(Analysis) Saudi Arabia is making significant investments in Brazil, solidifying a strategic partnership that benefits both nations.
This week, a Rio de Janeiro conference, backed by Saudi Arabia’s Public Investment Fund (PIF), showcases this burgeoning relationship.
The event features Brazilian President Luiz Inácio Lula da Silva, Finance Minister Fernando Haddad, and key Saudi officials, including PIF Governor Yasir Al-Rumayyan.
Saudi Arabia aims to diversify its investments. Recently, Manara Minerals Investment, a Saudi firm, bought a 10% stake in Vale’s base metals unit for $2.5 billion.
This move marks Saudi Arabia’s first major entry into the global metals market.
Moreover, BRF, a Brazilian chicken supplier, plans to open a factory in Saudi Arabia, boosting local production despite higher costs.
Brazilian food exports to Saudi Arabia reached a ten-year high in 2023, totaling $3.2 billion. Food products account for 90% of this trade.
Last year, Salic, a Saudi agricultural investment company, acquired over 10% of BRF. This investment aims to use Saudi Arabia as a hub for the broader Middle East.
Saudi Arabia’s Vision 2030, led by Crown Prince Mohammed bin Salman, seeks to transform the kingdom into a diversified economy.
The plan includes tourism, manufacturing, electric vehicles, and sports. Saudi Arabia needs $100 billion in annual foreign investments to realize this vision, triple its current rate.
In recent months, Saudi officials have promoted the kingdom as an investment destination across New York, Japan, and Hong Kong.
The Rio conference shifts focus to Latin America. Economist Farouk Soussa highlights Brazil’s complementary sectors, such as food security and metals.
Brazil, the main food supplier to the Organization of Islamic Cooperation, exported $23.4 billion in products last year.
Salic also holds a 30% stake in meat producer Minerva, ensuring a steady supply of up to 25,000 metric tons annually.
Brazilian-Saudi Economic Partnerships
Petrobras, Brazil’s state oil company, plans to re-enter the fertilizer market.
President Lula has proposed a potential Saudi partnership, aligning with his industrial policy goals. Early-stage talks are ongoing.
In aerospace, Brazil and Saudi Arabia signed a five-year defense cooperation agreement. Embraer is negotiating the sale of 33 aircraft to Saudi Arabia and considering a new production center.
eB Capital, with former SoftBank COO Marcelo Claure, is in talks with Saudi investors for a $600 million fund targeting Brazil’s climate and energy sectors.
Patria Investimentos, a major Latin American asset manager, also seeks to increase investments in Saudi Arabia.
Currently, Saudi Arabia invests more in Brazil than vice versa. In 2022, Brazil received $1 billion from the kingdom, while it invested $300 million in Saudi Arabia.
Experts foresee more Brazilian foreign direct investment in Saudi Arabia in the long term.
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