Chinese to invest in the Brazilian weapons maker Norinco?

Norinco plans to acquire 49 percent of shares in Avibras Aeroespacial, known for producing heavy weapon systems such as missiles and rockets, reports the newspaper “Folha de São Paulo,” citing anonymous sources.

According to the newspaper, both military and government sources confirmed that a document containing the Chinese company's proposal has been submitted to the Brazilian Ministry of Defense. The management of Avibras has not commented on the matter.

Previously, representatives of the Australian group DefendTex negotiated with the Brazilian company, which is struggling with financial problems. However, as “Folha de São Paulo” reports, the Australian firm withdrew from its acquisition plans due to difficulties in obtaining a loan from the Australian government.

A person familiar with these negotiations revealed that the Australians’ withdrawal was also due to the stance of the Brazilian government, which did not want to authorize the shipment of weapons to Ukraine, which is fighting against Russian aggression.

Sources explained that Australian investors had planned to produce and sell 4.8-inch caliber missiles in the short term, which were widely used in the post-Soviet area, including in Ukraine.

Avibras remains a key supplier of missiles and rockets for the Brazilian army, while the state-owned Chinese corporation Norinco is one of the main producers of weapons for the Chinese People’s Liberation Army. Norinco's products are also exported to, among other places, African countries.

In March 2023, the portal Politico reported that Norinco had supplied assault rifles to Russia. However, the White House stated that they were not intended for use on the battlefield. These transactions resulted from agreements made before the war broke out.

On Thursday, Brazilian Defense Minister José Múcio Monteiro informed that a foreign company is interested in starting negotiations with Avibras, without revealing its name, reports “Folha de São Paulo.”

The newspaper speculates that despite the lack of a veto, Brazilian diplomacy should scrutinize the negotiations between Avibras and Norinco regarding the "geopolitical impact" of a potential transaction.

The Ministry of Defense of Brazil initially assessed that selling 49 percent of the shares while leaving the controlling stake in Brazilian hands would be less controversial than selling the entire company. It could also resolve ongoing financial problems and enable the full operation of the Avibras factory, reports “Folha de São Paulo.”