draft and needing deeper waters and modern loading systems to operate.
In the same direction, according to Omar, the tendency is for an increase in production of raw "very very high polarization" (VVHP) sugar, which is purer than the type currently exported to Egypt, the "very high polarization" (VHP) variety. He believes that it will be difficult to separate these two kinds of sugar in the currently existing port terminals. "Only in new, modern terminals, will there be flexibility to make this separation", he stated.
Finishing off, he said that a new port terminal in the center-south region of Brazil would be of great use as most of the sugar exported to Egypt leaves the region, and sugar mills operate in similar production schedules, congesting the existing terminals in July and August.
How much does Egypt buy?
Omar stated that Egypt consumes around 2.2 million tons of sugar annually, being 1.4 million tons produced locally, by three main state-owned companies.
With this, the country must import around 800,000 tons of product, but this total can rise to 1 million tons in case of "low stocks at the end of the year". "Egypt likes to have, at any moment, a strategic stock of 250,000 tons of sugar", stated the businessman.
Most of the sugar imported by Egypt is of the raw VHP variety, explains Omar, as Egypt imposes tariff barriers on refined sugar, in an attempt to protect the local industry. He goes on to say that raw sugar is taxed at 2%, whereas the refined product is taxed at 10%, causing 70% of the sugar imported by the country to be raw, and 30% crystallized refined.
Omar added that Brazil is the "favorite" sugar supplier to Egypt, mainly due to the "high polarization" in the product, making it better quality.
How much does Brazil sell?
Data provided by the São Paulo Sugar Cane Agroindustry Union (Unica) states that Egypt was the second largest buyer of Brazilian sugar last year, losing only to Russia. In 2002 the Arab country imported 1.031 million tons of the Brazilian commodity, totaling US$ 160.3 million.
But trade between the two countries is not limited to sugar. Egypt is one of the main Brazilian trade partners in the Arab world. From January to September this year, Brazil exported US$ 322.3 million to Egypt, a trade volume only lower than sales to Saudi Arabia and the United Arab Emirates.
Among the main Brazilian products shipped to North Africa, apart from sugar, are iron ore, cattle beef, soy oil, and automobiles.
