When Vale, the world’s largest iron ore miner, announced its latest foreign acquisition this month, no one was surprised by the location of the target company: Africa.
The $1.1bn offer for Metorex, a small Johannesburg listed miner whose largest asset is a copper mine in the Democratic Republic of Congo, extends Brazil’s influence in a continent with which it has close historic and cultural ties.
So important has Africa become for companies such as Vale that the continent now accounts for half as much of Brazil’s international commerce as China. “Brazil-China trade is today worth more than $50bn, while Africa as a whole is more than $25bn – so it’s significant in its own right,” says Brad Koen, the São Paulo-based managing director and global head of business development at South Africa’s Standard Bank.
Brazil’s courting of Africa is partly the result of tireless campaigning by the previous president Luiz Inácio Lula da Silva, who made countless trips there. The former leader pointed to the fact that Brazil has the second largest black population of any country in the world after Nigeria.
Brazil’s affinity with the continent also comes from its shared Portuguese colonial history with Lusophone Africa, particularly Angola and Mozambique, although the Latin American giant today does more business with Nigeria, Algeria and South Africa.
According to research by Standard Chartered Bank, Brazilian imports from Africa increased nearly 21 per cent to $3.25bn in January to March, against a year earlier, while exports rose 39.4 per cent to $2.55bn. “The largest component of Brazilian exports [to Africa] has remained resource-based commodities [49 per cent],” says a report from the Office of the Special Advisor on Africa to the UN. Brazil, meanwhile, imports oil from Nigeria and Algeria, according to the 2009 report.