SAO PAULO, Brazil -- The Amazon jungle was problem enough, but it was the tangle of Brazilian bureaucracy and nationalist suspicion that finally shattered the dream of octogenarian shipping magnate Daniel K. Ludwig.
The Brazilian government and a group of the country's leading businessmen have negotiated a quarter-billion-dollar deal to buy out Ludwig's famed Jari Project, a 15-year-old farming, mining and tree-planting complex which sprawls over a 5,800 square mile Vermont-sized chunk of the world's biggest rain forest.
The Jari saga started in 1964.
Roberto Campos, then planning minister, flew to New York to persuade U.S. businessmen to put their cash into Brazil on grounds the Amazon was ripe for large-scale development.
Ludwig, 84, owner-boss of Universal Tank Ships, had the money, the power and the vision to step in.
All the numbers about Jari are big and hazy. According to insider reports citing a Jari purchase proposal sent to a couple of dozen Brazilian business leaders, Ludwig stands to take a half-billion-dollar beating on the sale.
Jari is a complex of projects beside the Jari River, which runs into the Amazon some 300 miles inland from Belem on the Atlantic coast, just south of the Equator.
It includes lumbering, reforestation, rice planting, buffalo ranching and cellulose and china clay production with as-yet undeveloped potential for hydro power and aluminium schemes.
However, Jari negotiators said that part of this -- specifically the 11,000 acre, 35,000-metric tons-per-year rice plantation, the world's largest single paddyfield -- might be sold off separately.
For $280 million plus a cut in future profits, the Brazilian consortium will take over the heart of Jari, a 12-story Japanese-built factory floated across two oceans to its jungle berth and designed to gulp down some 60 acres daily of fast-growing pine and eucalyptus trees to make 750 metric tons of cellulose. This is sold world-wide for paper making.
A quarter of a million acres of replanted trees feed the factory but the planned total reforestation area is twice that.
Land is still being cleared at the rate of 25,000 acres per year. Lumber exports of prime tropical hardwood earn $70 million.
Close by the cellulose factory, an open-cast mine four times as big as the world's largest football stadium and with a projected life of 250 years churns out 250,000 metric tons yearly of china clay. This goes along conveyor belts to a processor plant.
The resulting 160,000 metric tons a year of processed china clay, currently shipped, could at some later date team up handily with the cellulose factory output to supply the basic materials for a giant heart-of-the-jungle paper mill.
Jari spin-offs include a 12,000-head cattle ranch. And in the same area a large untapped bauxite deposit plus river falls with a 900 MW hydro electric potential point to a future aluminum smelter.
In all, Ludwig has invested some $1 to $1.1 billion in his Amazon dream.
His total return is estimated to be just half that.
But if Ludwig is apparently selling out at a loss, does that mean that Jari itself is a loser? And if so, why is Brazil buying it?
'As an investment designed to give profit, there are at least half a dozen more interesting projects,' said top financier Olavo Setubal, whose Banco Itau was one of 27 banks, insurance companies, capital goods producers and other firms 'invited' by the government to put up some $3 million each.
Most accepted quickly. A number of company presidents said they agreed not so much to a good investment as 'to help the nation.'
But the new Brazilian owners, including the official Banco do Brasil with a $180 million non-voting cut and consortium leader and mining millionaire Augusto Antunes, a 75-year-old close Brazilian friend of Ludwig who is chipping in $40 million, looked set to receive benefits apparently refused before by the Brazilian government.
Although Brazil at first welcomed Jari as a development nucleus in the empty Amazon, the 'foreign empire' quickly became a political embarrassment and an easy target for nationalists who said the country's 18-year-old military government had based its 'economic miracle' on foreign capital.
Ludwig, for example, built a planned town called Monte Dourado - 'Golden Mountain' -- to house Jari workers, today totaling 7,500. Across the river a 20,000 population water-edge slum sprang up on stilts with 2,000 prostitutes its raison d'etre and economic mainstay.
But after pumping some $100 million into schools, hospitals, roads, ports and additional infrastructure for these and other Jari settlements, Ludwig asked the Brazilian government to take them over and run them as it has done in other frontier-land developments. The government refused.
Similarly, the government rejected pleas for housing loans and reforestation financing common in other major schemes throughout Brazil.
Ludwig also tried in vain to import a second ready-to-roll cellulose factory from Japan at a cost of $270 million.
Another crucial problem has been land. Jari's formal claim is for around 3.95 million acres of what originally was virgin swamp and jungle. But it has received title to less than one-fifth of that.
Much of the rest is tangled in litigation with smallholders and dotted with Indian villages.
Planning Minister Antonio Delfim Netto, key government man pushing the take-over, said that Jari under Ludwig was not discriminated against because of its foreign owners. But Brazilian businessmen asked by Delfim Netto to put up their own cash have reportedly demanded -- and won - assurances that many of Jari's bureaucratic headaches will be eased once it flies adifferent flag.
The sort of suspicions that dogged Ludwig were reflected in the comment of one high Brazilian official, who said, 'I don't trust Daniel Ludwig because he is a shipowner and all shipowners are descendants of pirates.'
Ludwig follows in distinguished footsteps in coming a cropper in the Amazon.
In the early 1930s, Henry Ford pumped $10 million into two failed attempts to farm rubber trees. He went even farther up the Amazon than Ludwig. But first 1.9 million, then 3.2 million trees succumbed to an epidemic brought on by fungus.
In 1945 Ford sold out to the Brazilian government for a nominal $5,000.
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