Does Brazil have a cash flow problem?

Brazil seems to be having some money troubles by the looks of the press. It's not good news for Latin America when its largest economy slows, especially when until just recently it seemed Brazil (the depreciation of the Real aside) was well relatively well poised to weather the storm.

Like its fellow BRIC country's, Brazil is far from immune to the global crisis. The country is still heavily dependent on commodity exports, which was the main engine of growth for both the Brazilian economy and stock market the past few years.

Despite reports that consumer spending is still holding up and that Brazil's big state conglomerates like Petrobras are increasing spending (see MercoPress article here), it simply won't be enough to keep the economy afloat forever—and it definitely will not be enough to maintain growth levels of 4-5%.

Poor Ronaldo seen here losing at the French World

Now... for the grim news. While just days earlier Petrobras reported it will be increasing spending, yesterday things did not go its way when it went shopping in international markets to raise money. The company was forced to put off plans to sell bonds because the cost of borrowing to finance the bonds in dollar denominated debt was simply too high (see Bloomberg article here)

Moving on. Brazil's government also had some bad news to bring to the table, announcing plans to freeze roughly 6% of its planned spending budget for 2009 because slow economic growth is eroding tax collection ( see bloomberg article here)

To round up the negative news is one last story concerning loan defaults in Brazil. Credit card spending may be surging, people may be packing the stores but they aren't paying their bills. Loan defaults surged last month to their highest since September 2002 (see Bloomberg article here).

Not good news people...

Commodities in focus: Investment, Production Forecasts, New Discoveries and Project Cancellations from South America

The commodity market is having a mid-recession crisis. This is especially troubling for the major commodity producers in South America. Forecasts of when the global economy will recover from the current financial crisis to range from the 2nd half of 2009 into 2010.


Investing your rainy-day fund from the “boom years” and what it means for Chile

For a country like Chile, which has roughly $22 billion of saved reserves from the four-year boom in copper prices (Chile is the world's #1 producer of copper), recession is going to mean tapping into those savings in order to invigorate demand.

Chile has earned a reputation for being a very efficiently managed economy in South America. This, combined with the fact the country has saved for bad times has created a sense that the Chile is in the best position to weather the global recession.

Fund managers and analysts at Scotiabank Sud Americano SA and Santander are of this opinion and emphasize that so far, Chile's Ipsa Index is the best preforming Latin American benchmark, with a gain so far in 2009 of 5.1%.

(click here to read more on this topic from James Attwood's article on Bloomberg)



New Investments & South-South Cooperation: Brazil-Bolivia

In other commodity news, there is a new example of growing South-South Cooperation to report, this time between Brazil and Bolivia. Brazilian oil conglomerate Petrobras has announced plans to invest $1.1 billion in natural gas projects in Bolivia.

Brazil’s state oil company “has made the commitment to invest $1.1 billion in the coming years,” Lula said at a press conference late yesterday in the Brazilian town of Ladario, which borders Bolivia. “We need gas and we will act with the Bolivian government to fulfill that need.”

(click here to access the full article from Bloomberg)

Bolivia is proven to have the second-largest natural gas reserves in South America after Venezuela. Much like Venezuela, foreign investors are quite concerned with the political situation and as a result the flows of FDI in Bolivia have taken a serious hit in recent years.

However, with energy demand holding steady in Brazil and Argentina, Bolivia's current inability to meet supply contracts with the two nations, this is a smart and strategic move on Brazil's part. Furthermore, with ongoing issues concerning the the price Brazil pays for electric power generated by the Itaipu dam (the world's largest hydroelectric plant, located on the Parana River along the Brazil-Paraguay boarder), it is wise of Brazil to secure its energy needs from a additional source in the region.

(click here to access a recent article concerning this issue between Brazil and Paraguay, courtesy of La Presna Latina)


Exploration / New discovery in Brazil

Moving on... discoveries / exploration continue. Spanish company, Repsol has made a oil discovery offshore Brazil. Repsol announced this weekend, it had found “traces” of hydrocarbons at a deep water well being drilled off the Brazilian coast.

