ALABC Newsletters

Seeing Green

This week, Latin American policymakers presented road maps to a low-carbon economic recovery in two different international forums. Costa Rica, for its part, aims to build nodes for different green jobs across the country. These will be meticulously planned according to such factors as energy demand and wind speed, as detailed by a senior official at a United Nations sustainable development forum.

At the Inter-American Development Bank (IDB) annual assembly, Colombian officials mentioned their five-year stimulus plan, which likewise aims to create 114,300 green jobs. “Colombia today is the Latin American country that is leading the energy transition,” said President Iván Duque, adding that the country recently pledged to reduce its greenhouse gas emissions by 51 percent by 2030.

In Latin America, as elsewhere in the world, political leaders are at least paying lip service to making their post-coronavirus economies more sustainable. Preliminary reports on the makeup of stimulus packages around the region suggest that a few are even taking concrete steps toward green job creation. On balance, though, they could do far better.

Vivid Economics’ Greenness of Stimulus Index identified new sustainable investments such as green infrastructure in Argentina, Brazil, Colombia, and Mexico; conservation programs in Colombia; and subsidies for green products in Brazil. Still, each of those four countries earned aggregate negative scores in the index: They have also pumped money toward environmentally harmful products and infrastructure investments, and eased some environmental standards.

A U.N. Environment Program report that tracked recovery measures in the world’s 50 largest economies ranked Chile’s recovery spending the greenest in Latin America. The Chilean government says it is committing at least $1.3 billion to environmentally friendly measures such as installing electric bus terminals and retrofitting public buildings.

Read full article here. 

February 22 (Renewables Now) - Australian renewable energy company Enegix Energy will be part of a USD-5.4-billion (EUR 4.4bn) green hydrogen project in Brazil's Ceara state.

On Friday, the state government and the foreign firm signed a memorandum of understanding (MoU) for the project planned for the state's Pecem Industrial Complex Port. It is expected to be the first green hydrogen hub in Brazil and Latin America, the government said. Enegix Energy is to build the hydrogen production facility.

Thanks to the available port infrastructure, international partnerships and location, Ceara expects to be able to export hydrogen at a competitive price.

The government is also partnering with Pecem port, Ceara's industry federation Fiec and the state's federal university UFC. It has established a task force to enable the structuring of a green hydrogen production chain in the region.

Read full article here.

Misguided energy policies threaten its manufacturing sector and the global fight against climate change.

The combustible engine’s end date is firming up: General Motors Co., the largest of the Detroit big three, plans to stop making gas-driven cars by 2035. The global green shift goes beyond vehicles, as hundreds of companies and a growing number of nations pledge to neutralize their carbon footprints. Mexico’s natural bounty in alternative energy sources and its close industrial ties to the United States give it advantages going into this new era. Yet Mexico’s government is squandering them by rejecting the green revolution just as it picks up its global pace.

Mexico’s manufacturing base rests heavily on autos. The factories of Ford Motor Co., GM, Nissan Motor Co., Volkswagen AG, Toyota Motor Co., and other companies fill its industrial heartland and churn out nearly 4 million vehicles a year, making Mexico the world’s sixth biggest producer. Global parts-makers have followed their clients: Aptiv Plc set up with GM, Visteon Corp trailed Ford, and Denso Corp came with Toyota. Mexico developed sophisticated homegrown suppliers, too: Brake and suspension maker Rassini SAB, chassis provider Metalsa SA, powertrain manufacturer Nemak SAB, as well as hundreds of smaller shops that make the basic nuts and bolts assembled into seats, dashboards, mechanical systems and more. The sector is now Mexico’s biggest export driver by far, bringing in $100 billion in annual revenue. 

Read full article here.

Should Latin American SMEs consider the possibility of exporting their products to Brazil? Yes, because Brazil is the largest market in the region with almost 200 million inhabitants and because in addition to being a member of the Mercosur it has trade agreements with several countries in the region such as Chile and Bolivia, facilitating the entry of products into its territory.

If this information has convinced you to face the challenge of exporting to the verdeamarelho country, then you should investigate the characteristics of the Brazilian market. Below we provide answers to your possible questions.

1. What are Brazil’s main imports? According to a document from the Brazilian Ministry of Foreign Affairs, “almost 20% of the country’s imports consist of chemical products. Also significant are machinery and equipment (10.5% of the total number), oil (10.4%), automobiles (8.6%) and communications and electronic material (7.5%). However, the percentage of import products is diversified, with a significant amount of imports of other products with different features such as metallurgical, medical-hospital, precision and industrial automation products, food and beverages, rubber and plastics, office machinery and agricultural goods.”
2. How is the Brazilian market made up? According to the same report by the Brazilian Ministry of Foreign Affairs, the market of this country has changed significantly in recent years: while before consumption was concentrated in classes A and B (the higher income sectors), it has now expanded beyond these limits. Therefore, “foreign companies must no longer consider the Brazilian market as sophisticated and restrictive but as diversified and broad, offering several opportunities to producers of all types of goods, prices and quality.”

