Wildcat mining could cause national electricity blackout

. Jul 31, 2020
power Wildcat mining could cause national electricity blackout Belo Monte power line. Photo: ABr

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We’re covering today a major risk for Brazil’s power grid. The terrible Q2 earnings season. And new worries around the president’s health.

Illegal mining threatens major power line in Brazil

BMTE, the company which runs the Belo Monte power transmission line,

has filed complaints denouncing that illegal mining camps jeopardize the 2,076-kilometer high-voltage line, which stretches from the Belo Monte dam in Brazil&#8217;s North, all the way down to the Southeast. In a document to authorities, BMTE President Chang Zhongjiao complains about wildcat mining popping up in the municipalities of Marabá, Paraupebas, Itupiranga, and Curionópolis — all along the transmission line&#8217;s path.</p> <ul><li>The law says that BMTE controls a stretch of land 100-meters wide along the line, meaning that any activities on this territory require the company&#8217;s authorization. Of course, illegal miners are not known for respecting regulations.</li><li>The police carried out an operation on May 11, closing a number of mining camps. But they returned just days later, BMTE complains.</li></ul> <figure class="wp-block-image size-large"><img src="https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21-891x1024.png" alt="energy line" class="wp-image-45450" srcset="https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21-891x1024.png 891w, https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21-261x300.png 261w, https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21-768x883.png 768w, https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21-610x701.png 610w, https://brazilian.report/wp-content/uploads/2020/07/Screen-Shot-2020-07-31-at-06.39.21.png 1044w" sizes="(max-width: 891px) 100vw, 891px" /></figure> <p><strong>What they are saying. </strong>BMTE, which belongs to China&#8217;s State Grid and Eletrobrás, says that wildcat mining has become more prevalent in recent months. Gold digging includes removing large quantities of land with machines and water jets, which can affect the stability of the ground. The company says these activities have increased the risk of a tower falling, which would halt transmission.</p> <ul><li>Brazil&#8217;s electric energy regulator Aneel replied that the problem is BMTE&#8217;s to solve. &#8220;Guaranteeing the safeguarding of transmission facilities and running the 100-meter band is a contractual obligation of the company, which must take all necessary action to solve the issue presented.&#8221;&nbsp;&nbsp;</li></ul> <p><strong>Why it matters.</strong> The Belo Monte line has become one of the most important of the Brazilian power grid. A stoppage in operations could create a nationwide blackout.</p> <ul><li>In March 2018, just after the line became operational, a power outage temporarily shut down transmission. No less than 13 of 27 states were affected, with 70 million people left without electricity for hours.</li></ul> <p><strong>By the numbers. </strong>The Belo Monte power line is one of the world&#8217;s most expensive and modern energy transmission systems. Inaugurated in 2017, it cost over BRL 5 billion and spans over five states.</p> <iframe src="https://open.spotify.com/embed-podcast/episode/66DG5Kk9N12VhzHQe2vRMG" width="100%" height="232" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe> <hr class="wp-block-separator"/> <h2>A terrible Q2 may not be the end of the world</h2> <p>It&#8217;s earnings season, and most companies are confirming grim expectations with terrible numbers. Here are the most notable among them:</p> <ul><li><strong>Petrobras.</strong> The Brazilian oil and gas giant posted BRL 2.7 billion (USD 523 million) in net losses over Q2 2020. Earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped 23.5 percent. According to the company, these results were driven by the 29-percent nosedive of Brent oil prices, combined with increased market volatility and concentration of global demand.</li><li><strong>Usiminas.</strong> One of the largest producers of steel in the Americas, Usiminas reported losses of BRL 395 million — from a BRL 171-million profit in Q2 2019. Brute steel production was down 36 percent, and laminated steel production down 39 percent.</li><li><strong>Ambev.</strong> The giant beverage producer saw its net profits plummet 51 percent in Q2 2020, to BRL 1.2 billion. Net revenue was 6.7 percent lower than a year ago.</li></ul> <p><strong>Outliers.</strong> There were a few positive results, as was the case of Engie — the biggest private energy generator in Brazil. The company saw its net profits soar 98 percent to BRL 765 million. Meanwhile, mining giant Vale profited from rising iron ore prices to push its profits over the USD 995-million mark.</p> <p><strong>Why it matters.</strong> For analysts, the numbers aren&#8217;t <em>that</em> important, actually. &#8220;What will be key is what the companies expect for the upcoming future in terms of recovering their activities,&#8221; <a href="https://conteudos.xpi.com.br/acoes/relatorios/temporada-de-resultados-do-2o-trimestre-o-que-esperar/">writes</a> brokerage firm XP.