Jari, the billion-dollar Amazonian estate owned by American shipping magnate Daniel K. Ludwig, has been taken over by a consortium of 22 private Brazilian companies supported by the government's Bank of Brazil.
"The project is no longer his; it's ours," businessman Augusto Azevedo Antunes told reporters after signing the accord in Brasilia last week. "Jari will never fall back into the hands of foreigners."
Believed to be the most costly entrepreneurial effort undertaken by one man, the Jari complex spreads over an expanse of jungle the size of Connecticut, and includes four towns, four airports, two deepwater ports, one railroad, 3,000 miles of roads, one wood-burning power plant, a 17-story pulp mill, 10,000 acres of rice paddies, a 50-million-ton kaolin mine and vast tree plantations.
After purchasing the 5,600-square-mile tract for 75 cents an acre in 1967, Ludwig poured $559 million of his own money and $304 million in borrowed funds into the project. In a country that remains largely open to foreign investment, Jari became the largest American investment in Brazil.
But in 15 years, Jari never made a profit, and the sale virtually guarantees that Ludwig, now 84, will never get any return on his money. To buy Jari, the Brazilian consortium is committed to spending $350 million, one-third of Jari's $1.1 billion appraised value. Almost all this money is earmarked for five debts coming due over the next three years.
Ludwig's dreams of growing trees like corn foundered on two hard realities: the thin soil of the Amazon, and deep-rooted suspicion in Brazil about foreign designs on Amazonia's riches.
The melina, a fast-growing "super tree" that Ludwig imported from India, came up scrawny and scraggly on Jari's sandy and clay soils. Today, the melina fields are being torn out and replaced with eucalyptus and Caribbean pine, but the pulp mill faces a five-year shortage.
For 10 years, coinciding with the most repressive years of Brazil's military government, Ludwig kept Jari closed to Brazilian reporters. On the political left, mysterious tales abounded of peasants forced into slavery to work gold mines and of U.S. Marines training in "the American enclave."
Opposition to Jari became so vituperative that O Globo, Rio's progovernment daily, complained recently in a front-page editorial: "Paranoid nationalism has made the Jari project one of its favorite targets. The artillery of the street xenophobe never tired of taking potshots against the work of Daniel Ludwig, who is always painted as a foreign demon who came here to sack the land and resources...."
On the right, Brazil's bureaucracy quietly hemmed Ludwig in on all sides. His land titles were declared irregular. His requests to import a newsprint plant and to build a hydroelectric dam were denied. Pleas to pick up costs for Jari's infrastructure--Ludwig has installed schools, hospitals, sewers, electricity, telephones and piped water for 30,000 people--fell on deaf ears. Instead, the government installed a tax collector's office in Monte Dourado, Jari's principal town.
Since taking power in 1964, the Brazilian military has generally ignored public opinion, but this November the government faces the widest local elections in 15 years--for governors, congressmen and mayors. Although government strategists recently rewrote the electoral rules to favor the unpopular government party, the leaders evidently wanted to resolve the thorny Jari question before the elections.
Brazilian private investors admit the project is not very attractive. Not only has Jari never turned a profit, but its interim director, Locke Craig, told Brazilian reporters that to get out of the red, Jari needs another pulp mill--an investment of $700 million.
"As a profit-making investment, there are, at least, a minimum of half a dozen more interesting things," said Olavo Setubal, a Sao Paulo banker. Setubal and 21 other private investors--mostly banks, construction companies and insurance firms--have each pledged $2.7 million for Jari.
Setubal and others say they succumbed to arm-twisting by Antonio Delfim Netto, Brazil's minister of planning and undisputed economic chief. The Bank of Brazil is to put up $180 million, which will be converted into nonvoting shares, following a recent Brazilian policy of minimizing state control of the economy.
Under the transfer accord, Ludwig or his Swiss-based Cancer Research Institute will receive 5 percent of the dividends starting in 1987, then 4 percent in 1997, and 3 percent from 2007 until 2021.
The largest private investor is Antunes, 75, a longtime friend of Ludwig's. Antunes, who made a fortune mining manganese in the Amazon, has agreed to pay $40 million for Ludwig's mine of kaolin, a fine white clay used to coat magazine paper for color printing. It reportedly is Jari's only money maker.
One Brazilian industrialist commented enviously, "It was a father-to-son deal, and Antunes ended up buying the mine for the price of a banana."