Brazilian conglomerate Odebrecht plans to spend $8.1-billion in Mexico in the next five years in what appears to mark the biggest investment pledge yet from a Brazilian firm in Latin America’s No. 2 economy.
Odebrecht, one of Latin America’s biggest family-owned companies, will invest in petrochemicals, renewable energy, ethanol and sugar production and highway concessions, according to a statement on Tuesday from Mexico’s president.
Marcelo Odebrecht, the company’s chief executive, met on Tuesday with Mexican President Enrique Pena Nieto, the statement said.
Since taking office in December, Pena Nieto has been pushing a reform agenda to boost growth and investment. Lawmakers are currently debating a bill that would open up the state-run energy sector to greater private investment.
Mexico and Brazil, which are regional rivals for attracting investments from the developed world and Asia, have a difficult relationship that has been marked by economic disputes and the failure to clinch a free trade deal between themselves.
Since 1999, Brazilian firms have invested less than $1.2-billion (U.S.) in Mexico, according to data on the Mexican economy ministry’s website. That is less than 0.4 per cent of the $335.7-billion of foreign direct investment that flowed into Mexico during the last 14-1/2 years, mostly from the United States.
Odebrecht, headquartered in Sao Paulo and Salvador, Brazil, has enjoyed enormous growth in Latin America in recent years.
Odebrecht said the firm had already invested $1.8-billion of the planned amount in Mexico, according to the statement from Pena Nieto’s office. It was not clear if any of that amount had been registered in the Mexican economy ministry’s data.
With 175,000 employees in 26 countries, the conglomerate – which includes construction, petrochemical, defence and biofuels holdings – had $41-billion in revenues in 2012. That was more than double its revenues in 2008, and slightly more than the annual economic output of Panama.
Earlier this year, Odebrecht said it planned to invest $20-billion globally over the next three years, with a large chunk of that spending earmarked for Peru.