Exploration work was headed by a consortium of companies of which Repsol has the largest stake in. Brazil's Petrobras and Australia's Woodside Petroleum Limited are the other two partners.

It's good news to see companies continuing with resource exploration. When the global economy recovers, which it eventually will—commodities will be back in the headlines. The companies which have managed to brave the recession will find themselves rewarded as consumption increases and buyers line up, ready and willing to pay a premium.

(Click here to read more on this discovery from MercoPress)


Production in 2009 – Copper & gold production set to rise in Peru

Peruvian news agency, Andina has reported Peru's mining companies will produce more copper, gold and silver this year in a bid to offset slumping prices, according to Finance Minister Luis Valdivieso.

In the world, Peru ranks as the third-largest producer of copper, zinc and tin. The fifth largest producer of gold, and the number one producer of Silver. None the less, Peru is confident that by raising output it will be able to cope with the global downturn.

However, if the global economy does not recover as quickly, Peru may find increasing output was not the best method to deal with the situation in the long term. If other producers in the world economy do the same, the market will hypothetically be flooded with supply.

With base metal prices down roughly 25-40%, gold and silver down 14% and 43% respectively, this does seem the most logical path for Peru to take at the moment. The ideal situation I assume the big shots making decisions down in Peru can hope is that the global economy does pick up in the 2nd half of 2009, so that prices do not fall to levels in which mining production becomes economically inviable.

(click here to access Andina's article on this topic)


Baosteel and Vale cancel steel project due to lack of credit – BNAmericas

Cia Vale do Rio Doce and Baosteel have canceled their steel project in the Anchieta complex, in the Espirito Santo state of Brazil, the groups announced.

The companies blamed the global economic crisis, which has seen leading steelmakers worldwide cutting their steel production. As result of the global cut in demand, Baosteel proposed the cancellation of the project and the liquidation of Companhia Siderúrgica Vitória (CSV).

(click here to access the full article from BNAmericas)

News Line: Energy in South America and China

Uruguay Opens bids for Offshore Oil, Gas Blocks – reports Uruguay Energy Ministry courtesy of Rigzone

On December 1-3, Uruguay Energy Ministry and ANCAP, the National Oil Company, will launch the offshore licensing round for exploration and exploitation of gas and oil. The blocks on offer, lie in the Punta del Este and Pelotas basins, where water depths range from 50 to 1500 meters, as well as another basin further offshore called Oriental Del Plata. The blocks' areas range from 2,500 to 10,000 square kilometers...

Click here to access the full story from Rigzone

PetroLatina Commences Drilling Colon-1, IDs 4 New Wells Sites in Colombia - reports PetroLatina courtesy of Rigzone

PetroLatina has announced a further operational update to that released on November 7, 2008.

La Paloma

The Company commenced drilling Colon-1, the first exploratory well to be drilled on the La Paloma block, located in Middle Magdalena Valley, Colombia, on Sunday, November 24, 2008. The Colon-1 well has been drilled vertically to a total depth of approximately 600 feet, to date. Drilling continues to be undertaken vertically to an expected total depth of approximately 9,072 feet in order to test the La Paz, Lisama and Umir formations. Drilling is scheduled to take 25 days in total at a cost of approximately $6 million...

Click here to access the full story from Rigzone


Petrobras' Platform P-53 Kicks Off Production at Marlim Leste Field – reports Petrobras courtesy of Rigzone

Petrobras announced that platform P-53 kicked-off its operations yesterday, November 30. This is the first production unit installed in the Marlim Leste field, in the Campos Basin.

The P-53 unit has total production capacity of 180,000 barrels per day of heavy oil, 20 degrees API, and compressing capacity up to 6 million cubic meters/day of natural gas. The platform's oil production will be offloaded to shore by shuttle tankers with the assistance of Autonomous Re-pumping Platform PRA-1 and the FSO Cidade de Macae. Part of the gas that is produced will be consumed by the platform itself as fuel to generate electricity, and the remaining will be exported to shore via the Campos Basin's gas network. The platform will reach peak production in the first half of 2010.

