Brazil's Bullet Train

Brazil's on-again, off-again bullet train project connecting Rio de Janeiro and Sao Paulo is back on again. A rail project you ask? Ten years into the 21st century?

Yes, it's a backwards, outdated project proposing expensive passenger rail transportation at a time when air transportation is not only faster, but cheaper and more efficient. Yes, it is more of a political move rather than an infrastructure necessity. Yes, thousands of innocent families will be booted out of their homes and paid 10 centavos on the dollar (Real) in the government's eventual appropriations. Yes, Brazilian taxpayers will be footing a large chunk of the bill with no clear benefit for them. Yes, small townships located on the proposed Rio-Sao Paulo line are already fighting to have the trains stop in their municipalities, taking the speed out of the bullet.

Here are some "bullet" points:

• Government estimated costs of US$ 18.7 billion (triple that to get true estimation)
• The company offering the lowest fare will win the bid for the 317 mile train
• The winning (wink, wink) consortium will be announced on December 16th, 2010
• President Lula expects the project to be delivered in 2016, just in time for the 2014 World Cup
• Average train speed of 177mph
• 82 miles of trajectory through tunnels
• Trains leaving every 15 minutes
• Passengers per train - 855
• Estimated time from city to city - 85 minutes
• Projected ticket price R$ 200 each way (US$ 115)

Weekend bullets

• The Folha Online reports that Apple wants to manufacturer the iPhone, the MacBook, and possibly the iPod in Brazil. The objective would be to lower costs and increase sales of the devices. Brazil's import duties on electronics are among the highest in the world, causing hoards of Brazilians to load up their bags with iPods on regular trips to Florida and New York.

• An American journalist living in Sao Paulo, Seth Kugel, wrote an article in the GlobalPost where he wonders if Brazil is Iran's best friend in the West. Recent events tend to indicate that Brazil, indeed, has become somewhat cozy with the controversial nation, from President Lula urging the US to hold back sanctions against Iran, to Brazilian politicians and business leaders making field trips to Tehran.

• My buddy Mike sent me an article from the Economist that details the fight for Rio de Janeiro's oil revenues. It appears that most of the states feel that the money should be shared equally, while Rio depends on it to keep their fantastic, high quality public services.

• Brasil Econômico writes of an upscale Brazilian beer, called Xingu, that plans to expand internationally. The beer's creator, Cesario Mello Franco, sold the brand to Kaiser in 2001 but maintained the international distribution rights himself. Now that Kaiser has been acquired by Heineken, he sees a fantastic opportunity and a big paycheck ahead of him if he is able to convince the Dutch company to take it global.

Tuesday bullets

• Flash flooding in the city of Rio de Janeiro has spurred chaos and is responsible for approximately 100 deaths (as of 7:30 p.m. Brasilia time). BBC posted some pictures on their website of what life was like for "cariocas" (residents of Rio) today after receiving 11 inches of rain in 24 hours.

• Meanwhile, bad news for some is good news for others. Businessweek reports that the rain is welcome news for the world's largest producer of coffee, sugar and orange juice, and may boost yields.

• The US and Brazil appear to be slowly resolving their trade dispute over cotton subsidies offered by the US government. Brazil won a case at the World Trade Organization (WTO) and has the right to impose sanctions on US companies. In the end, this sort of action (tariff increase) doesn't help anyone. It just makes products and services more expensive for Brazilian residents.

• Where's the beef? Reuters reports that the world's largest beef processing company, Sao Paulo-based JBS, is looking to raise over one billion dollars in a stock offering. "JBS, which started as a small abattoir in Brazil's Midwest, has ballooned in size in recent years through a series of acquisitions in the United States, Europe and Asia to become the world's biggest beef exporter, the No. 2 global poultry company and the No. 3 U.S. pork processor. The company plans to use two-thirds of the proceeds from the stock offering to expand its direct sales business, including acquisitions of distribution centers and delivery trucks. The remaining funds will be set aside for working capital."

• Kevin Grewal at Minyanville gives his argument of why Brazil is a hot market. Nothing we haven't heard before -- the country is rich in natural resources, it will be hosting international events (World Cup 2014, Olympics 2016), and it has low interest rates. Wait. What? Low interest rates? That point is certainly debatable. Brazilian interest rates have declined, but they are still high compared to most economies.

• Exame has a great article (in Portuguese) on the future of the proposed bullet train linking Sao Paulo and Rio de Janeiro, allowing passengers to get from city to city in a blazing 90 minutes. It has an estimated cost of R$ 34.6 billion (US$ 19.8 billion), but we all know how projects increase in price, scope and corruption.