June 30 (Bloomberg) -- China Development Bank Corp., the government-run bank for public works projects, plans to open an office in Brazil next year to invest in ports, steel mills and energy, Rio de Janeiro state Governor Sergio Cabral said.

The bank expects to locate the branch in the city of Rio, home to the nation’s state-controlled oil company Petroleo Brasileiro SA, and Vale SA, the world’s largest iron-ore producer, by the middle of 2010, Cabral said in a statement. The Beijing-based bank agreed in May to lend $10 billion to Petrobras, as the oil company is known, and extended loans in June to Russia’s development bank.

“China is building up ties with natural resource rich nations,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange, in a phone interview from London. “The United States is going to get increasingly isolated in terms of where the new and upcoming powers decide to invest.”

China, the world’s third-biggest economy, became Brazil’s leading trade partner this year after the global recession choked sales to the U.S. The two countries’ central banks are studying a proposal to use their own currencies -- the real and the yuan -- in bilateral trade instead of the U.S. dollar.

The development bank’s decision “could be a way for China to gain access to the real so it can purchase natural resources,” Gallo said.

A press officer at the Chinese Embassy in Brasilia declined to comment.

BRIC Nations

Leaders of Brazil, Russia, India and China -- the so-called BRIC nations -- called for a “more diversified” monetary system to reduce dependency on the U.S. dollar at a June 16 meeting in the Russian city of Yekaterinburg. China’s central bank last week renewed its call for a new global currency.

“Brazil is a real source for raw materials and intermediate products for China to import,” said Donald Straszheim, a former Merrill Lynch & Co. chief economist who runs Los Angeles-based Straszheim Global Advisors, a consulting firm for investors in China. “It’s very natural that CDB would want to do this.”

China Development Bank’s profit tumbled 28 percent last year on higher loan losses as the nation’s economic growth slowed. The bank, which had 3.8 trillion yuan ($556.3 billion) of assets at the end of 2008, received a $20 billion capital injection from the government in December 2007 and is seeking to become a commercial lender. The Ministry of Finance owns 51.3 percent of the bank and Central Huijing Investment Co., a unit of China’s $200 billion sovereign wealth fund, holds the rest.

Russia Loans

The development bank’s loans span the globe. It agreed to lend $1.3 billion to Vnesheconombank, Russia’s state development bank, the Moscow-based lender said June 14. The two banks signed another contract on a $310 million loan to fund a cement plant in the St. Petersburg region, according to a separate statement.

The China-Africa Development Fund, which has helped finance a cotton planting and processing facility in Malawi and power station in Ghana, was set up in June 2007 with an initial $1 billion from China Development Bank.

The Chinese bank has agreed to lend $800 million to Brazil’s state development bank, known as BNDES, according to the Rio-based lender. Petrobras Chief Financial Officer Almir Barbassa said this week the Chinese lender is offering more loans if the oil company agrees to buy Chinese goods.

In Brazil, the Chinese bank also has expressed interest in investing in projects related to the 2014 World Cup soccer tournament and Rio de Janeiro’s bid for the 2016 Olympics, Cabral, who is visiting China, said in the statement.

“This is spectacular news, because the arrival of representation by the bank, one of the largest in the world, will be a platform for Chinese investments in Rio de Janeiro and Brazil,” Cabral said.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

Last Updated: June 30, 2009 15:48 EDT