SAO PAULO (Reuters) – Brazil’s plan to secure its borders could spell a windfall for companies that sell radar systems, satellites and military aircraft.
Two contracts loom above the others. One is a deal worth at least $4 billion to refurbish Brazil’s Air Force fleet, which will be used to patrol remote border areas and deter incoming drug planes.
Reuters reported in February that France’s Dassault was “very likely” to win the bid, according to government officials. The other finalists are Boeing and Sweden’s Saab.
Brazil’s Embraer is also pursuing a government contract to provide equipment for border security, known as SISFRON, worth around $4 billion over 15 years. The initiative is part of a broader shift toward defense for a company best known as a builder of regional aircraft for commercial carriers.
“We’re working hard to land that contract. It’s fundamental for us,” said Luiz Carlos Aguiar, head of the defense unit.
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Aguiar said he believed 60 to 65 percent of the contract’s value would go to Embraer and partners, with the rest subcontracted to outside suppliers.
Embraer has announced a string of joint ventures and acquisitions in the last year to beef up its broader defense portfolio with an eye on Brazil’s borders, including:
A Brazilian joint venture called Harpia with Israeli contractor Elbit, focused on unmanned aviation, flight simulators and avionics. President Dilma Rousseff’s preference for nationally manufactured content may help demand for a Brazilian-made drone.
A 64.7 percent stake in Orbisat da Amazonia, which focuses on remote sensing and ground radar, for 28.5 million reais ($15.8 million).
A 50 percent stake in systems developer Atech for 36 million reais. [ID:nN12151179] Atech makes systems for coordinating air traffic in real time.
A joint venture with state telecom Telebras to launch a defense and communications satellite for the Brazilian government. The contract is estimated at $400 million.
(Additional reporting by Brian Winter)