ProInversion board to okay Pisco-Lurin pipline contract -- investment opportunities in Peru!

BNAmerica's reports ProInversion, Peru's state agency for promoting private investment is due to release purchasable contracts to private investors willing to buy them.

Grana y Montero, a local Peruvian company and Oiltanking, a German firm will construct a 300km from the province of Pisco to a dispatch plant in Lurin, which is within the district of Lima. Construction of the pipeline will take approximately 30 months once all financing is approved.



I learned today through researching this particular "investment," ProInversion allows private investors to invest in numerous infrastructure and state projects of the Peruvian state. Although the English site is a little vague on how the investment works, it is interesting to see such a site exists and that the Peruvian state has managed to package the debt of such products into purchasable and tradable forms.

Investors, seeking a alternative avenue to diversify their investment should consider such investments. ETF's and mutual funds, or even direct purchase of equity is risky considering the current state of the global economy and the world's financial markets.

I am sure many situations from the past can be pointed out by others who are aware of them of times when Latin American government have issues similar "bonds" or purchasable equity to finance their own projects... only to never pay their investors back. People have good reason to be worried, but ask yourself... in today's market, what investment comes with "no worries?"

Video -- Investing in Peru

China and South America in focus: China considers boycott of Australian BHP Billiton... could help Brazil's Vale

The Chinese are considering a boycott of BHP Billiton (BHP), the world's largest miner, according to a report by London-based investment bank Fairfax (article from BNAmericas).

Rio Tinto and China's Baosteel, recently announced a joint venture deal, which China now argues exports iron ore, (one of Brazil's major exports to China) at a fair market price while Australia's BHP Billiton does not...

Interesting being that it cost $45/t more to ship Iron Ore from Brazil to China than it does from Australia to China. Despite the distance, the recent 100% increase imposed by the company (BHP) on Australian iron ore, makes iron ore from the Australian mining giant with more expensive ore than China can obtain 1000's of miles away from its Brazilian counterpart.

Dangerous move for BHP, but in the end it might work out considering that BHP and RIO combined export about 80% of the world's iron ore, even if RIO can hold out for a while and BHP feels the pain from the Chinese boycott, the global macro economic conditions of the commodity market, combined with the market share BHP currently retains may force RIO to raise its prices as well.

Pedro Galdi, an analyst at SLW Corretora brokerage firm in Brazil, stated the following:

"In reality, Vale- Rio Tinto (RIO) and BHP account for 80% of global [iron ore] mining needs. Demand is higher than supply and it's hard to imagine one of these players leaving this market, or selling iron ore at spot prices, which could be bad for everyone," said Pedro Galdi.

"I do believe this is going to become a duel of giants but it's still too early to say that BHP is going to be selling at spot prices during this year, especially with its acquisition attempt of Rio Tinto. We have to wait until June 30 to see what is going to happen," Galdi said.

Once again, if you would like to read the full article please visit BNAmericas or click here for a direct link to the publication.