</p> <p><strong>Yes, but … </strong>That will only be true if analysts&#8217; assumptions that the worst of the crisis has passed proves correct. But as the coronavirus begins to resurface in places where it had been brought under control, such as Australia and Vietnam, this may show that we still have a long way to go before calling this pandemic over.&nbsp;</p> <ul><li>Also, the record 32.9-percent drop of the U.S. economy in Q2 is certainly not a good omen for the global economy.</li></ul> <hr class="wp-block-separator"/> <h2>The president&#8217;s health once again in the spotlight</h2> <p>Five days after claiming he had recovered from a Covid-19 infection, President Jair Bolsonaro told supporters during a live broadcast that he is taking antibiotics for an infection that left him &#8220;weak,&#8221; providing precious few details beyond joking that he had &#8220;caught mold in [his] lungs.&#8221;</p> <ul><li>The president announced he had tested positive for the coronavirus on July 7 and spent 20 days in isolation before his tests reportedly came back negative once again. At 65, Mr. Bolsonaro is considered to be an at-risk patient.</li></ul> <p><strong>Why it matters.</strong> Jair Bolsonaro has been less than fully transparent about his health — which is a matter of state.</p> <p><strong>No problem. </strong>The president has decided to go ahead with his visit to Bagé, a city in the southernmost state of Rio Grande do Sul — a behavior considered by many physicians as risky.</p> <ul><li>That is especially the case with Mr. Bolsonaro, who so blatantly disregards sanitary recommendations in times of pandemic. Just yesterday, he visited the northeastern state of Piauí, gathering with voters, touching their hands … and removing his facemask.</li></ul> <figure class="wp-block-image size-large"><img src="https://brazilian.report/wp-content/uploads/2020/07/ezgif.com-video-to-gif-8.gif" alt="bolsonaro facemask" class="wp-image-45449"/><figcaption>Jair Bolsonaro on Thursday. Image: Still via Globo</figcaption></figure> <p><strong>Masks.</strong> Not wearing masks has become a badge of honor for officials within the federal administration — following the president&#8217;s behavior. Brasília correspondent Renato Alves has reported that masks are viewed as an anti-government statement within public buildings, and <a href="https://brazilian.report/power/2020/07/08/not-wearing-masks-a-badge-of-honor-in-bolsonaro-government/">many servants are being pressured into not protecting themselves</a>.</p> <p><strong>Covid-19.</strong> On Thursday, First Lady Michelle Bolsonaro announced she had contracted the coronavirus, as did Science and Technology Minister Marcos Pontes. He is the fifth cabinet member to confirm a Covid-19 diagnosis.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Ports and airports.</strong> Congress passed new legislation determining that ancillary workers in ports and airports who are part of at-risk groups for Covid-19 or have shown symptoms of the disease must be put on paid leave. These payments will be tax-exempt for companies, in a push from lawmakers to lower the financial pressure over a key sector for the economy. Over 95 percent of Brazil&#8217;s trade runs through ports.&nbsp;</li><li><strong>Congress. </strong>The pandemic has forced Congress to operate remotely —&nbsp;and that has halted meetings of its 25 issue-based committees. One negative consequence of that is removing an important step in debates around a given bill, as these committees are often able to have in-depth discussions about proposed legislation. Another side effect is that it has given unprecedented powers to House Speaker Rodrigo Maia and Senate President Davi Alcolumbre. They alone decide what will be voted on by their peers. The latest episode of the Explaining Brazil podcast discusses the <a href="https://brazilian.report/podcast/2020/07/30/explaining-brazil-podcast-bolsonaros-ticket-to-re-election/">importance of the heads of Congress to the country&#8217;s political future</a> —&nbsp;and to the 2022 election.&nbsp;</li><li><strong>World Bank.</strong> Brazil&#8217;s former Education Minister Abraham Weintraub was confirmed as an <a href="https://brazilian.report/newsletters/brazil-daily/2020/06/19/brazil-fired-education-minister-world-bank-job-queiroz-arrest-gdp/">executive director of the World Bank</a>. Nominated by the Brazilian government, Mr. Weintraub is a highly controversial figure in Brazil —&nbsp;and members of the bank&#8217;s staff raised concerns about his track record. He once claimed Supreme Court justices are “bums” who should be “thrown in jail,” he has been accused of racism, and he committed a string of diplomatic gaffes.</li><li><strong>Boom to bust.</strong> Electric scooter rental company Grow has filed for court-supervised recovery. It claims to have been &#8220;heavily affected by the pandemic,&#8221; as its business is based on <a href="https://brazilian.report/society/2019/06/24/brazil-micro-mobility-scooters-streets/">urban micro-mobility solutions</a>. But the truth is that Grow&#8217;s crisis predates the coronavirus. A lack of understanding of the local market coupled with an unprofitable model seemed to be the root of the problem. Residents of smaller Brazilian cities do not have the purchasing power to afford scooters, while vandalism is an issue in larger urban areas. In March, Grow was <a href="https://brazilian.report/tech/2020/03/13/ai-congress-regulation-brazil-tech-tax/">sold to a private equity fund</a> which agreed to take over its BRL 38-million debt for just USD 1.

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