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RIO DE JANEIRO, Sept 3 (Reuters) - One of the radical groups organizing an informal Brazilian plebiscite this week said it expects up to 10 million to vote in favor of annulling the privatization of the world’s No. 1 iron ore miner, CVRD.
While that amounts to a significant minority in a country with 185 million people, it underscores a sentiment of nationalization that has swept through other parts of Latin America such as Venezuela, Bolivia and Ecuador.
The results of the Brazilian vote will have no legal binding on the ownership of Companhia Vale do Rio Doce (CVRD) VALE5.SA (RIO.N). The company declined to comment on the plebiscite.
“The aim of the plebiscite is to educate the Brazilian people,” Joao Pedro Stedile, national leader of the Landless Peasants’ Movement (MST) said Friday afternoon.
He said that the CVRD privatization was fraudulent.
The control of CVRD, which had been profitable as a state-owned company since its foundation in 1942, was privatized in auction in May 1997 for 3.3 billion reais (at that time worth approximately $3.3 billion).
This value was far below the company’s own estimate of its market value of $40 billion, according to Stedile.
CVRD’s financial report put its market value on June 30 at $103 billion. The company reported net profits of $4.09 billion in the second quarter of 2007. CVRD’s shareholders include Brazil’s Bradesco bank and Brazil’s BNDES development bank.
Recent global economic growth fueled by China has caused the price of world commodities such as oil to rise sharply, which has in turn prompted a wave of natural resource nationalization throughout producer countries.
But analysts say Brazil stands apart from its Latin American neighbors Venezuela, Bolivia and Ecuador and has shown no signs of moving to reclaim previously sold state assets.
Direct foreign investment is flowing into Brazil driving the real BRBY up against the dollar, while Venezuela’s bolivar is plunging on the black market [ID:nN24369628].
But Brazil is not without nationalization sentiments, albeit a minority. The plebiscite is backed by 200 groups including the Trade Union Confederation (CUT) and the Brazil’s National Bishops’ Confederation (CNBB), Stedile said.
The public can vote between Sept. 1 and 9 in 4,000 Brazilian municipalities.
In 2002, MST held a similar plebiscite against Brazil’s entering the Free Trade Area of the Americas, which won around 10 million votes, which Stedile considered a strong showing. He expects a similar performance for the CVRD vote.
“CVRD is not just another company,” Stedile said. “It controls three main railways and ports built with public money, and has rights on 70 percent of Brazil’s mineral wealth.”
(For more on resource nationalism, see [ID:nL28852342].)
Writing by Reese Ewing
