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China’s Joint Investments with Eike Will Reach Billions of Reais in Oil and Gas, Mining, Renewable Energy, and Infrastructure Projects
After seeing his empire crashing down, former billionaire Eike Batista has been spending his time nurturing a list of at least 11 projects that he calls ‘unicorns’, which include a gas pipeline linking Brazil to Paraguay, new gold mines, renewable energy, and nanotechnology. This was reported exclusively by Brazil Journal.
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Despite facing arrest, fines, and lawsuits, Eike did not give up on his projects and continued to work his brilliant mind 24 hours a day to bring these new businesses to life, which faced obstacles due to limited capital, as his image and credibility as an entrepreneur are not among the most highly regarded by national and international investors.
Then comes China Development Integration Limited (CDIL), an investment vehicle linked to the Chinese government and based in Hong Kong; this heavyweight investor shares its appetite for grand projects and is willing to partner with Eike.
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For those who don’t know, CDIL has been an active participant in the Belt and Road Initiative, the project through which China has been increasing its geopolitical power by investing in the infrastructure of dozens of countries around the world since 2013.
The main driver behind the partnership between the Chinese and Eike was Rubicon Capital Partners, a newly created management firm by Pedro Pinto Guimarães, a Rio executive who spent more than five years at PetroRio and left the company a year ago. While at PetroRio, Guimarães met Chinese and Saudi investors who were analyzing co-investments with the company.
Eike Will Have Apparently Infinite Capital to Implement His Projects in Brazil
The new ventures between the Chinese and the former billionaire will be as follows: Eike contributes his pipeline of projects (including assets and optional assets) and CDIL provides the apparently infinite capital, in addition to bringing various Chinese banks and state-owned companies that will be responsible for providing machinery, equipment, and services, and, when it comes to agricultural or metal commodities, will guarantee the purchase of production in the form of offtake agreements.
Eike “is one of the greatest natural resource developers in history,” said CDIL chairman Andy Lai to Brazil Journal during a Zoom video call from Hong Kong. “He developed one of the largest mines in the world [the Minas-Rio project, which now belongs to Anglo American], knows the data about the large unexplored reserves, and brought the largest infrastructure projects in Brazil to life. For us, leveraging his knowledge and experience is a wise choice.”
According to Brazil Journal, the Chinese requested the interview as a way to introduce themselves to Brazilian society and market agents. Lai noted that the Chinese and Eike have another thing in common: a mindset focused on projects with 30- to 50-year horizons.
“The Chinese saw Açu, OGX, and MMX and said, ‘Eike thinks a lot like us, but all of this he has done is for governments to do; it’s government-scale,’” said Pedro Guimarães from Rubicon. According to him, Eike will contribute with his “structured mindset,” and CDIL will help with management capacity.
Partnership Between China and Eike Will Reach Billions of Reais in Mining and Infrastructure in Brazil
For the Chinese CDIL, its joint investments with Eike will reach billions of reais, from mining to infrastructure. The group hired Lefosse to represent it in Brazil.
To execute the projects, the partners established 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 the international department of CDIL. As part of the agreement, the Chinese will cover the R$ 800 million fine that Eike will have to pay as part of his agreement with the Attorney General’s Office.
The miner MMX is the first test of the new partnership and announced last week that CDIL is negotiating with the company’s creditors regarding its debts and intends to take it out of judicial recovery.
Eike Targets Projects at Porto do Açu
Another project in the works: the creation of a solar power park with a capacity of 1,100 megawatts, with the first 300 being built in an area adjacent to Porto do Açu. The panels are expected to be supplied by Trina Solar, one of the largest solar panel manufacturers 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 with Minister Tarcísio Gomes and with the controller of Triunfo, which is a partner in the concessionaire. The idea is to make a capital injection 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 surrounding area.
Political Differences Between Brazil and China
When asked about the hostility from members of the Brazilian Government towards China, Lai said, “We cannot please everyone. Everyone will have their personal 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 adored as a symbol of success and then devoured by his own mistakes, Eike has paid his debt to justice and remains obsessed with entrepreneurship.
In this second chance, he is no longer the all-powerful figure dreaming of being the richest person in the world. He is just a Brazilian who never gives up.
by Journal Brazil
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