infra 2009 - apresentação michael meagher - china e brasil
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Corporate Headquarters
60 State Street T +1 617.482.6200
Boston, MA 02109 F +1 617.482.6201
USA www.cwdowner.com
Shanghai Representative Office
1366 Nanjing West Road M +86 138 1853 1159
Plaza 66 Tower 2, 15 / F O +86 21 6137 6020
Shanghai, China 200040 F +86 21 6137 6138
www.cwdowner.com
23 - 24 April 2009
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China e Brasil:
Potenciais Parceiros em Projetos
de Energia Alternativa
Michael Meagher
C.W.Downer & Co.
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Background
Chinese Infrastructure Development
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Transportation Infrastructure
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Highways, waterways, and airports are being improvedacross the country
All of these projects bring opportunities to constructionequipment, engineering, and electronics and safetydevices companies, especially for projects funded by
the World Bank, Asian Development Bank and OECF
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The Chinese Government is in the midst of a massiveupgrade of its transportation infrastructure
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In the past few years, China has beenrapidly developing its highway system
The government has added about 3,000km of expressway a year to the existingnetwork
China has already built a 30,000 kmnetwork of highways, second only to theU.S. in total kilometers
Highways
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One major project is a 29 km bridge acrossthe mouth of the Pearl River in the southeastern province of Guangdong to link Hong
Kong and Macau, and then on to Zhuhai
Work on this US $730 million project isexpected to start this year
Bridges
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China has sixteen major shipping ports with acapacity of over 50 million tons per year
Combined Chinas total shipping capacity is inexcess of 2,890 million tons
By 2010, 35% of the worlds shipping isexpected to originate from China
Ports
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0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Shangha i Shenzhe n Hong Kong Guangzhou Ningbo Qingdao Tianjin
2006 Throughput
2011 Throughput
Selected Chinese PortsUnit: 1,000 TEU
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The new Shanghai Port of Yangshan is an example ofthe type of investment the Chinese are making in portinfrastructure
The first two phases of the US $14.5 billion Yangshandeep-sea port are now open, with a 2020 target yearfor achieving the full capacity of the port (33 to 50deep-sea berths) at 25 million TEUs per year
The port is located about 32 km (20 miles) offshoreand is connected to the mainland by a highway bridge
Port of Shanghai
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2006 2010 Five Year Plan:
Six new railways for passenger transportation,including one between Beijing and Shanghai
Five inter-city railways, including one betweenBeijing and Tianjin that has trains running at atop speed of 350 km/h
Upgrading of five existing railways including onebetween Datong and Qinhuangdao
Chinese Railway System
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Shanghai Metro
Shanghai Metro opened in 1995
By 2010 it will have 250 km of track
By 2012 it will 500 km of track with350 stations citywide
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Chinas Response to the Economic Crisis
At a time when major infrastructure projects are
being put off around the world, China will spend an
estimated US $586 billion over the next two years
roughly 7 percent of its gross domestic product
each year to construct new railways, subways
and airports and to rebuild communities devastated
by an earthquake in May 2008
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Rural infrastructure:
Efforts will be made to speed up rural
infrastructure construction
Roads and power grids in the countrysidewill be improved, and efforts will be stepped
up to spread the use of methane and toensure safe drinking water
Chinas Response to the Economic Crisis
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Transport:
Accelerating the growth of the transportnetwork, including more passenger rail links
and coal routes
Trunk railways will be extended and moreairports will be built in western areas
Urban power grids will also be upgraded
Chinas Response to the Economic Crisis
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China's Government announced it will spend anextra CNY 100 billion (US $14.5 billion) on keyprojects in the fourth quarter of 2008
About CNY 28 billion (US $4.06 billion) hasbeen allocated to railways, roads and airportinfrastructure, CNY 15 billion (US $2.18 billion)for railways, CNY 5 billion (US $2.18 billion) forhighways, CNY 5 billion (US $2.18 billion) forrural roads, and CNY 3 billion (US $726 million)for the country's central and western airports
Additional Projects Announced 04 Dec 2008
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(Tianjin is the port city nearest Beijing)
Chinese City Example: Tianjin
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From 2004 China began to secure raw materialsthrough investing in Chinese businesses thatoperated in Latin America
Many Latin American business leaders thought they
could look forward to a sharp increase in Chineseforeign direct investment
Chinese did not invest in their companies, but
sought to buy them instead
There were some exceptions, such as Chile'sCodelco copper mining company, which saw asignificant investment from China
Chinese Infrastructure Projects in Latin America
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China offered to make a US $4.82 billion investmentin Brazil's rail lines but the deal died because Chinawanted to bring in its own workers, while theBrazilian government wanted those jobs forBrazilians
Brazil's saw its trade balance with China reverse,resulting in a deficit largely driven by cheap Chinesetextiles flooding Brazilian markets
Some business sectors accused the Chinese of"dumping" textiles on Brazil, selling them far belowmarket prices
Chinese Infrastructure Projects in Latin America
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In September 2008, in response to the boycottstaged against its price hike by Chinesesteelmakers, Brazilian iron ore miner Valerefused to provide ore to China
Jia XiangRong, vice-chairman of JiangsuShagang Group, China's largest private steelenterprise, also spoke of the ships stranded in
Brazil:
We are angry with Vales behavior and ourbottom line is no way for even a penny
increase."
