Brazil Marks the Spot – Two Barons of Industry

(Baron of Mauá & Eike Batista)

Brazil has seen its share of dreams built upon dreams. Some, whether foreign or Brazilian-born, have proven too good to be true while others have found varying degrees of success (often depending on who you ask).

One of the failures that comes to mind is the prefabricated town of Fordlândia, which was to be used to generate latex, replacing Henry Ford’s dependency on Malaysian rubber. Situated near the northern city of Santarém, in Pará, it was a flop before it even begun as the land on which the rubber trees were planted was infertile and none of the Ford people had experience in equatorial agriculture.

Among the successes, one might think of the Capital city of Brasília or perhaps even the Curitiba of Jaime Lerner. Such accomplishments, though, aren’t solely feats of architectural prowess, backed by billions in investment. Sometimes, a mix of perfect timing, economic conditions and strategic positioning brew up the best opportunities. Below, you’ll learn about two men who came upon such a scenario.

Mauá Era

In the midst of the 19th century, when developed capitalist countries were experiencing the second Industrial Revolution, Brazil was having some advancements of its own as it went from a monarchy to a republic. The abolitionist process and the growth of urban activities made the monarchist regime less and less important. Coffee, Brazil’s economic saviour, on one hand preserved parts of the colonial past (masters and slaves), but on the other hand its profits stimulated the construction of railways and ports as well as helped the growth of banks and internal trade.

One of the most important business leaders of this growth period was the Baron of Mauá, who was heavily involved in the industrialization of Brazil. He built shipyards, foundries and railroads, heading 17 companies at one point. The baron also founded the Banco do Brasil, in its second incarnation (the previous one was ultimately a failure after it was sacked by the royal family on their return to Portugal), and offered lower lending rates to stimulate more national growth. Among other endeavors, he created a company whose goal was to keep the US from internationalizing the Amazon and he brought electricity to Rio de Janeiro.

The baron found good fortune in two acts of legislation of the time. The first was known as the Alves Branco tariff which increased taxes on imported materials, thereby favoring Brazilian businesses. The second was the Eusébio de Queirós law which abolished the trafficking of slaves (but not the use of them). Both acts allowed the liberal and abolitionist baron to be successful, if only for a while.

Despite all the good he did, the old guard wasn’t too happy with him seizing so much of their power and wealth and thus he encountered a barrage of obstacles at almost every turn. Most of his problems were directly or indirectly British in nature as the British were highly favored trade partners with Brazil yet were being pushed out by the baron’s businesses and their patriotic leanings. The enemies he made in the Brazilian government and with British businessmen soon led him to cave in and sell his companies at reduced prices, thus the Mauá era came to a quick end.

Eike Era

Brazilian billionaire Eike Batista, founder of grupo EBX, may just be the next ‘Baron of Mauá’. While the times have changed, the idea that Brazil needs powerful people to look after Brazilian interests is just as important as it ever was. Enter: Cidade X (X City), one of Batista’s big ideas.

The self-made magnate wants to build Cidade X in São João da Barra, a city in the north of Rio where his other project, Porto do Açu (Açu Super-port), is scheduled to be built, starting in 2012. The undertaking looks to bring a real estate boom to the city and generate 50 thousand jobs.

Eike chose the famous architect and urban planner Jaime Lerner to plan Cidade X, which will be able to house 250 thousand people, quite a bit more than São João da Barra’s current population of 30 thousand. According to Eike, the idea is to build an ecologically correct city to take advantage of the migration that should occur once the Açu Super-port is operational.

The complex where the future city will reside is one of the ventures of LLX, the logistics company within grupo EBX. The new city will help develop the pre-salt industry with suppliers setting up shop along the 19,275 acres set for construction. The super-port, said to be on par with that of Shanghai, will boost commerce with Brazil’s main trading partners, mainly China. As of last year, 66 companies signed memorandums showing interest in having a presence at the port.

Will the Eike Era be as short-lived as that of the Baron of Mauá or is he operating under more favorable conditions? Do his big ideas hold as much weight as investing in education or other initiatives that might improve Brazil’s poorest regions? The next decade will be telling and many will be watching Brazil’s progress. Of course, I’ll be watching, too, but I’ll also be looking at how progress is being defined, and according to whom.

Originally written for Street Smart Brazil.

The Barons of Brazil

The 9th installment of my articles at Street Smart Brazil is out. This one looks at two barons of Brazil, Irineu Evangelista de Souza (otherwise known as the Barão de Mauá) and Eike Batista, and how they help(ed) to drive industry forward.

Brazil Marks the Spot – Two Barons of Industry

Welcome to Rio de Janeiro, USA

“He extracted his first million from lawless goldmines deep in the Amazon jungle and went on to become Brazil’s richest man, a smooth-talking mining and energy tycoon who keeps a Mercedes-Benz SLR in his sitting room as a symbol of his $27bn (£17bn) empire.

Now, with Rio de Janeiro gearing up for the 2014 World Cup and 2016 Olympics, Brazilian entrepreneur Eike Batista has set himself two new goals: to help transform his adoptive beachside home into one of the world’s most dynamic and affluent cities, and to become the richest man on Earth.

“Mister Carlos Slim has to invent a new race kart to catch up,” said the 53-year-old, referring to the Mexican telecoms billionaire rated by Forbes as the world’s wealthiest person. Batista is currently eighth.

Batista’s companies, controlled by a holding group called EBX – the X a reference to multiplying profit – plan to pump nearly £13bn into Rio state over the next two years, constructing ports and factories, and drilling for oil.

“If I look at Rio 10, 15 years out it is going to be unbelievable,” he said, describing the city’s future as a mix of California, New York and Houston, combining stunning beaches and natural beauty with financial clout and ultra-modern architecture.

He is also working on plans to build, from scratch, “a super-modern, digital city” for about 250,000 people. The city, to be erected around150 miles from the state capital and designed by the Brazilian architect and urban planner Jaime Lerner, will be called Cidade X.

The billionaire’s Rio projects involve cleaning up the Rodrigo de Freitas lagoon, running a luxury cruise ship for tourists, revamping the city’s marina and restoring a traditional hotel, which like much of Rio has fallen on hard times in recent decades as growing violence triggered a crippling economic exodus.” – Guardian (more)

Building a Highway to China

“Dangling above the South Atlantic, construction workers brave wind and waves to erect a vast 10-berth port terminal off the Brazilian coast. Nicknamed the “highway to China,” the $2.7 billion port will be one of the biggest in the world when completed in 2012.

Eike Batista, a mining mogul and Brazil’s richest man, dreamed up the idea for the Acu Superport because he was fed up with the delays in getting iron ore from his mines onto ships bound for China. “Land your cargo at a port and if it’s a container, it may stay there for 30 to 60 days,” Batista told CNN in an interview.

He ended up building a port and industrial complex that will be bigger than Manhattan and already is luring foreign and domestic investments. “Brazil is a gigantic opportunity to arbitrage inefficiencies,” he said.” – Source (more here, video)

Eike Batista – The richest person in Brazil

Via Expat Brazil, I found this video interview (duration: 53 minutes) on Charlie Rose with Eike Batista, the richest man in Brazil.

Mr. Bautista “is a Brazilian entrepreneur. He has founded several different companies, with a concentration in the mining field. Eike Batista is considered to be a wild business man, sometimes classified as “adventurous”. Recently, he became the wealthiest person in Brazil, with an estimated fortune of US$7.5 billion.”

He was born in Governador Valadares, in Minas which has the nickname ‘Vale Dolares’ (Worth Dollars), but that’s just a coincidence.