Read full article here.

Chilean miner SQM plans to invest US$700mn in an Australian lithium project in 2021-25.

The project, known as Mt Holland, is a JV between SQM and Australia’s Wesfarmers, which will invest another US$700mn in the initiative.

The parties announced a final investment decision in disclosures on Wednesday.

According to an updated definitive feasibility study, initial concentrator and refinery production will be about 50,000t/y of battery grade lithium hydroxide. Environmental approval for the refinery is pending.

Construction is forecast to start in 2H21 and first production of lithium hydroxide is expected in 2H24, SQM said in a filing with Chile’s securities regulator CMF. 

Read full article here

Perth-based retail and industrials conglomerate Wesfarmers has announced it will forge ahead with a near billion-dollar investment to construct a lithium mine in the Western Australian region of Mt Holland.

Wesfarmers told investors after market close on Wednesday evening it had made a final decision to proceed with the investment in the mine and its associated refinery in Kwinana which it is building via a joint agreement with Chilean chemical company Sociedad Química y Minera de Chile (SQM).

The two businesses’ joint venture company, Covalent Lithium, completed a fresh feasibility study on the mine, determining its annual production capacity of 50,000 tonnes of battery-grade lithium, a 5,000-tonne increase on the original planned production capacity.

Wesfarmers and SQM are currently in the process of landing all necessary approvals for the project though final approval is required from the Western Australian Environmental Protection Authority.

Read full article here

Mexican bill would reform tax law for subcontracted services

November 16, 2020

In brief:

Mexico’s Executive branch submitted a bill to Congress on November 12 that would reform labor and tax laws related to the tax treatment and legal permissibility of subcontracted services. Given the political context, Congress likely will pass some version of the proposed legal reform and that the effective date could be as early as January 1, 2021.

In detail:

Background

Subcontracted services are a widespread feature of Mexican business both through third-party personnel providers and, more commonly, through related-party service companies. For decades, Mexican businesses often have maintained their employees in legal entities that are separate from the operating entity.

Additionally, Mexican Labor Law mandates an annual 10% profit-sharing payment to employees. The payment is made directly to the employees and is not a tax. Labor Law bases the payment on the employer’s taxable profits. As a result, an employee´s profit sharing is limited to a portion of the fair market value profit at the legal entity employer rather than the consolidated business profit of a group of entities.

For MNCs that house their employees in a separate legal entity, the proposed legal reform could disrupt various aspects, including legal structure, people planning, income tax and value-added tax (VAT). Companies that provide workforce solutions such as staffing to unrelated parties also should consider the proposed legislation’s impact.

Read full document here. 

Austrade is making it easier for businesses to go further, faster with services delivered online, in person and via partners. To support Australian businesses anytime, anywhere in the world Austrade is reimaging existing services and developing new ones. These services will help businesses unlock more opportunities, more often, making it easier to find export markets, understand exporting rules and get the latest insights. Businesses going global can also connect with Austrade and other government services through the advisory centre, staffed by experienced specialists.  In 2021, Austrade will provide more tailored information and digital services based on where a business is in its global growth journey, from new to experienced exporters, through a fully integrated online export guide.

Learn more about Austrade's Digital Services  and try Austrade’s new digital tools, currently in beta for Food and Agriculture businesses.  

The establishment of the joint business council between the Australia-Latin America Business Council and the Chilean Federation of Industry. 

On November 12, a Memorandum of Understanding (MOU) was signed between the Australia Latin America Business Council and the Chilean Federation of Industry (SOFOFA) for the establishment of the Australia-Chile Business Council ACHBC), to foster closer friendship and promote economic, trade and investment between Australia and Chile.

The signing ceremony was co-hosted by the Chairman of the Board of Directors of ALABC Mr. Richard Andrews and by the President of SOFOFA Mr. Bernardo Larrain and included the participation of the President of the Australian Chapter Mr. Andrew Phillips and by the President of the Chilean Chapter, Mr. Ramon Jara and the Vice-Presidents of both Chapter Mr. John O’Donogue and Mr.Pablo Altimiras along with the respective members of the boards.

Special mention to highlight the presence of H.E.Patricio Powell, Ambassador of Chile in Australia.

In his welcoming remarks the President of SOFOFA Bernardo Larrain highlighted that the signing of the MOU marks a new milestone in the consolidation of the business relations between Australia and Chile and that the main objective is to provide a regular forum for a more systematic bilateral business promotional initiatives that lead to increase trade in goods and services and investment between the two countries. He added that “the current trade and investment figures demonstrate that the existing potential remains largely untapped. An essential role for the Australia-Chile Business Council it is to encourage investor confidence and strengthen relations to establish the bases for stable growth that is beneficial for both countries”

The President of ALABC, Richard Andrews mentioned that this is the first binational business advisory group created by ALABC . The  bilateral business councils are unique instances of private sector cooperation, coordination and consultation whose objective is to increase business between two countries. They are made up of senior businessmen and executives of companies that have significant investments or trade flows with the countries that act as counterparts. 

