China's joint investments with Eike will reach tens of billions of reais, in oil and gas, mining, renewable energy and infrastructure projects.

After seeing his empire go downhill, former billionaire Eike Batista has been busy nurturing a list of at least 11 projects he calls 'unicorns', which include a gas pipeline linking Brazil to Paraguay, new gold mines, renewable energy and nanotechnology. This is how the Brazil Journal exclusively reports.

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Despite having faced prison, fines and lawsuits, Eike did not give up on his projects and continued working his brilliant mind 24 hours a day to get these new businesses off the ground, which had as obstacles the limitation of capital, since his image and credibility as an entrepreneur is not among the most quoted by national and international investors.

Enter China Development Integration Limited (CDIL), an investment vehicle linked to the Chinese government and based in Hong Kong, this heavyweight investor shares his appetite for grandiose projects and is willing to carry it with Eike.

For those unfamiliar, CDIL has been an active participant in the Belt and Road Initiative, the project through which China has increased its geopolitical power by investing in the infrastructure of dozens of countries around the world since 2013.

The person largely responsible for the marriage between the Chinese and Eike was Rubicon Capital Partners, a management company recently created by Pedro Pinto Guimarães, an executive from Rio de Janeiro who spent more than five years at PetroRio and left the oil company a year ago. While at PetroRio, Guimarães met Chinese and Saudi investors who were analyzing co-investments with the company.

Eike will have seemingly infinite capital to put his projects into practice in Brazil

The new business between the Chinese and the former billionaire will be as follows: Eike contributes his pipeline of projects (including assets and optioned assets) and the CDIL provides the apparently infinite capital, in addition to carrying with it several Chinese banks and state-owned companies that will be responsible for supplying machinery, equipment and services and, when it comes to agricultural or metallic commodities, will guarantee the purchase of production in the form of offtake agreements.

Eike “is one of the greatest developers of natural resources in history,” CDIL chairman Andy Lai told Brazil Journal in a Zoom video call from Hong Kong. “He developed one of the largest mines in the world [the Minas-Rio project, which today belongs to Anglo American], he knows the data on the large reserves still unexplored and he set up the largest infrastructure projects in Brazil. For us, leveraging their knowledge and experience is wise.”

According to the Brazil Journal, the Chinese asked for the interview as a way of introducing themselves to Brazilian society and market agents. According to Lai, the Chinese and Eike have something else in common: a head that thinks about projects with horizons of 30, 50 years.

“The Chinese saw Açu, OGX and MMX and they said, 'Eike thinks a lot like us, but all that he did is something for governments to do, it's on a government scale',” said Pedro Guimarães, from Rubicon. According to him, Eike will contribute with his “structuring head”, and the CDIL will help with management capacity.

Partnership between China and Eike will reach tens of billions of reais, from mining to infrastructure in Brazil

For the Chinese CDIL, its joint investments with Eike will reach tens of billions of reais, from mining to infrastructure. The group hired Lefosse to represent it in Brazil.

To execute the projects, the partners set up a holding company in Hong Kong: CDIL will have a majority stake, but “more or less 50/50”, said Edmond Amir, a French executive specializing in financial modeling of large projects who is the head of CDIL's international area. As part of the agreement, the Chinese will pay the BRL 800 million fine that Eike will have to pay as part of his agreement with the Attorney General's Office.

The mining company MMX is the first test of the new partnership, and announced last week that the CDIL is negotiating the company's debts with creditors and intends to take it out of judicial recovery.

Eike targets projects at the Port of Açu

Another project in development: the creation of a solar energy park with a capacity of 1.100 megawatts, with the first 300 being built in an area adjacent to Porto do Açu. The panels must be supplied by the Chinese Trina Solar, one of the largest producers of solar panels in the world. “The energy tariff in Brazil is the best in the world,” said Amir, who was in Brazil from December to February negotiating with Eike and visiting the assets.

In infrastructure, CDIL is trying to be part of the solution in Viracopos. Amir and Guimarães have already met Minister Tarcísio Gomes and the controller of Triunfo, which is a partner in the concessionaire. The idea is to make a capital contribution to keep the concession in the hands of the consortium — avoiding a new tender at the end of the year — so that the Chinese can develop the airport and the backyard.

Political differences between Brazil and China

Asked about the hostilities of members of the Brazilian government against China, Lai said, “We can't please everyone. Everyone will have their own opinion, but we only do what is right and follow the law. We try to avoid political issues. If the project is economically viable and beneficial for the population and the country, this is our basic criterion.”

For Eike Batista, the agreement with the Chinese offers a second chance. After being worshiped as a symbol of success and then devoured by his own mistakes, Eike paid his debt to justice and remains obsessed with being an entrepreneur.

In this second chance, he is no longer the all-powerful man who dreams of being the richest in the world. He's just a Brazilian who never gives up.

by Journal Brazil