Countries of the World/COUNTRYS.BIN/dp/0049/00499.txt

Text File | 1991-06-24 | 30KB | 479 lines

$Unique_ID{COW00499}
$Pretitle{220}
$Title{Brazil
Chapter 3C.   Industry}
$Subtitle{}
$Author{Darrel R. Eglin}
$Affiliation{HQ, Department of the Army}
$Subject{percent
billion
alcohol
million
tons
brazil
production
project
fuel
oil}
$Date{1982}
$Log{}
Country:     Brazil
Book:        Brazil, A Country Study
Author:      Darrel R. Eglin
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 3C.   Industry

     Contemporary studies point to the last decade of the nineteenth century
as the beginning of Brazil's industrialization, but such dating is
somewhat arbitrary. In the 1880s, for example, over 300 industrial firms were
established. By 1890 there were more than 50,000 industrial employees, and the
first hydroelectric power plant was in operation. In the earliest industrial
census-1907-there were over 3,000 industrial establishments with a total of
over 150,000 workers. The 1920 census recorded 13,000 plants and shops
employing about 275,000 workers. By 1920 manufacturing was well established,
providing 64 percent of the supply of manufactured goods; imports provided the
remaining 36 percent. Manufacturing was concentrated in textiles and food
processing, and imports of such products were below 10 percent of the total
supply.

     During the 1920s industrialization slowed. Between 1919 and 1932
manufacturing output increased about 1.5 percent a year. Government attention
and funds were concentrated on the support of coffee prices. Nonetheless, the
metallurgical and chemical industries made substantial gains. An integrated
steel plant, for example, began operation in 1925 to supplement the existing
charcoal-fired blast furnaces. In the mid-1920s the cement industry was
established. By the late 1930s Brazil supplied virtually all of its
requirements for pig iron and cement.

     Government policies during the Great Depression curtailed imports,
stimulating rapid industrial expansion. Between 1932 and 1940 manufacturing
output increased an average of 11.8 percent a year, but expansion slowed to
5.4 percent a year during World War II because of limited access to equipment
and raw materials. By 1950 the country had 83,000 industrial establishments
employing a total of nearly 1.3 million workers. Textiles and food processing
had declined to about 50 percent of the value of industrial production,
reflecting the expansion of the industrial base. The government established
some important firms in manufacturing-justified on the grounds of strategic
or national significance-such as the Volta Redonda steelworks, as part of the
long-term development of an integrated steel industry. A number of
multinational businesses established large manufacturing and assembly plants
in response to government efforts to adopt advanced technology and broaden
industrial capabilities.

     Industrial output has increased an average of about 9 percent a year
since shortly after World War II. Industrialization was the cause for much of
the impressive economic growth during this period. In the 1980s the growth
of industry will largely determine conditions in the rest of the economy and
the degree of prosperity for much of the population.

Energy

     Industrialization required a huge growth in energy consumption and a
drastic change in sources. At the end of World War II the bulk of Brazil's
energy was supplied by firewood, charcoal, and bagasse-the woody residue of
sugarcane processing. Industrialization, with particular emphasis on the
automobile and other internal combustion engines as well as a huge
roadbuilding program, was adopted in an era of cheap energy. In little  more
than a generation, compared with centuries in Europe, Brazil leaped from a
wood-burning to an oil- and electricity-based economy. The rapid rise of
energy costs in the 1970s caught Brazil in a vulnerable position because of a
deficiency in fossil fuels. In 1979 oil products supplied about 41 percent of
the country's primary energy; hydroelectricity, 28 percent; and coal, wood,
bagasse, and alcohol, 31 percent. Government energy policy after the first oil
crisis in 1974 focused on conservation and maximum efficiency in the use of
energy; search for and exploitation of domestic energy sources; and
substitution of domestic energy, particularly renewable sources, for imported
supplies.

     Oil was first discovered in Brazil in 1939. Proven oil reserves were
small, amounting to about 1.7 billion barrels in 1982, plus about 400 million
barrels equivalent of natural gas. The crude oil deposits were mainly located
in the Northeast and Southeast. In 1981 domestic oil consumption was about 1
million barrels per day (bpd). Domestic production averaged close to 250,000
bpd, leaving the country dependent on imported crude for above 75 percent of
total supply. The domestic production goal for 1983 was 300,000 bpd. In 1981
imported fuels (the bulk of which was crude oil) cost US $11 billion, 50
percent of total imports. Exports of small amounts of surplus refined products
amounted to about US $900,000.

     A near monopoly in hydrocarbons (exploration, production, importing,
refining, and transportation of petroleum and natural gas) was granted the
national oil company, Petrobras, created in 1953 in response to a wave of
nationalism. The largest Brazilian corporation, it was primarily a
government-owned (federal and other levels) holding company operating through
numerous subsidiaries. Petrobras, or its subsidiaries, conducted exploration
and oil field development at home and abroad; produced, imported, and refined
crude oil; owned petrochemical plants that produced a variety of products,
such as chemical fertilizer; and carried out transportation and distribution
of crude oil and products. In 1977 Petrobras began negotiating exploration
contracts with foreign oil companies to obtain technology and financing to
speed up the search for oil, particularly offshore. These contracts again
allowed foreign oil companies to operate in Brazil's territory, although
under controlled conditions and in limited areas. Modest new fields were
discovered, which permitted a gradual growth in crude oil production in the
early 1980s.

     After the formation of a national energy policy, officials managed small
reductions in petroleum consumption. Oil price increases were passed on,
diminishing the use of vehicle fuel. Conversion of some industries to the use
of coal or other oil substitutes contributed to lower consumption. The
combination of conservation, substitution, and greater domestic production
reduced the country's dependence on imported oil from around 80 percent in the
late 1970s to 75 percent in 1981, but it was recognized that the
possibilities in such programs were limited.

     Much more hope and effort went into a unique plan formulated in 1975 to
substitute domestic alcohol for imported fuel in vehicle use. The national
alcohol program (called Proalcool) was a bold attempt to use available skills,
equipment, and other resources to produce a substitute fuel from renewable
sources; it was the world's first large-scale substitution effort and was
watched by many other countries. The initial program concentrated on alcohol
as a substitute for gasoline, but in the 1980s research and experiments were
under way to produce a substitute for diesel-engine fuel from various
vegetable oils. Brazil had experience dating back to the 1930s in using
alcohol as a mix with gasoline for automobile fuel.

     Briefly, Proalcool planned the production of 10.7 billion liters of
alcohol by 1985 to substitute for the equivalent of about 148,000 barrels of
petroleum per day. Planned alcohol production would supply about 45 percent of
projected automobile-fuel consumption in 1985, compared with about 20 percent
achieved in 1980. According to the plan, the alcohol would supply about 5
percent of the nation's energy requirements in 1985. The program's estimated
cost between 1981 and 1985 would exceed US $7 billion in 1980 dollars. In 1980
an earlier goal was met in which 3 bi