Petrobras (PETR3; PETR4) suffers from Saudi Arabia's decision to drop the price of oil below US$ 30 to harm Russia/; Vale shares (VALE3) falls 10%

The disputes between Saudi Arabia and Russia over oil prices collapsing. In addition to this dispute, there is also a decline in product consumption due to the new coronavirus, which has been pushing the global economy into recession, a movement that should catch Brazil in a very fragile situation. Analysts say the crisis between the government and Congress, the target of a demonstration encouraged by President Jair Bolsonaro, scheduled for March 15, increases distrust of the country.

2019 is going to be a tough year for Petrobras. Due to the economic effects of Conav-19, there was a drop of 24% in the international price of oil. This led the Brazilian state-owned company to lose about 80 billion reais in market value on the Brazilian stock exchange B3 until 06.03.2020.

Now, with the dispute between Russia and Saudi Arabia influencing oil prices, even more, Petrobras has been hit again. Since the beginning of the year, Petrobras has seen the prospect of annual cash generation falling by 20 billion dollars.

Earlier today, the Ibovespa registered a sharp drop in Petrobras' shares (PETR3; PETR4), which fell 23%; Vale (VALE3), which fell 8%; and banks, which also fell 8% as oil prices plunged up to 30% after Saudi Arabia lowered the prices of the commodity and with projections of a drop of up to $ 20 a barrel.

According to the website Infomoney, "Petrobras' ADRs, on the NYSE pre-market, dropped by up to 20%, Vale's were down 22% and Itaú's were down by around 10% on a day of a general downturn in the stock market".

Earlier this morning, the Brent-type oil futures contract, which serves as a benchmark for the prices charged by Petrobras, dropped 19.9% to 36 dollars a barrel on the London Stock Exchange.

2019 was a year of environmental tragedies in Brazil

The rupture of a Vale dam in Brumadinho (MG), deforestation and burning in the Amazon, and the dumping of oil on Brazilian beaches summed to the unfortunate and terrible statements of the president, Jair Bolsonaro, and the environment minister, Ricardo Salles, contributed to the aggravation of the crises.

In January, the rupture of the Vale dam at the Corrégo do Feijão in Brumadinho, Minas Gerais, shocked Brazil and the world. To date, more than 260 deaths of employees of Samarco (a joint-venture between the Brazilian Vale and the English-Australian BHP, each one holding 50% of the company's stocks) and residents of the region have been confirmed. There are people that are still missing. For Greenpeace, what happened in Brumadinho was a "crime".

According to Greenpeace, "cases such as this, which may become more frequent with the easing of environmental licensing, cannot be considered accidents, but social and environmental crimes arising from greed and neglect."

Samarco itself is linked to the largest environmental disaster ever recorded in Brazil. The Mariana dam rupture in Minas Gerais killed 19 people and dumped tons of tailings polluting and destroying the Rio Doce basin and devastating the fauna and flora of the region. In the affected Rio Doce region, approximately 3.2 million people live.

According to the Repérter Brasil website, the Amazon burnings in 2019 were more frequently detected in cattle-producing regions near refrigerators than in the rest of the forest.

In 2019, the burning in the Amazon almost tripled and surpassed the historical average. Within 12 months from August 31, 2018, until August 31, 2019, 30,901 fire outbreaks were recorded compared to 10,421 fire outbreaks for the same period between 2017 and 2018, which corresponds to a 196% increase.

The disaster caused by the oil spill that hit the beaches of the Northeast and part of Southeast Brazil is still unsolved. More than 800 sites have already been hit by oil slicks on the coast. Three months after the appearance of the first spots, the origin of the oil is unknown, and no one has been indicted.

Gold mining dam breaks in Mato Grosso and injures two people; meanwhile, the Brazilian president continues to defend the implementation of large-scale mining in the Amazon

Yesterday, the TB01 dam in the municipality of Nossa Senhora do Livramento, in Mato Grosso, broke up leaving two people injured. The tailings from gold mining flowed through an area of vegetation on the site, knocking down a high voltage pole that serves the region. The Civil Defense rules out the need to vacate the city, which is 30 kilometers away.

Mining in Brazil has already produced numerous environmental disasters. The crimes committed by the mining companies in the cities of Mariana, Bento Rodrigues and Brumadinho, in Minas Gerais, produced huge damage to the affected ecosystems and the region's economy. Such losses are so great that they are incalculable and in some cases irreversible.