Chinese Infrastructure Projects in Latin America
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In February 2009 Petrobras announced ithad signed two Memorandums ofUnderstanding with Chinese institutions andan export oil contract with UNIPEC Asia Co.
Ltd. -- a subsidiary of China PetrochemicalCorporation, or SINOPEC to export around100 thousand barrels of oil per day
The Memorandum between ChinaDevelopment Bank Corporation, SINOPECand Petrobras presents has the followingsdetails :
Chinese Infrastructure Projects in Latin America
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Chinese Infrastructure Projects in Latin America
* Credit supply to Petrobras, including the option to
off-set the debt with the export of oil, as per
Chinese institution option and in a volume to be
defined in the future
* Increase the oil export of Petrobras to China
* Partnerships between Petrobras and Chinese
companies to develop projects in several oil
industry segments
* Supply of service, material and equipment by
Chinese companies to Petrobras
* Promoting contacts between Chinese and
Brazilian companies for the purpose of creating
joint ventures
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The amount of the deal is estimated as US$10 Billion in loans for Petrobras which is inexchange for future oil exports
The loans will be used by Petrobras tocontinue its investment programs to developa huge oil field in the pre-salt basin
Chinese Infrastructure Projects in Latin America
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In January 2009, Draga Brazil, a consortiumheaded up by Chinese dredging firm ShanghaiDredging Company, bid for a share of theReais1.46bn ($729.8m) dredging contractsbeing offered throughout by the Braziliangovernment
Draga Brasil has already won the Reais17.5maward to carry out Emergency Dredging for the
port of Itajai
Many people believe Draga Brasil is well placedto win further contracts in Brazil
Chinese Infrastructure Projects in Latin America
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Draga Brasil has already confirmed to SAO thatit will be bidding for Tender $78.3m, numbertwo, which is for Brazils Santos port
Draga Brasil announced that it will not bebidding for Rio Grande (tender number threeworth $91.5m), in the south of Brazil
A Draga Brasil spokeswoman added that the
consortium will put in bid offers for a goodpercentage of the other six contracts coming upthis year
Chinese Infrastructure Projects in Latin America
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In 2004, Chinese leader Hu Jintao traveled toLatin America, promising US$100 billion in tradeby 2010 on the heels of the APEC summit inChile
His promise was reached in 2007, with tradebetween China and Latin America passing someUS$102 billion
Bilateral trade between China and Brazilreached around US$23.37 billion
Chinese Infrastructure Projects in Latin America
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Alternative Energy in China
China rapidly has moved along the path ofrenewable energy development
About 16 percent of China's electricity came
from renewable sources in 2006, led by theworld's largest number of hydroelectricgenerators
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Alternative Energy in China
In 2007, China had the world's largest totalinvestment in renewable energy sources(excluding large scale hydropower plants) withexpenditures of US $10.8 billion, up 91 percent
over the year before and the largest installedrenewable capacity at 152 GW
In 2007, China invested US $12 billion, almostlevel with world leader Germany as apercentage of GDP
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Alternative Energy in China
For wind power, Chinese policymakers haveset an ambitious goal of putting in place 30,000MW of wind power by 2020
Biomass energy from agricultural waste, strawand waste from cities alone may exceed 500million metric tons of coal equivalents
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Alternative Energy in China
In the near-term China plans to develop 120GW of renewable energy by the year 2020; thiswould account for 12% of Chinas total installedenergy producing capacity. China's growth
target for renewable energy production willrequire an investment of approximately 800billion Yuan (~ US $115 billion) by 2020
China has set a renewable energy target of 5%of primary energy by 2010 and 10% of primaryenergy by 2020
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Alternative Energy in China
In the long term, China has set an objective of
having 30% or more of its total energy
requirements satisfied by renewable sources by2050
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Wind Energy
China is the fourth largest producer of windpower, after the United States, Germany, andSpain
China has identified wind power as a keygrowth component of the country's economy
It is anticipated that China will have 25-30 GWof windpower capacity or even more by 2010
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Wind Energy
In 2006, China had 1.3 GW of installed windcapacity
In 2007, China added 3.4 GW of wind power
In 2008, 5.5 GW of wind power was added
China projects to add 10 GW of capacity per
year by 2010
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Wind Energy
There are currently more than 40 windturbine generator manufacturers in China,
including 4 foreign invested enterprises, 7joint-venture companies and over 20domestic manufacturers
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Solar Energy
China has become a world leader in themanufacture of solar photovoltaic
technology, with its six biggest solarcompanies having a combined value of overUS $15 billion