Click here to access the full story from Rigzone


Geopark Tests Positive Oil at Manekenk 1 in Chile – reports GeoPark Holdings Limited courtesy of Rigzone

GeoPark Holdings Limited has announced the successful testing of the new Manekenk 1 well on the Fell Block in Chile at an initial rate of approximately 1,300 barrels of oil per day equivalent (boepd). Geopark operates and owns a 100% working interest in the Fell Block...

Click here to access the full story from Rigzone


Peru's mining/hydrocarbons output rose 4.57% in Oct 2008 – reports Andina.com

Lima, Dec. 01 (ANDINA).- Production in Peru's mining and hydrocarbons sector expanded 4.57% in October from the same month last year, as the mining sub-sector increased 2.72%, the National Statistics Institute (INEI) said Monday...

Click here to access the full article from Andina.com


PetroChina Starts Developing Offshore Block in Bohai Bay – reports Dowjones Newswires courtesy of Rigzone

PetroChina Co. has started developing an offshore block in Bohai Bay with an output target of 3 million metric tons a year or 60,247 barrels a day, parent company China National Petroleum Corp. said Monday.

The Yuedong block, located in shallow water near Liaoning province, has rich reserves of heavy oil, CNPC said on its Web site, without elaborating.

Yuedong is part of the Liaohe field, China's largest heavy oil field, with annual output at 12 million tons a year or 240,986 barrels a day...

Click here to access the full article from Rigzone


China North East Petroleum's October Crude Oil Production up 135% - reports China North East Petroleum courtesy of Rigzone

China North East Petroleum has announced preliminary results for its October 2008 oil production.

Crude oil production for the month ended October 31, 2008 increased 135%, or 40,479 barrels, to 70,545 barrels from 30,066 barrels for the month ended October 31, 2007. On a sequential basis, crude oil production increased 4,627 barrels, or 7%, compared to the month ended September 30, 2008...

Click here to access the full article from Rigzone

Latin America in focus: Commodities, food and South-South Cooperation (delayed post from Oct 30)

1) Brazil Petrobras agrees to explore for oil offshore Cuba – Benito's take

Brazil frequently enjoys assuming the role as a leader in the developing world of promoting South-South Cooperation.  This time the nation has agreed to help Cuba explore for oil and gas. Brazil's Petrobras is expected to sign an agreement with Cuba for deep-water oil and gas exploration during President Lula da Silva's two day visit to the island this week.

Cuban media is reporting both sides will “sign a contract for the production of hydrocarbons.” No further details have been reported, but the Cuban Foreign Minister Felipe Perez Roque has stated he “anticipates Cuba will sign in the presence of Lula da Silva a very important agreement for oil exploration in deep water.”

Although the details are shady at best, it no less is a sign of Brazil further developing its reach in promoting economic cooperation among developing nations, with the pretext of mutual economic development.

To read more about this development check out this article published by Merco Press.



2) Petrobras Transpetro unit won't delay 49-tanker plan (update 2) courtesy of Bloomberg LP

Oct. 30 (Bloomberg) -- The transport unit of Petroleo Brasileiro SA will be able to maintain a 49-ship fleet expansion program because it has sufficient financing from a government fund and can ignore the world credit crunch, the unit's president said.

Brazil's Merchant Marine Fund, managed by state-development bank BNDES, has enough cash to pay the $2.5 billion needed for 26 tankers that have already been ordered, said Sergio Machado, president of Rio de Janeiro-based Transpetro, as the unit is known. The fund can also finance another 23 ships that will be ordered by the end of the year, he said.

State-controlled Petrobras, as Transpetro's parent is known, may delay some investments as oil prices fall and credit becomes scarce, Chief Executive Officer Jose Sergio Gabrielli said Oct. 20. The credit crunch may force the cancellation of 20 percent of the deepwater oil rigs under construction, Brian Uhlmer, analyst at Pritchard Capital Partners in Houston, said.

