Brazil’s paranagua port hit by environmental issues

Brazil's No. 2 port, Paranagua, resumed operations on Friday after a temporary shutdown by the environmental agency Ibama which caused brief delays in shipping sugar and grains including soy.

Ibama ordered the port to close on Thursday and fined it 4.8 million reais (USUS$2.7 million) for operating without an environmental license. But a federal judge overruled the order in the early hours of Friday, allowing the port to operate normally.

The severity of the measure raised questions about regulatory risks in one of the world's biggest commodities producers. Business leaders have long complained that excessive red tape in obtaining environmental licenses was an obstacle to economic growth in Brazil.

"This was excessive on Ibama's part. There was no need to halt everything," Andre Cansian, the port's technical director, told Reuters.

"We had 13 ships docked at the time. We had soy and sugar loading yesterday. During this time they couldn't load," he said, adding that inspectors remained to enforce the shutdown from 6 p.m. Thursday until 2 a.m. Friday when the judge's decision arrived.

The port said it could have lost around US$50 million a day if it had been halted for longer. It handles about US$12 billion of merchandise a year.

Cansian said the port did not have any major environmental problems that would prevent it from obtaining a license.

The sugar market rose on the initial news of a possible supply disruption from the world's top exporter, as concerns mounted about already lengthy delays to load, which can now involve waits of up to three weeks.

Traders said they were surprised at the severity of the unexpected measure.

"This was a rash action by the Ibama inspectors," said Alaor Balbinot, manager at Cerealpar grains brokerage in Curitiba, a city near to the port. "I don't know how this can happen," he added.

He said he could understand that Ibama might lose patience waiting for the port to meet its requirements for licensing some seven or so years after it began the application process.

Ibama said the port had failed to meet deadlines for presenting documents needed to obtain the environmental license.

The federal judge, Marcos Josegrei da Silva, gave the port a deadline of 30 days to present a timetable for the steps it must take to obtain an environmental operating license. The port's technical director, Cansian, said the timetable was ready and would be delivered on Monday.

Ibama also issued a fine to the country's largest port, Santos in Sao Paulo state, and ordered it to close on Wednesday. But the fine was revoked within hours after the head of the port showed its own application for a license was advancing as required, and the port was never shut down.

This is a busy time of year for the port, which handles about 30 million tonnes of cargo a year, as much of the now-finished soy harvest is exported and as the world's top sugar exporter nears the peak of the annual sugarcane harvest.

According to port statistics, Paranagua shipped nearly 4.8 million tonnes of soy in 2009 -- roughly 8 percent of the national crop -- and 3.7 million tonnes of sugar -- 13 percent of total production.

Brazil as a whole exported 4 million tons of soybeans in June and about 2.5 million tons of sugar.

Major trading houses such as Cargill and ADM have operations that are also part of the publicly-owned part of the port affected by the closure.

Ibama's shutdown order did not affect terminals at the port which are owned and operated by private firms.

In order to obtain a license, the port authorities were supposed to deliver two independent studies on environmental aspects of the port and an emergency plan in case of environmentally damaging accidents.

Source: Buenos Aires Herald