As this blog post already pointed out, the landslide that occurred in Brumadinho dam of Vale on January 25 is an example. 250 people died. The tragedy was a direct result of the lack of public oversight and the policy of easing environmental licensing laws, which is widely advocated by the current government of Jair Bolsonaro and his Environment Minister Ricardo Salles, which want to apply this same policy to the Amazon region.

Yesterday, President Jair Bolsonaro, speaking to a group of prospectors, stated that "the interest in the Amazon isn't in the Indian or the fucking tree, it's in the ore." The statement took place in front of Planalto Palace after Bolsonaro received representatives of the group.

Bolsonaro wants to implement large-scale mining in the Amazon.

The Brazilian GDP growth forecast for 2019 to be 0.8%, according to bank UBS; numbers released by IBGE today showed that the Brazilian economy underperformed and grown 0.4% in Q2 2019

Bank UBS presented a new growth forecast for Brazil's Gross Domestic Product (GDP) for 2019 and 2020. According to UBS, in 2019, the estimate for the increase of the Brazilian GDP fell from 1% to 0.8%. Already referring to the years 2020, the institution believes that the index will grow only 1.5%, compared to 2.2% previously predicted. Therefore, in a scenario of economic stagnation, UBS forecasts even lower performance than expected.

According to economist Laura Carvalho, the current recovery of the Brazilian economy is among the slowest in recent Brazilian history. According to Laura de Carvalho's estimates, "GDP (Gross Domestic Product) in force in the first quarter of 2014 would not be reached until December 2021 - 20 quarters after the end of the recession."

According to data released today by the IBGE, the Brazilian economy underperformed and grew only 0.4% in the second quarter of 2019. This result was driven by a slight recovery of the Brazilian industry. However, compared to the same period last year, the GDP was up 1%.

Also according to IBGE data, the Brazilian extractive industry had a record drop: -9.4%. This was the sharpest drop in the historical series of this sector. Vale's crimes in Brumadinho (where 248 people died and 22 others are missing) and the paralyzing of other dams for inspection in an attempt to prevent further tragedies. This, added to the rains in Pará impacted the iron ore industry in Brazil in the period.

Cost of living in Brazil: Petrobras (PETR4) announces a reduction in gas price, but the measure does not reach consumers; Vale (VALE3) and Petrobras (PETR3) pull Brazilian GDP down

The National Union of Liquefied Petroleum Gas Distribution Companies (Sindigás) reported that Petrobras will reduce the price of gas by up to 12% for residential consumption and up to 17% for corporate consumption. Brazilian refineries will practice the reduction in prices from today, August 5.

In Brazil, cooking gas (LPG) is usually sold in 13 kg canisters for residential use and in packages over 13 kg for business use. However, it is still unclear how the measure can cheapen cooking gas. The fall in the price for the end consumer depends on a number of factors, such as an infrastructure that allows the effective reduction of the gas price and that does not exist in Brazil.

According to the Institute of Applied Economic Research (Ipea), Vale and Petrobras' performance in the first half of 2019 helped push Brazilian GDP down.

According to Ipea, the poor performance of the Brazilian extractive industry in the first half will decrease by 0.2 percentage point the Gross Domestic Product (GDP) expansion of 2019, despite the expected improvement until the end of the year.

Brazilian GDP falls 0.2% in the first quarter of 2019

According to information published today (30.May.2019) by the Brazilian Institute of Geography and Statistics (IBGE), the GDP (Gross Domestic Product) in Brazil fell by 0.2% in the first quarter of 2019 in relation to the previous three months.

This is the first negative result of the Brazilian GDP since 2016. The figures released by the IBGE point to the risk of Brazil again suffering from the recession (when the country registers two consecutive quarters of decline in economic activity).

According to the IBGE, the rupture of the Vale dam in Brumadinho (MG), and its consequent effect on the result of the industry is among the main factors that brought down the economic activity of the country.

This landslide of Brumadinho dam of Vale occurred on January 25. 244 people died. The tragedy was a direct result of the lack of public oversight and the policy of easing environmental licensing laws, which is widely advocated by the current government of Jair Bolsonaro and his Environment Minister Ricardo Salles.

Among other things, Salles favors "self-certification." This means that the company itself will inspect its dams without the need for any prior environmental inspection by the government agencies for certain types of projects. According to Exame magazine, "not even the worst socio-environmental tragedy in Brazil, provoked by Vale in Minas Gerais, made the minister change his mind."

Now, with the possibility of a new tragedy in the Upper South dam of the Gongo Soco Mine, in Barão de Cocais, Minas Gerais, which can break at any moment, it puts the lives of the region's inhabitants at risk, it can cause another immense disaster environmental and make the Brazilian economic situation even worse.