``Everything regarding our shipbuilding program is defined and is part of Brazil's strategic plan,'' Machado said in a phone interview from his office. ``The Transpetro program is fully financed.''

Click here to access the full article from Bloomberg LP



3) Favorable 2009 beef export prospects for Brazil and Argentina, courtesy of Merco Press

Beef exports are forecast to rise nearly 2% during 2009 as gains by Brazil, Argentina and the United States outweigh downturns in Australian and New Zealand shipments according to the US Cattle network.

As the world’s leading trader Brazilian exports are forecast to spring back nearly 5% to over 2.0 million tons. Shipments are projected to decline in 2008 for the first time since 1996. However, by overcoming sanitary barriers, it is now poised to regain sales to Chile, EU-27 and other key markets...

...

In Argentina exports are forecast to expand 20% to 480,000 tons in 2009 after plummeting an expected 25% in 2008.

The rebound stems from the Argentine government setting a higher export quota, cattle and beef supplies not expected to be limited by farmer strikes, and thermo-processed product to be exported outside of the quota.

Click here to access the full article from Merco Press



4) Venezuela books 10.252 billion barrels more in oil reserves, courtesy of Dow Jones Newswires

Venezuela said Wednesday it was adding 10.251 billion barrels of crude to its national reserves as part of an ongoing review of its hydrocarbon reserves.

With this increase, the oil-rich country's total reserves now amount to 152.561 billion, making Venezuela the country with the second largest crude reserves, the Venezuelan oil ministry said in a statement.

Click here to access the full article from Rigzone
http://www.rigzone.com/news/article.asp?a_id=68576

5) Chile trims 2008 copper output forecast again, courtesy of the Mining-Journal

Chile on Wednesday trimmed its 2008 copper output forecast for the second time since July, this time to 5.45Mt, citing operational issues but not slumping prices for the metal.

Limited financing due to the global credit crisis may delay or cancel some new projects, said Eduardo Titelman, executive vice-president of Chile`s state copper commission Cochilco, one of the world`s leading copper think-tanks.

Copper prices rose above US$2/lb on Wednesday, but they remained less than half the record levels of over US$4/lb hit in July. A global credit crunch and fears the world could enter a recession have hit demand for metals like copper, heavily used in the auto and construction industries.

Click here to access the full article from the Mining-Journal

http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=5174

News Line: Commodities in Focus - China, Vietnam, Italian Investments in Peru and Venezuela, Petrobras to suffer from global credit crisis

1) Falling prices give China chances to buy copper mines -- reports Mining Journal Online via Reuters

Falling copper prices are providing opportunities for cash-rich Chinese firms to buy overseas resources, a senior executive at China Nonferrous Metal Mining said on Monday...

...

"The winter is coming. It may be a good timing for Chinese firms to go out to buy resources," Liu Guoping, director of the exploration department at China Nonferrous, said at the conference. Liu said some overseas exploration firms might find it difficult to obtain funds to finance their projects, giving cash-rich Chinese firms good opportunities to buy their assets...

...

Liu at China Nonferrous said Chinese firms had acquired copper resources in the past few years at high prices as China`s need for the raw material rose. The demand for imported copper materials would stay strong in the long term. Jiangxi Copper, China`s top producer and the owner of the country`s largest open-pit copper mine in Jiangxi, will need to import 70% of its materials for refined copper production by the end of this year when its capacity rises by nearly 30% to 900,000t/y, president Li Yihuang said.

Click here to view the full article, courtesy of Reuters and Mining Journal


2) Saipem wins $1.1 billion contracts in Peru and Venezuela

Italian oil and gas industry contractor Saipem announced it had won onshore drilling contracts in Peru and Venezuela worth a total value of about $1.1 billion...

Click here to access the full article, courtesy of Living In Peru


3) Vietnam Lion Field Fires up production offshore Vietnam

Cuu Long Joint Operating Co. has commenced oil production from the Su Tu Vang (Yellow Lion) field located in Block 15-1 offshore Vietnam, according to a Dow Jones Newswire citing the Thoi Bao Kinh Te newspaper. Su Tu Vang, estimated to be Vietnam's fourth-largest field, is situated in the Cuu Long Area near the Bach Ho, Rang Dong and Ruby Fields and was discovered in 2001. The 'Yellow Lion' field is set to produce 65,000 barrels of crude per day...