They are an effective tool for business diplomacy and complement the efforts made by DFAT, ALABC along with key industry player such as COALAR (lead by Alberto Calderon), Austrade, Global Victoria, Trade and Investment Queensland and their Chilean counterparts.

Andrews also mentioned “Latin America has been growing in economic importance for Australia in recent years. Chile, for example, in 2009 became just the fifth country in the world with which Australia entered a free trade agreement, and this basis for exchange has only been bolstered through both countries’ membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – an accord that also includes Mexico and Peru.

Clean energy and green hydrogen are a major focus for the Chilean government and industries are wanting to attract and partner with Australian energy technology exporters on new projects.

Online commercial platforms are gaining traction for tech companies that can focus on digitalisation solutions. That's where we see new and emerging sectors for Australian companies. With the new Asia and South America digital gateway (submarine cable) connecting Australia and Chile, plus the 5G networks rolling out across the region, provides new opportunities for data driven businesses.

Mr. Andrews Phillips added that “ the road is long, the challenges are great and the goals are ambitious. Although the Australia-Chile Free Trade Agreement signed in 2009 allowed for an important advance, which was deepened when both countries granted tariff preferences to almost all products, this is still insufficient” .

“ The importance of the MOU signed between the two  industry bodies, through which an strategic alliance is established represents a unique opportunity for Australian companies to access key players and decision makers in the Chilean private sector. On the other hand, there has never been a better time given the reasonable success that Australia have had in managing the health crisis caused by Covid-19, the relative stability, medical and economic, offered by Australia, to explore opportunities here”.

• Mr. Bernardo Larraín, Chairman of SOFOFA   
• Mr. Richard Andrews, Chairman of ALABC 
• Mr.Ramón Jara, Chairman, Chilean Chapter Chile-Australia Business Council   ) 
• Mr. Andrew Phillips, Chairman, Australian Chapter Australia-Chile Business Council      )
•  Mr. Pablo Altimiras,  VP Senior Business Development and Planning Lithium and Iodine of SQM and Vicepresident of the Chilean chapter.
• Mr. Juan Eduardo Errázuriz, Presidente Ejecutivo de Sigdo Koppers S.A.

Pedro Reus, Chief Executive Chilean Chapter

Marcelo Salas, Chief Executive Australian Chapter (0412643343)

Currently, SOFOFA has established 15 bilateral business councils and the business council of the Pacific Alliance.

Some of the Chilean companies that have a presence in Australia are:  Duratray, Latam Airlines, SQM, Antofagasta Minerals, ARAUCO, CMPC, Davey Bickford Enaex, Downer Blasting Services, Covalent Lithium.

SOFOFA is a non-profit trade association that brings together companies and associations related to the Chilean industrial sector.

It brings together about 4,000 companies, 48 industry associations and 22 regional business associations. All these members together comprise 100% of Chile's industrial activity and 30% of GDP.

Its political independence, soundness of principles, technical approach and prestige of its leaders, has allowed it to achieve an important place in national life, and is listened with respect by governments and political, economic and social sectors.

ALABC ALABC was established in 1989 as a Non-for Profit association and our membership is comprised of companies and organisations ranging from large multinational corporations to education and research institutions, SMEs, sole traders and professionals, who are at the forefront of forging business relations between Australia and Latin America.

An Australian citizen or a permanent resident can apply for a travel exemption to leave Australia if they meet at least one of the following:

• your travel is as part of the response to the COVID-19 outbreak, including the provision of aid 
• your travel is essential for your business/employer
• you are travelling to receive urgent medical treatment that is not available in Australia
• you are travelling outside Australia for three months or longer
• you are travelling on compassionate or humanitarian grounds 
• your travel is in the national interest.

An applicant must provide evidence to support their claim, for example a letter from their employer, or other evidence that they are travelling for an essential business reason. Further information regarding exemptions for Australian citizens and permanent residents can be found on the Department of Home Affairs’ website.

For non-citizens, the Commissioner of the Australian Border Force may grant an individual exemption if they are

• travelling at the invitation of the Australian Government or a state or territory government authority for the purpose of assisting in the COVID-19 response
• providing critical or specialist medical services, including air ambulance, medical evacuations and delivering critical medical supplies
• with critical skills required to maintain the supply of essential goods and services (such as in medical technology, critical infrastructure, telecommunications, engineering and mining, supply chain logistics, aged care, agriculture, primary industry, food production, and the maritime industry)
• delivering services in sectors critical to Australia’s economic recovery (such as financial technology, large scale manufacturing, film, media and television production and emerging technology), where no Australian worker is available
• providing critical skills in religious or theology fields
• sponsored by your employer to work in Australia in an occupation on the Priority Migration Skilled Occupation List (PMSOL)
• whose entry would otherwise be in Australia's national interest, supported by the Australian Government or a state or territory government authority.

An individual can submit a request for a travel exemption under this category or a business can submit a request on their behalf. Further information on travel exemptions for non-citizens can be found on the Department of Home Affairs’ website.