Despite Brazil’s stock market being on the rise in recent days, due largely to growth within the mining sector, there is one man within the Brazilian mining industry who will be benefiting little from this happy news.
Once the world’s eighth-richest man, Eike Batista’s rise and fall from enormous wealth has already been heavily chronicled online. For our purposes, this summary will suffice: after a lifetime, entrepreneurial achievement of working himself to a net worth of $30 billion in 2012, he lost the majority of his wealth, and by 2013 had a net worth of “only” $200 million. As of November 1 of this year, it has been reported that many of his once-golden companies are now “practically bankrupt”:
Another of Batista’s five companies, oil and gas driller OGX—the cornerstone of his short-lived mining, energy and shipping empire— said late Tuesday that debt restructuring talks with holders of $3.6 billion in bonds ended with no agreement… According to Thomson Reuters data, if OGX ends up seeking court protection from creditors, it would be the largest-ever corporate bankruptcy filing in Latin America. (Mining.com)
Where did it all go wrong, you well may ask.
Although there are some who maintain that Batista was all smoke and mirrors from the beginning, his financial empire took its first dent in early 2012, when an overstatement of the oil reserves at his newly-pumping Tubarão field turned out to have been highly inflated. The release of this news caused mild panic, causing investors to bolt (The Daily Beast). This was the beginning of the end.
From there on, his entire financial empire turned into one giant grease fire. At least, according to him. It should be noted that although some of his companies, which he has sold in multi-million-dollar deals, are bankrupt, he certainly is not. Some of us would content ourselves with coming out on the other side as a “mere” multimillionaire, but perhaps perspective changes once one has tasted the sweet fruits of billionaire-hood. After experiencing life on that scale, perhaps any fall is a long fall.
Although some economists predicted that the entire Batista debacle spelled doom for Brazil’s general economy, this has fortunately turned out not to be the case. Brazil’s economy — and, more particularly, her mining industry — will live to fight another day.
For that, even Eike Batista can be thankful.
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