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China firms looking to buy builders, rail projects in Brazil: chamber

SAO PAULO (Reuters) - Chinese companies are interested in acquiring large engineering groups in Brazil and would like to take part in government auctions for the rights to build and operate commercial railways, Charles Tang, the head of the Brazil-China Chamber of Commerce, told Reuters on Wednesday.

Tang said Chinese firms prospecting in the Brazilian market are also willing to finance projects, a competitive advantage over local groups as the deepest recession on record has reduced local credit lines and made them more expensive.

Chinese companies “want to build and finance construction projects,” said Tang. “They have asked me to help them find suitable targets, (such as) builders who are not involved in the ‘Car Wash’ probe.”

Nearly all of Brazil’s large engineering groups are being investigated amid allegations of their participation in Brazil’s sweeping bribery probe, dubbed “Operation Car Wash.”

Among the projects the Chinese would be interested in are the railways Ferrovia da Integração (Fiol) and Ferrogrão. These projects combined would require around 13 billion reais ($4.18 billion) in investment.

The Fiol railway is set to link distant areas in the country’s northeast to a port off the Bahia state coast. The Ferrogrão project is basically aimed at expanding transport alternatives for grains produced in Mato Grosso, Brazil’s top soy-producing state, to ports up north in Pará state.

Tang said companies such as China Railway Engineering Corporation (CREC10) and China Communications Construction Company (CCCC) 601800.SS could be interested in these projects.

“In the past, Chinese firms would never be able to enter Brazilian infrastructure projects, because the large local engineering groups were dominant. But today those groups are in the Car Wash, projects have been abandoned and need capital. Everything is cheap,” he said.

There is also interest from China in Brazilian agriculture and oil exploration, Tang added.

Chinese investors are closely watching the discussions regarding foreign land ownership in Brazil. Currently, there are strong limitations regarding land purchases by foreign companies, but the government is evaluating making the rules more flexible.

Writing by Marcelo Teixeira, editing by G Crosse