Latin Finance - June 2008 - 14

ceo of the year time Brazil is also on a major upswing, with Cleveland [Cliffs] bought half of it for $7 gas to provide fuel for, among other billion.” recent elevation to investment grade by things, Batista’s power utilities. The executive likens his trade to that of a S&P and numerous discoveries of fresh oil “Each [company] relies on the other. diamond cutter. “The diamond buyer will reserves. With so many things going What happens if one of those doesn’t work buy 10 raw stones that look like bits of Batista’s way, it is hard not to stop and ask out?” says a Brazil-based private equity broken glass, like they’re worth nothing at what would happen if one of his grand investor with stakes in some of Batista’s all. But the buyer sees that just one of those schemes were to fall apart. companies. “By asking what could go wrong, you’re stones could be worth more than the entire Batista counters that his companies are set once it’s been cut and polished.” all self sufficient. With the exception of LLX assuming that my asset – be it a mine or EBX has a group of specialized Brazilian and MMX, the other main units truffle hunters, he says. “What we have here have their own sources of Batista’s Empire is a lot of asset foragers around the entire power and discrete points of Diamonds in the rough country looking for mines, and these mines sales. MPX, for example, are [then] audited and have proven imports coal from two mines EBX resources,” Batista says, Batista owns in Colombia. Holding Company speaking metaphorically about “Thankfully, I’ve managed the various assets his companies to develop a critical mass so specialize in, including real that I’m not at the mercy of MMX estate and forestry. “I’m not other market players,” says Mining & Minerals selling dreams here.” Batista, referring especially to the MMX-LLX link. “If I had to depend on Petrobras for distribution or on Vale for access to its Brazilian Bling LLX railroads, I think they’d probably screw me The ultimate wealth creating Logistics over,” he adds. Batista points to Gerdau, exercise for Batista may CSN, Camargo Correa and Votorantim as someday come in form of an IPO examples of companies successful because of holding company EBX. The MPX they control the operational process from executive says he’s been Power Generation start to finish, and are in many ways selfapproached with the idea and is sufficient. “If you look at it closely, that’s seriously considering taking his the story of success in Brazil,” says the CEO. vehicle public to create a OGX Oil& Gas Batista’s sometimes cavalier posture Berkshire Hathaway-like entity – also draws criticism. “Eike’s a great, a publicly traded holding successful entrepreneur and he realizes company with a $10 billion BFX projects with mastery,” says a senior market float. Timing would Renewables & Forestry executive at a Brazilian steel outfit. “But depend on how long it takes to he’s not in it for the long haul. He’ll build raise the value of operating part of it and then leave it to someone else companies to the point where REX to finish,” adds the official. EBX’s stake in them is worth $40 Real Estate Critics point to Batista’s willingness to billion. That may take some hand over the reigns having just saddled time, and will probably depend the horse, most recently in the Anglo on the oil and gas venture, PFX American deal. Much ado had been made which recently won rights to Entertainment about a grand scheme to build an iron ore explore seven offshore blocks. pipeline across the states of Minas Gerais Once that happens, EBX Source: EBX and Rio de Janeiro. The project, designed to would be ready to list on the guarantee an MMX iron ore mines direct Novo Mercado, which requires members to whatever – is a weak one. But what you access to LLX ports, is sure to be the source have a public float of at least 25%. have, actually, is a mine with proven of numerous headaches given its disruptive reserves,” counters Batista, adding that “Companies with a public float of $10 billion meandering through various jurisdictions are on the radar of most every investment mines data are based on extensive audits. subject to an array of political, legal and fund in the world,” says Batista, “When I went to market with MMX, environmental authorities. Anglo American we had one million tons of proven acknowledging his interest in achieving that is now the proud new owner of this hot status. resources. But we kept drilling and potato, the centerpiece of the integrated With stakes in firms that process so many digging and the amount of resources mining complex and a key factor of domestic natural resources, EBX would grew by seven times,” adds Batista. “The determining valuation at the time of sale. serve as a proxy for Brazil, says Batista. He market doesn’t pay you today for all that controls roughly 60% and 70% of MMX and potential discovery. At the time [of the MPX respectively, which in mid-May had MMX IPO], the market agreed to pay me Polishing Diamonds market caps of 16.9 billion reais and 7.1 Despite the sour grapes, Batista seems to be $1 billion for the company, but today it’s worth $10 billion, and Anglo and hitting consecutive home runs. At the same billion reais, according to Economatica. 14 LATINFINANCE June 2008

Latin Finance - June 2008

Table of Contents for the Digital Edition of Latin Finance - June 2008