Click here to access the full article, courtesy of Rigzone


4) Credit crunch may block 20% of deep oil rigs, slow Petrobrad reports Bloomberg LP

Oct. 28 (Bloomberg) -- As many as 20 of the 100 deepwater oil rigs on order worldwide may be delayed or canceled as loan availability erodes, possibly slowing developments including the biggest petroleum discovery in the Americas in three decades...

...

Norway's Sevan Marine ASA has lost 70 percent of its value this month amid concern it won't get financing for two drilling units. Houston-based Atwood Oceanics Inc. said Oct. 16 that it won't exercise an option to build a deepwater rig at Jurong Shipyard Pte. Ltd. in Singapore. New rigs were being ordered to ease a shortage of deepwater gear needed to exploit offshore prospects like Brazil's Tupi, announced in November by Petroleo Brasileiro SA, or Petrobras.

``Petrobras would probably be the dominant oil and gas company that gets hit by this,'' Uhlmer said.

Jose Sergio Gabrielli, chief executive officer at state- controlled Petrobras, said the Rio de Janeiro-based company may need to help find financing for some of its suppliers. ``We are concerned about the supply chain of products for Petrobras,'' Gabrielli told reporters at a conference in Houston last week...

...

Click here to access the full article, courtesy of Bloomberg LP

Peru's energy production rises 4.75% from previous month

Peru produced an average of 118,714 barrels of liquid hydrocarbons a day in July, 4.75% higher than in the previous month, state agency Perupetro said Tuesday.

Pluspetrol Peru Corp. produced 35,413 barrels a day of liquid hydrocarbons in July from Block 88, the main block in the Camisea natural gas field.

Pluspetrol Norte produced 23,074 barrels a day from its Block 1-AB and another 15,697 barrels a day in the month from Block 8.

Petroleo Brasileiro SA (PBR), or Petrobras, produced 13,980 barrels a day of liquid hydrocarbons in Block-X during the month, the report said.

...................

Click here to access the full article from Dowjones Newswire, provided by Rigzone

Disappear for 12 days and things go a bit crazy... falling Metals drag down LATAM financials --

Latin American stock markets plunged Monday, led by a slide in Brazilian and Mexican equities as prices for resources sparked a broad sell-off and growing fears about the performance of the US economy. Brazil and Mexico markets fell to their lowest level in seven and six months, while in Argentina the Merval ended at a two year record low.

In Sao Paulo, the Bovespa dropped 3.5% to 55,609.07, its third consecutive decline. Shares of the market's heaviest-weighted stock, oil giant Petrobras tumbled 4.7%. Something similar happened with Companhia Vale do Rio Doce, the world’s leading iron ore mining giant which slid 7.2%.

Click here to access the full article from Merco Press

More comprehensive updates and analysis of past weeks events and where things may be heading to come. Need to play catch up with the world after 12 days in Brazil, with limited net, tv and media I could read (my Portuguese is not the greatest)

South American Energy in focus

Venezuela's PdVSA Reports Successful Oil Drilling Ecuador

A slew of energy developments in a handful of countries in South America has made headlines in the past day or so. For starters Venezuela and Ecuador made headlines this morning once again... this time for successful drilling and exploration in the Amazonian region. The newly established supply of crude will eventually be sent to the new refinery being build on the pacific coast.

Click here to access the full story from Rigzone.



Petrobras' Production Soars 3.3% More in June

Petrobras’ average oil and natural gas production abroad was 218,117 barrels of oil equivalent per day (boed) in June, 8.1%.

Added to the volume lifted from the domestic fields, Petrobras’ total production in June set a monthly record, topping out at 2,421,155 barrels of oil equivalent, 3.3% more than a year ago and 2.3% higher than May 2008.

Click here to access the full story from Rigzone.



Arduous Process of getting the Camisea facilities in Peru up and running
- Wood Snag 3-Year Maintenance Contract for Camisea Facilities

The Camisea Project comprises the exploitation The San Martin and Cashiriari fields natural gas fields, the construction and operation of two pipelines, one for natural gas (NG) and one for natural gas liquids (NGL) and the distribution network for natural gas in Lima and Callao. The pipelines wiII make NG and NGL available for domestic consumption and for export.

Natural gas wiII be transported to the main consumption center in Lima, where it will be used for residential and industrial purposes and to generate electricity, that will then be distributed nationwide through Peru’s existing transmission infrastructure (click here to read more about the Camisea Project)

Wood Group Production Facilities has been awarded a three-year, performance-based contract by Pluspetrol Peru Corporation to provide integrated maintenance services for the Camisea facilities in Peru. The Camisea project includes the largest natural gas field in the region.

Click here to access the full story from Rigzone



Shell to invest $300m in search for oil and natural gas in Peru

Royal Dutch Shell is ready to invest as much as $300 million in exploring for oil and natural gas in Peruvian waters as part of a agreement with BPZ Energy, executives from the two companies said Thursday.

......................

In March, U.S.- and Peruvian-owned BPZ found an estimated 60 million barrels' worth of crude oil and 40 million cubic feet of natural gas in the same region off Peru's northern Pacific coast.

The accord announced Thursday calls for Shell to spend up to $300 million on exploration and - if reserves are found - exploitation of natural gas, while BPZ will put the same amount into searching for crude oil along with an additional $150 million to build an electric plant in the area.

Under the deal, BPZ will get 51.75 percent of any oil or gas produced and Shell will claim the rest.

Click here to access the full story from Rigzone



Geopark Grabs up Additional Petroleum Block in Chile

GeoPark Holdings Limited announced that the Ministry of Mining in Chile has awarded the Otway Block in southern Chile to a consortium consisting of GEOPARK (42%), Methanex Corporation of Canada (16%) and Wintershall Energia SA, a division of BASF Ag of Germany (42%).

The Otway Block is a large new attractive exploration area (5,992 square kilometers) located in the Magallanes region near GEOPARK's Fell Block operation in Chile. GEOPARK is the first and only private-sector oil and gas producer in Chile and the addition of the new Otway Block will further enhance GEOPARK's position as the premier private-sector oil and gas operator in Chile.

Click here to access a previous post in regard to GEOPARK's natural gas discoveries in the Magallanes Region -- published on South-South Cooperation on June 17th, 2008.

Click here to access the full article from Rigzone



Colombia to create oil price stabilization fund

Colombia's government is creating an oil price stabilization fund (FEPC) that will be used to cushion domestic oil prices from unexpected rises on international markets, government news agency SNE reported.

Congress has approved the fund, which is included in the national development plan and must go to the president for final authorization. The finance ministry would administer the fund, which would receive financing from the existing oil stabilization fund (FAEP) owned by state oil company Ecopetrol.

Click here to access the full story from Rigzone

Peruvian miners begin nation wide strike June 30---- Petrobas to set Orinco Policy---- Brazil and Venezuela hold fourth bilateral meeting

Apologies work and assignments have kept me busy today. Little time or brain power to give you my analysis today of articles I think relevant to discuss. I will however include some pieces which grabbed my attention from the news I read through today.

Peru Mine Workers Begin National Strike for More Pay (Update2) -- Bloomberg LP

By Alex Emery

June 30 (Bloomberg) -- Peruvian mine workers began their third national strike for better pay and benefits in less than 14 months, adding to protests from Mexico to Chile that have disrupted copper supplies and sent prices to records this year.

Miners walked off the job at more than a dozen sites to pressure Congress to pass laws to increase their share of profit and improve pensions, said Luis Castillo, general secretary of the Mining Federation. The group represents about 28,000 mine workers and 70 unions.

``The strike is on across the country and will take several days to solve,'' Castillo said today in an interview from Lima. ``Talks with the congressional committee should get under way tomorrow.''

Strikes have cut copper output in Peru, Chile and Mexico, helping fuel a 28 percent rally in the price of the metal this year. Copper has climbed fivefold in the past five years as rising demand outpaced production, eroding global stockpiles. Peru is the world's largest silver producer and the third-biggest source of copper, zinc and tin.

Also joining the strike were unions representing workers at mines run by Barrick Gold Corp., Southern Copper Corp., Renco Group Inc.'s Doe Run Peru unit, Shougang Corp.'s Hierroperu iron unit, Cia. de Minas Buenaventura SA, Cia. Minera Antamina and Volcan Cia. Minera SA, the Mining Federation said.

``The strike has had a visible impact at the mine,'' Shougang Deputy Manager Raul Vera said in a telephone interview. ``But the strike isn't 100 percent, as some employees have gone to work.''

Legislation

Southern Copper's Ilo smelter and Cuajone mine are operating with subcontracted workers and have not had any ``significant'' output losses, Southern Copper spokesman Alberto Giles said in an e-mail. Toquepala mine workers didn't join the strike, he said.

Doe Run Peru's La Oroya zinc and lead smelter is operating normally, spokesman Victor Belaunde said in by telephone. Employees at Barrick's Alto Chicama and Pierina gold mines also turned up to work ``as normal,'' spokesman Vincent Borg said in a telephone interview.

Antamina spokesman Jose Salazar declined to comment.

Congress will vote this week on a law that seeks to eliminate a ceiling on workers' share of profit, Peru's Labor Minister Mario Pasco said. Workers' bonuses based on profit currently can't exceed 18 times their monthly salary.

``There's no reason for this strike,'' Pasco told reporters in Lima today. ``In a week, more or less, this law will pass.''

Futures

Copper futures for September delivery rose 0.45 cent, or 0.1 percent, to $3.8825 a pound on the Comex division of the New York Mercantile Exchange.

Gold futures for August delivery fell $3, or 0.3 percent, to $928.30 an ounce, while zinc rose $2, or 0.1 percent, to $1,932 a metric ton on the London Metal Exchange.

Peru's Mining Federation held five-day national strikes in November and May of last year. In Chile, contract workers on May 5 called off an almost three-week strike that cost Codelco, the world's biggest producer, an estimated $400 million in lost output and damages.

Mexico's largest mining union is scheduled to vote today on whether to strike to protest the labor secretary's refusal to recognize the re-election of Napoleon Gomez Urrutia as the group's general secretary.

A strike has shut down Grupo Mexico's Cananea copper mine in Mexico since July 30. Grupo Mexico is seeking to buy the workers out and reopen the mine in 2009.

Government Solution

Congress, not the companies, will have to act to solve the dispute in Peru, Buenaventura Chief Financial Officer Carlos Galvez said.

``This is a political issue that has made the federation more visible,'' Galvez said in a telephone interview. ``It's likely there will be more mining operations on strike this time than last year.''

Peruvian lawmakers have been debating legislation since 2006 that would boost profit-sharing and pensions for miners. Peruvian President Alan Garcia last week enacted a law granting more rights to employees of contractors.

To contact the reporter on the story: Alex Emery in Lima at aemery1@bloomberg.net.

Last Updated: June 30, 2008 17:23 EDT

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Petrobras to set Orinoco policy in September - Brazil, Venezuela

Click here to view full article -- BNAmericas

Brazil's federal energy company Petrobras (NYSE: PBR) will define its role in Venezuela's Orinoco heavy crude belt at the September meeting between the two countries, Venezuela's state oil company PDVSA said in a statement.

Brazil's President Luiz Inacio Lula da Silva met his Venezuelan counterpart Hugo Chávez in June in Caracas for the fourth bilateral meeting.

Lula said that both PDVSA and Petrobras would take their time to cement any joint participation.

"These are both large and very powerful oil companies that are currently establishing common denominators that will guarantee a strong participation between the two companies," Lula said.

"The more oil we find, the more powerful we will become," he said in the statement.