China Development Integration Limited (CDIL), based in Hong Kong, is partnering with Brazilian business mogul Eike Batista for investments in Brazil, from mining to infrastructure.
Eike “is one of the greatest developers of natural resources in history,” CDIL chairman Andy Lai told the Brazil Journal 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 large still unexplored reserves and set up the largest infrastructure projects in Brazil. For us, taking advantage of his knowledge and experience is a wise thing”
The main responsible for the partnership between the Chinese and Eike was Rubicon Capital Partners, a capital management firm recently created by Pedro Pinto Guimarães, a Rio de Janeiro executive 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.
“The Chinese saw Açu, OGX and MMX and said, ‘Eike thinks a lot like us, but all he did is something for governments to do, it is a government scale’,” said Pedro Guimarães, from Rubicon. According to him, Eike will contribute with his “structuring head”, and CDIL will help with management skills.
For Batista, the new partnerships is a comeback after having faced imprisonment, fines and prosecutions, for insider trading.
Under the arrangement, Eike will contribute his pipeline of projects (including assets and optional assets) and CDIL provides the seemingly infinite capital, in addition to bringing in several Chinese banks and state-owned companies that will be responsible in provide machinery, equipment and services and, in the case of agricultural or metallic commodities, will guarantee the purchase of production in the form of offtake agreements.
According to the Brazilian press, CDL´s joint investments with Eike will reach tens of billions of reais, from mining to infrastructure.
To carry out 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 who specializes in financial modeling of large projects who is the head at CDIL for international operations.
As part of the agreement, the Chinese will bear the 800 million reais fine that Eike will have to pay as part of his agreement with the Attorney General’s Office in Brazil.
Mining company MMX is the first test of the new partnership, and CDIL is negotiating with the company’s creditors debts, to take it out of judicial reorganization.
Another project in the pipeline: the creation of a solar energy park with 1,100 megawatts of capacity, with the first 300 being built in an area adjacent to Porto do Açu.
The panels are to be supplied by the Chinese company 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 stayed in Brazil from December to February, negotiating with Eike and visiting assets.
In terms of infrastructure, CDIL is trying to be part of the solution in Viracopos. Amir and Guimarães have already been with Minister Tarcísio Gomes and with the controller of Triunfo, which is a partner of the concessionaire.
