Minas Gerais governor seeks investments in New York

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Governor Romeu Zema of Minas Gerais today delivered the opening speech of the Brazil Summit, an in-person conference hosted in New York City, where Brazilian and international CEOs, senior government officials, and financiers will provide strategic insights on key business sectors, investment trends, and the latest policies and corporate initiatives to drive growth. 

The Brazilian Report is a supporting partner of the event. 

Mr. Zema used his platform to go after previous left-wing administrations in Minas Gerais state and the federal government. To a crowd of investors, Mr. Zema claimed that his state managed to attract BRL 409 billion (USD 79.28 billion) “while the government that preceded mine slashed 200,000 formal jobs.” 

Mr. Zema believes his pro-market agenda may be enough to encourage private investment in his state. “In Minas Gerais, [investors] will find a favorable business environment,” he promises. “We have revoked over 1,800 decrees that made doing business more complex.”

“By Saturday, we will have some good news to give,” he added, referring to the possibility of sealing investment deals while in New York City.

Despite the governor’s optimism, the fiscal situation in Minas Gerais is daunting, and has been for years. The state is set to end 2024 with the second-highest deficit of Brazil’s 27 states (BRL 4.21 billion), and two-thirds of its revenue will be tied up in payroll and debt repayments, hindering the state’s ability to invest. 

“We still face some difficulties, but nothing compared to the situation prior to 2018 [when Mr. Zema won the gubernatorial election],” the governor tells The Brazilian Report. “Today, we are a bellwether for the Brazilian economy, increasing our share of the GDP from 8.8 to 9.5 percent,” he adds.

Minas Gerais is Brazil’s third-largest state economy, behind São Paulo and Rio de Janeiro. It is also the largest producer of commodities such as iron ore and coffee. “Of every four cups of coffee consumed in the world, one is produced in Minas Gerais,” the governor said.

The coffee sector was one of the first in Brazil to adopt voluntary sustainability standards, with about one-third of the total area under cultivation covered by certification. Only 0.1 percent of the deforestation associated with coffee production is related to agricultural production. 

According to a recent study by the International Institute for Sustainability (IIS) in Rio de Janeiro, the coffee industry is the most likely in Brazil to comply with new anti-deforestation rules passed by the European Union. 

The European Union’s Anti-Deforestation Regulation (EUDR) requires proof of zero deforestation for products shipped to the EU, and similar legislation is expected to be implemented in the United Kingdom soon.

Brazil’s National Supply Company (Conab) forecasts a coffee harvest of more than 58 million sacks this year, 5.5 percent more than last year and below only the crops of 2020 (63 million sacks) and 2018 (61.6 million). The recovery comes after climatic hardship in 2021 and 2022, such as water shortages and frosts during the country’s crop cycle.

The production of iron ore, the other key Minas Gerais commodity, remains haunted by the two worst mining disasters in Brazilian history: the 2015 Mariana tragedy and the 2019 Brumadinho disaster.

Those responsible for the tragedies have yet to be held accountable, and victims of both collapses complain of a lack of proper compensation. Last month, Vale offered to pay BRL 127 billion (USD 24.8 billion) in compensation to the victims of the 2015 tragedy in order to settle litigation.

Mr. Zema said his administration supports the negotiations but complains that federal officials have got in the way of a settlement, seeking the perfect deal rather than a possible one. “It’s better to have a deal now that will help us build five hospitals that will immediately benefit the lives of Minas Gerais people than a deal in a 40-year time that will build 40 hospitals,” he explained.

Once touted as a potential candidate to take up former President Jair Bolsonaro’s far-right mantle in the 2026 election, Mr. Zema has lost his way somewhat, with Mr. Bolsonaro’s wife Michelle and São Paulo Governor Tarcísio de Freitas currently leading the way as options for Brazil’s conservatives. 

That said, Mr. Zema did not rule out a run for the presidency in two years’ time.

“I want to continue helping Minas Gerais or Brazil. I don’t yet know how, but there are several options out there,” he says. “What I can assure you is that we, the right-wing governors […] want to put forward a candidate we can all support, but it will be a group decision and nothing has been defined yet.”

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