Around 820 megawatts of solar PV wereproduced in China in 2007, second only toJapan
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Solar Energy
In China there now are six factories producing at least2 MW/year each of monocrystalline, poly-crystallineand non-crystalline Photovoltaic cells, including:
Wuxi Suntech Solar Energy Co., Ltd., which produces
approximately 50 MW/year of solar cells andphotovoltaic modules and is the worlds third largestsupplier of solar cells
Yunnan Semi-conductor Parts Plant, which
manufactures approximately 2 MW/year of mono-crystalline cells
LDK Solar Co
S l E
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Solar Energy
Baoding Yingli Solar Energy Modules Plant, whichmanufactures approximately 6 MW/year ofpolycrystalline cells and modules
Shanghai Jiaoda Guofei Solar Energy BatteryFactory, which produces approximately 1 MW/yearof modules
Shanghai PV Science and Technology Co., Ltd.,which produces approximately 5 MW/year ofmodules
H d
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Hydropower
In 2005, the following hydroelectric powerprojects were approved by the NationalDevelopment and Reform Commission andbegan construction:
The Jinsha River Xiluo Crossing (12.6 GW)
The Yellow River Laxiwa (4.2 GW)
The Yalong River Mianpi (First Phase) (3.6 GW)
H d
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Hydropower
In 2006, 10 GW of installed hydropower capacitywent into operation in China
The National Development and Reform
Commission also approved 13 additionalhydropower projects in 2006, which cumulativelywill have 19.5 GW of power generating capacity
H d
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Hydropower
New hydropower projects that were approvedand began construction in 2006 include:
The Jinsha River Xiangjia Dam (6 GW)
The Yalong River Mianpi (Second Phase) (4.8GW)
The Lancang River Jinghong (1.75 GW)
The Beipan River Guangzhao (1 GW)
Bi d Bi f l
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Biomass and Biofuel
China emerged as the worlds third largestproducer of ethanol bio-fuels (after the U.S. andBrazil) as of the end of the 10th Five Year PlanPeriod in 2005
At present ethanol accounts for 20% of totalautomotive fuel consumption in China
Bi d Bi f l
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Biomass and Biofuel
In the 11th Five Year Plan period (2006 through2010) China plans to develop 6 million tpy of fuelethanol capacity
Chinas fuel ethanol capacity is expected to growto 15 million tpy by 2020
Despite this level of production, experts say that
there will be no threat to food security, thoughthere will be an increasing number of farmerswho will be "farming oil" if the price of crude oilcontinues to increase
Bi d Bi f l
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Biomass and Biofuel
Work has begun on the 250 million Yuan KaiyouGreen Energy Biomass (Rice Husks) PowerGenerating project located in the Suqian CityEconomic Development Zone in Jiangsu
Province
The Kaiyou Green Energy Biomass Powerproject will generate 144 million kwh/year and
use 200,000 tpy of crop waste as input
Infrastructure Opportunities Involving
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There are many Chinese companies whomanufacture the following equipment related toinfrastructure:
Construction Equipment
Telecommunications and other electronicequipment
Steel and concrete
China is a world leader in the manufacture ofalternative energy equipment, including solar
panels and windpower turbines
Infrastructure Opportunities InvolvingChinese Companies
Infrastructure Opportunities Involving
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Some Chinese construction companies areseeking partners worldwide
Some Chinese companies make excellentjoint venture partners
Some Chinese companies are looking to
make overseas acquisitions, particularly inareas such as mining, telecommunicationsand manufacturing
pp gChinese Companies
How to do Joint Ventures and Conduct
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Chinese / Brazilian relationships have greatpromise, but many have failed due tomisunderstandings and bad strategies
There are thousands of Chinese consultantswho claim to have the relationships necessaryto help you do business
They are not professionals and will do muchmore harm than good
M&A with Chinese Companies
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SECTION IV
C.W. Downer & Co.
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C.W. Downer & Co. Specializes in Cross-Border M&A and Fundraising
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Boston
Paris
Dublin
Sydney
Frankfurt
Shanghai
40 client-side professionals across seven integrated offices
Mid-Market
Focus
Integrated
Firm
Over 30 Years
Experience
Beijing
C W D & C Si 2004
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C.W. Downer & Co. Since 2004
47 cross-border transactions
involving US, UK, Benelux,
French, German, Spanish,
Australian, Norwegian,
Finnish and Irish companies
56 transactions with
strategics,
17 transactions with
private equity groups
38 sell-side transactions,
35 buy-side transactions
Aerospace, Automotive,Food Ingredients, Material
Handling & Logistics,
Retail & Consumer
Products, Pharma,
and Industrials
73 completed transactions
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SECTION V
C.W. Downers Previous Clients
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Trusted Advisor to Leading Corporations and Private Equity Firms
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Trusted Advisor to Leading Corporations and Private Equity Firms
Private Equity
Clients:
Strategic Clients: