WHO ARE THE OWNERS OF
AMAZONIA’S HYDROPOWER PLANTS?
I. INTRODUCTION
I.I. WHAT GOES WHERE?
I. II. Hypothesis
I. III. ASPECTS OF THE DEBATE AND RESEARCH SCOPE
I. IV. THE PROBLEMATIC APROPRIATION OF THE AMAZONIAN SPACE I.V. THE FOUR REGIONS WHERE THE SELECTED PROJECTS ARE LOCATED
I.V. I. TELES PIRES RIVER BASIN I.V. II. XINGÚ RIVER BASIN I.V. III. MADEIRA RIVER BASIN I.V. IV. TOCANTINS RIVER BASIN
II. METHODOLOGY
II. I. USE OF PUBLIC DATABASE
II. I. I. STRATEGIC PLANNING FOR ENERGY AND MINNING SECTORS
II. I. II. STATE CONTRACTS (THROUGH BNDES) WITH WINNING CONSORTIUMS II. I. III. DNPM - MINERAL PRODUCTION NATIONAL DEPARTMENT’S DATABASE II. II. OWNERS’ CHAIN
III. THE DEVELOPMENT OF THE BRAZILIAN’S ENERGY MATRIX
III. I. BRIEF HISTORY
III.II. THE DECENNIAL PLAN FOR ELECTRIC ENERGY EXPANSION 2021 - PDE 2021
III.II.I. PDE 2021 AND THE EXPANDING HORIZON OF ELECTRICAL ENERGY PRODUCTION III. II. II. PDE AND THE EXPANSION OF HYDROELECTRICITY ON AMAZON TERRITORIES III.III. 2010’S ACCELERATED GROWTH PROGRAM II (PAC II)
IV. THE MINNING SECTOR
IV. I. METHODOLOGY E USED DATA IV. II. BRIEF HISTORY
IV. III. 2030’S MINNING PLAN
IV. IV. DEBATE ON THE ROLE OF MINNING ACTIVITIES ON AMAZON TERRITORY
V. BRAZILIAN STATE AS A “CEMENT-PARTNER” ON THE PROJECTS
V.I. FLEXIBILIZATIONS IN AMBIENTAL LAW
V. II. STATE’S ROLE IN THE CONSTRUCTION CONSORTIUMS
V. III. BNDES AND BNDESPAR’S PARTICIPATION ON THE PROJECTS
VI. STUDY CASES
VI. I. MADEIRA RIVER
VI. I. I. SANTO ANTONIO VI. I. II. JIRAU
VI. II. ESTREITO VI. IV. TELES PIRES VI. V. BELO MONTE VI. VI. BNDES/BNDESPAR
VII. A FINAL PIECE OF HISTORY
VIII. CONCLUSIONS
I. INTRODUCTION
I. I. What goes where?
This report is the written result of a series of researches developed by the More Democracy Institute on the complex structure of national and multinational companies working in Bra- zil. The main purpose of our research was to explore the various aspects involved in min- eral and energy interests in the Amazon territory, specifically the interests involved in the construction of the Amazonian hidropower plants and the exploration in sorrounding areas.
We based our research on a concept called MEFC, developed by a partner institute – SOMO, a Centre for Research on Multinational Corporations based in Amsterdam. The Minerals-En- ergy-Finance Complex, or MEFC, would be “a system of accumulation of resources and cap- ital concentrated around the minerals and energy sectors1.” Note that the authors assume changes in context may affect the concept’s applicability.
This paper is divided into five main topics with a few ramifications each. In this first chapter we are going to introduce our hypothesis, the aspects of the debate, the research scope, a piece of history on the use of the Amazonian space and specifications on the four regions where the chosen projects are located.
The second chapter will consist of explanations on the methodology used to develop the study, the sources of the data and a few clarifications on each one.
The third chapter consists of a brief history on the development of the Brazilian Energy Ma- trix, focusing on two specific programs – the Decennial Plan for Electric Energy Expansion 2021 (PDE 2021), and the Plan for Accelerated Growth (PAC), including a discussion on both program’s consequences to the Amazonian Ecosystem.
The fourth chapter will discuss the mining sector. We intend to enlighten the reader on the methodology and data used to reach our conclusions, discuss the 2030’s Mining Plan, one of the government’s projects to develop the sector, and propose a debate on the role of mining activities in Amazonian territory.
The fifth chapter consists of a series of examples to consolidate the argument that Brazil’s government has been working as a “cement-partner” on the hydroelectric power plants, currently playing the role of the actor holding together the capitalist network. We will be discussing a series of flexibilizations made in environmental laws, the role of the State in the construction consortiums and BNDES/BNDESPAR’s participation on the projects.
The sixth chapter will consist of the actual study cases on the five hydroelectric power
plants we proposed - Santo Antonio, Jirau, Estreito, Belo Monte and Teles Pires; and a final round of historical facts. The aim here will be to connect the political aspects with the ener- gy-mineral ones, taking in consideration that our interpretation puts the government in the role of an entrepreneur on the process of network construction, being and acting like the link between access to the areas and the investments needed to explore them.
The seventh, and last chapter, will consist of our main research conclusions.
I. II. Hypothesis
Our Main Hypothesis was constructed under two principles, which we are going to test throughout the research. See the picture below:
The main hypothesis is that the energy production, mining and civil construction corpora- tions in Brazil are getting stronger by working together as a network and in alignment with the government. These two dimensions – the power and mineral potentials – seem to pres- ent a strategic orientation to the expansion of both sectors in the Amazon region, where a wide range of State and parastatal actors play their specific roles to make the reproduction of private capital and of the status-quo2 more efficient and swift.
2 The status-quo referred to in this particular case is the one involving political actors who obey interests of corporations and thus, have unlimited resources to keep running, winning elections and ignoring the people’s pleads.
The first principle is that the State is playing a role as a last instance funder and regulator/
facilitator, we decided to call it a “cement-partner” of the projects. If we have in mind that the only long term funder for economic infrastructure in Brazil is BNDES, and that the State regulates every project by conceding rights to exploit energy and mineral potentials, as well as emitting environmental and technical licenses, then we come to a situation where the State becomes a partner of the project, and can discriminate and reshape, at any moment, the conditions in which big corporations operate.
The second principle is that the energy production, mining and civil construction corpo- rations are working like a network to put pressure on certain aspects of the government – directing investments to very specific sectors in development, like the energy sector. We must also have in mind that big civil construction corporations play a pivotal role in Brazil´s 20th century economic expansion, and therefore accumulate a wide range of key contacts in the State. These groups have also developed close relationships with other private groups whose sector and modus operandi complement each other´s and produces enormous economies of scale.
It is important to state that, along the process, we started considering this part of the re- search almost preliminary, given the many unfoldings this project can imply. A further as- sessment requires further investigation, so we decided to outline a scope and work from there.
I. III. Aspects of the Debate and Research Scope
Based on these hypotheses, we tried to research the various aspects involved in miner- al-energy interests in the Amazon territory specifically, one of the highest interest regions worldwide. According to the website amazonia.org, the Rio Madeira Complex is “in the list for an international campaign.”, mostly because of the many hydroelectric power plants being planned to be developed there and how this process is happening.
Throughout the research we grew to the idea that the hydroelectric power plants being planned didn’t only obey a logic of integrating the country’s energetic system, they also related to a political agenda of submission of the Amazonian space under the name of de- velopment. We decided then, to outline a scope embracing five of the main hydroelectric power plants under construction, keeping an eye on where the investments were higher, they are: Santo Antonio and Jirau (Madeira River Basin – Mato Grosso); Estreito (Tocantins River Basin – between Maranhão and Tocantins); Belo Monte (Xingu River Basin – Pará); Teles Pires (Teles Pires River Basin – Mato Grosso).
I. IV. The Problematic Apropriation of the Amazonian Space
The apropriation of the Amazonian Space is a process that began centuries ago, dating back to the XVI century with the arrival of foreigners. The next century was marked with the arrival of Portugal, that promptly started exploring the region, going beyond Treaty of Tordesilhas3 frontiers. The indigenous population was soon enslaved and Amazon turned into the main source of extractive economy.
Still as a part of this apropriation cicle, the region played a key role on the Industrial Revolution process as a source of rubber during the first Rubber Cycle. Even though there happened to be a second Rubber Cycle with the outbreak of World War II, Amazon’s territories were left to rest during a period in wich the product was being cultivated from amazonian seedlings, and extracted in Indonesia – this only lasted until Japan invaded indonesian territory (Gadelha, 2002).
With President Getulio Vargas comes the term “rubber soldiers” – workers who were encouraged by the government to move to the Amazon and work as extractors. But it was really in the 1960’s, with the Military Dictatorship, and the start of a major highway construction conecting Belém and Brasília (the capital), that Amazonian territories were really occupied.
The descovery of an iron mine in Carajás – Pará, in 1962, was another contribution (Brasil, 1972).
Based on a political speech about development and redistribution of lands, the military starts spreading an ideology of exploration. Amazon was a “green hell”, an uninhabited place when thousands were homeless, we, as brazilians, had to “integrate not to give away” (the actual expression in portuguese is “integrar para não entregar”). In 1966 they created an agency name SUDAM – Superintendence for Amazonian Development, with the main goal of exploring the region through government subsidy and fiscal incentives. In 1972 they finished constructing the Trans Amazonian Highway, and in 1974 they opened the Belém- Brasília route, closing the integration process (Brasil, 1972).
In addition, in 1974 the military government includes Amazonian exploration as a public policy through the National Development Plans for Amazonia (years 67-71; 72-74;75-79 and 80-85). With the creation of a program for exploring the region – POLOMAZONIA – they predicted the implantation of fifteen “development centers” focusing on mineral explora- tion. Carajás, Trombetas (Pará), and Amapá were the most expressive ones. Large companies like Eletrobrás, Vale do Rio Doce and Petrobrás played a fundamental role, being some of the 3 The Treaty of Tordesillas was a contract celebrated between the empires of Spain and Portugal in 1494, wth the aim to “legally” divide the newly discovered areas. The line of demarcation was about halfway between the Cape Verde Islands.
largest corporations in Brazil. By this point, decision- making towards the Amazon’s fate was taken by major corporations based on a profit logic (Brasil, 1976:132).
.
This kind of policy making, still living, was and continues to be of extreme prejudice to the whole of brazilian population, but specially for those who were here before us – the Indians. Besides many tradicional communities living riverside and in the forests, the indians are one of the most endangered cultures in Amazon nowadays. They have to cope with “white-man” deseases, mass migration, requests for exploration on indian reservations, assassination of idealists, and more.
I. V.The Four Regions Where the Selected Projects are Located
I. V. I. The Teles Pires River Basin
The region, commonly known as a good mining area for it’s wealth in gold, is located in the centre-north portion of Mato Grosso’s state. The Teles Pires River springs of two other rivers – Serras Azul and Finca Faca, at approximately 240 km from Cuiabá (state capital), and after running for 1.431 km and joining the Jururema River, becomes the Tapajós River. Inside Teles Pires River basin are two of the biggest ecosystems still alive – Cerrado and the Amazonian Rainforest. In the picture below, between the two signaling green balloons, is the area of the dam belonging to the Teles Pires hydroelectric power plant, still under construction and, as you can see, surpassing several limits imposed by ambiental and cultural protection laws.
I. V. II. The Xingu River Basin
This is the area where Belo Monte will be deployed. The area is known for being one the most valuable in terms of biodiversity because of the rivers located there, some of the largest in the state – like Xingu, Bacajá and Iriri. The indirect influence area of this project reaches beyond 317.470 habitants living in 11 municipalities, most of them near the Trans Amazonian roads (BR-230). It is worth mentioning that most of these municipalities were created in order to fullfill the military’s plans to conquer and explore amazonian territories.
That government planned a whole system of agricultural villages that were never actually operational, and therefore abandoned the territories to poverty. Once again we can see areas of exploration among lands supposedly protected by environmental and cultural protection laws.
I. V. III. Madeira River Basin
This basin is going to allocate both Jirau and Santo Antonio’s hydroelectric power plants. The Madeira River is an affluent of the Amazon River, born in the peruvian and bolivian slices of Amazonia. Both rivers are part of a wide network crossing most of the brazilian territory, covering at least 1,5 million km². Because some of it’s affluents spring in the Andes, the river is fed by the periodical defrosting of the continental mountain range, the water flow is 23 litres per second, it has 1.700 kilometers of extension and is 1,5 km wide. The direct influence area of the endeavors is the city of Porto Velho, an old tradicional area mostly inhabited during the construction of a road called Madeira-Maimoré, very important for the outflow process of the rubber cycles.
Like on the other projects, it is possible to tell this is going to affect greatly both the environment and the population living nearby. In this case, FUNAI – an organ also responsible for matters involving indigenous rights – published a report predicting big consequences for the territories, including the harm of, at least, fifteen different indigenous tribes, like the Karitiana, Karipuana, Oro Ari, among others. On the other hand, a report instituted by law and
ordered by the companies interested in the endeavor, EIA/RIMA – Studies and Report on Environmental Impact, concluded the business ventures wouldn’t affect the areas, so they just kept on being built.
I. V. IV. Tocantins’s River Basin
This basin will be the location for Estreito, the last hydroelectric power plant selected for the scope here. The Tocantins River is a brazilian river born in the State of Goiás, passing through the states of Tocantins, Maranhão and Pará, until it reaches its river mouth in the Amazonian Gulf – close to Belém, where the Marajos Island is located. After the union of the Alma’s River, Maranhão River and Paranã River, between the municipalities of Paranã and São Salvador do Tocantins (both located in the state of Tocantins), the river officially becomes Tocantins River. The area’s population is one of the region’s highlights for it’s cultural diversity, having roots all over the country.
II. METHODOLOGY
II. I. Use of Public Database
II. I. I. Strategic planning for the energy and mining sectors.
As sources of information on the government’s plans for these strategic sectors we acessed de The Decennial Plan for Electric Energy Expansion 2021 – PDE 2021, the II Plan for Accelerated Growth – PAC II – of 2010, and the 2030’s Mining Plan. In terms of fund raising and consortium formation, these publications serve as parameters to the companies working the mineral-energy complex on the development of strategie, since they indicate the policy making’s direction.
II. I. II. State contracts (trought BNDES) with the winning consortiums.
One of the first documents we came upon for analisys were public contracts signed between the brazilian government – throught BNDES4/BNDESPAR5 –, with the winning consortiums at the biddings for the plants. This method helped us identify how much money was credited for funding, and how it was transfered, so we could observe how concrete were the connections between BNDES/BNDESPAR and the consortiums.
It is important to say the acess to this documentation was only possible due to huge improvement in our democracy system – the promulgation of The Acess to Information Law, making it a public responsibility for companies to publish all sorts of documents to the civilian public.
II. I. III. DNPM – Mineral Production National Department Database
All concessions for exploitation on amazonian grounds are now registered by the Mineral Production National Department. Throught their website we were able to acess maps and lists showing every company name that ever applied for studies or area exploration, when they did, what type of request and type of mineral, how many requests and how much territory was requested. The cartography base served to enlighten us on the interests in the area. You’ll find some tables on the subject in the study cases chapter.
For now it is important to highlight that the same basins where the damns are being constructed are the ones wanted for their mineral wealth. The mineral interests applied to all amazonian territories and the big constructions being planned there culminated on a new 4 BNDES – National Bank for Development is a brazilian bank responsible for funding actions, programs and policys that foment the entity’s main goal – Brazil’s development.
5 BNDESPAR – National Bank for Development Participations, is an integral subsidiary compa- ny, responsible for applications in actions and partnerships.
era of the gold run. The worsening of the interests on Amazonian mineral wealth becomes very clear on government lobbies, objectfying changes on the mineral laws and granting of illegal permits for exploitation in areas supposedly protected by environmental and cultural protection laws.
Given our premise of the convergence between the mining and electrical sectors being the result of the enormous amounts of energy and infrastrutucture these sectors require to function, the database organized by the DNPM, the Mineral Production National Department, was usefull because it showed us wich of the explored areas were growing in sizes and numbers, and how many of these companies were being a part of the processes. We then began to relate the hydropower constructions to the growth in exploration requests, as if they had opened a window to exploring the area more and more, including inside preserved areas.
II. II. Owners Chain
Few companies in the world are capable of articulating alliances and projects like the ones we are talking about here. But behind the ones that can, there is a whole chain of smaller companies working to maintan the status. The “opening” of these chains made clear to us the close relashionships between the State and the private interests on the mineral-energy- complex and the civil construction corporations, and how much territory each of them controls. In order to unravel the soil’s appropriation, our methodoloy was to try acessing data to construct such chains. Based on that decision we used two different databases – the
“Owners of Brazil” project, articulated by the More Democracy Institute a few years ago, and ANEEL’s website – Nacional Agency for Eletric Energy.
The “Owners of Brazil” project, with the main goal of unraveling who were the real actors in decision-making involving governmental investments, policy making and the corporate structure of private groups, was calculated from a rate they called accumulated power of every company. This rate is constructed by the crossing of an array of concepts, like open and closed capital companies, ordinary and preferential actions, participation chains, company compositions, and more.
The index is defined as “the accumulated power of A is defined as the recursive cascade of all it’s participations, direct and indirect, until the end of the participation chain”. In turn, the Nacional Agency for Eletric Energy, the first regulatory agency to be created in Brazil, makes it a public responsabily of every entrepreneur to keep the information on their business’s action shifts updated. We acessed ANEEL’s website, where we found the most up-to-date information on the goings of the electrical sector. Booth databases were essencial for the construction of this paper and for out attempt to contribute to the debates on the domination of amazonian territories and the hegemonic development project happening in this country.
III. THE DEVELOPMENT OF THE BRAZILIAN ENERGY MATRIX III. I. Brief History
Brazil’s energy matrix is a very diversified one, with investments in all forms of energy – hydroelectricity, natural gas, petroleum, nuclear energy, coal and photovoltaic energy, for example. But given Brazil’s history, despite the growth in exploring alternative sources of energy generation, and the existence of several socioeconomical and environmental restrictions to the power plants, the energy sector is bound to be almost monopolized by hydroelectrical energy forms for many years to come. And even though Lula and Dilma’s governments both invested a lot on this kinds of infrastructure, it operates mostly under the private sector’s hands, and at 70% of its capacity (Brasil, 2007).
In Brazil’s context, the concentration of energy usage on the hydroelectrical base narrows the forms of generation. And when it comes to the generation of hydroelectrical power, partly because it’s exploitation isn’t as expensive as in other cases in the brazilian scenario6, it is the one sector that produces more – 70,6% of all country’s production, according to the report published by the ministery in the beginning of 2014. This last updated data was disposed by the Mines and Energy Ministery as follows:
Source: Mines and Energy Ministery7
6 PDE / MME
7 Available in: http://www.tnsustentavel.com.br/noticia/10632/emissoes-na-matriz-energeti- ca-brasileira-cresceram-69-em-2013 (Acess in August 12, 2014)
Going back to the 1990’s, president Fernando Henrique Cardoso opted for paralyzing investments in the electrical sector, causing major imbalance between offer and demand for energy, and reverting a process started back in the 1980’s, when the government invested, throught BNDES, 5 billion dollars to hold the fees on electrical energy hoping to raise the values of energy assets to be sold. FHC’s intention was to weaken the sector in order to create a politically and economically valid argument for privatising it (Pase, 2010; Goldemberg e Prado, 2003).
In the end, the profit made from the privatisations was of about 30 billion dolars, and several investments judged uninteresting by the private iniciative were stuck in the state’s hands, like some areas in the States of Acre, Amapá, Piauí and Rondônia, where the projetcs were non-profitable and left the states in debt. That said, our ascertainment is that the privatising program for the energy industry was a disadvantage for the brazilian people for putting in transnacional hands a strategic sector to the country’s development. In the table below you can see the companies that were privatised and when.
III.II. The Decennial Plan for Electric Energy Expansion 2021 - PDE 2021
The Decennial Plan for Electric Energy Expansion is a short-term plan, of no less ten years, that contains guidelines for the development of the energy sector the years to come. It consists of, for example, decisions comprehending the physical expansion of the energy offers, defining and setting investments in time and space, gathering studies on technical viabilities, both economical and environmental, and constructing possible scenarios. The plan we are going to analyse was launched in 2011 and foresees scenarios for 2021. For a more accurate analysis of a long-term scenario, the government produced in 2007 The National Energy Plan for 2030.
III.II.I. PDE 2021 and the expasion horizon of electrical energy production.
The PDE 2011-2021 predicted an uprising of 52% in demand for electricity based on premises such as demographycal, economic, of autoproduction and efficiency capacities in terms of energy development, consumption forecasts and others. Is is good to notice that this forecast also works in alignament with social public policies like the program Light for Everyone - Luz para Todos, launched in the 2010 PAC – Accelerated Growth Program (Brasil, 2012). As the numbers for consumption of households represent barely anything in a panel next to the consumption of the large corporations we will be talking about, that doesn’t affect our premises.
The auctions promoted for the endeavors happened according to Law n10.848/2004 – to attend future consumption necessities, they must happen in the forms of either three (A-3) or five (A-5) years prior to construction start. As consequence, the entire generation park for the projects studied here was, in it’s totall, hired and on it’s way to implementation by the time the plan was lanched, clarifying how real the projects are and excluding any chance of resistance by the affected population. The projects were predicted to be operating between 2012-2014 and 2015-2016 (Brasil, 2012).
The project growth was in the order of 4,3% a year, going from 58.185MWmedium in 2011 to 88.921MWmedium in 2021. It is woth to say that in 2013 and 2014 more systems will be interconnected, following the government’s strategies. The growth in the offers is expected to be of about 57% (Brasil, 2012).
Following the predictions mentioned in the first paragraph, the plan had foreseen that 40% of all energy produced would be consumed by the eletric-intensive industries of aluminum, bauxite and steel (Brasil, 2012). Note that the aluminum production has the biggest consumption numbers. But what happened in reality was a shrinkage of the offers for energy and an increase on the prices, according to the complaints made by the Brazilian
Association of Aluminum Industry8. Also note that the energy stratum is a crucial sector to the development of the alumunum production.
As it seems to be a pattern for government decisions, there is a political justification to the implementation of every hydroelectrical power plant in the amazon region. And even though there are many who criticize the government’s hydroelectrical plans, their argument is that the construction plans were made in an intertwined way, connecting the systems, and in such a perfect tune with the region’s sazonal climate conditions, that it would actually help with the problem of drought and flood seasons (Brasil, 2007).
Unfortunetly, that is not what we see now. That argument is as far from reality as it is from a logical point of view given that, to construct the barriers that are part of the power plants, it is necessary to flood not only the rivers, but several other areas, including inhabited ones.
The argument for Belo Monte, for example, is that it is located in an area where the result for an environmental change would be an equilibrium of flows during drought seasons, which would generate an energy supply capable of unburdening other hydroelectric plants in the system.
The table below shows that the exploration of brazilian rivers through energy auctions has been growing throuought the years.
Energy Auctions Table
Number Year Quantity Value (R$)
2 2011 5.175 MW 15,6 million
1 2012 574 MW 2 billion
3 2013 7.145 MW 26,6, billion
Fonte: PAC 2’s Balance
In terms of investments made by the government, the expansion in power generation between 2011-2021 demands 213 billion dollars, keeping in mind that a big part of the investments are already setled (Brasil, 2012). The amount yet to be invested in new power plants, ones not predicted in the plan, is in the order of 117 billion dolars, with 57% of the resources being directed to the hydroelectrical plants.
III. II. II. PDE and the Expansion of Hydroelectricity on Amazon Territories
The Amazon’s key role on the process of expanding Brazil’s energetic horizons is due to the area’s wealth of basins with great potentials for power generation, guaranteeing the country’s demand is met.
8 http://www.aluinfo.com.br/novo/alto-custo-de-energia-e-um-dos-gargalos-da-industria-
The graphic below shows the generation potencial on the different types:
Capacity by type of Source Graphic - 31/12/2011 (MW)
Brazil’s State has it’s attention turned on the Amazon because the system they can implement could be, at a profit logic level, of maximum importance to the development of the energy sector, generating enough income to support nacional economony’s extension plans. The expansion plans go further into Amazonian localities with the inclusion of nine new power plants, besides the funds directed to the expansion of already existing investments see the picture below:
Ongoing Projects that will receive more investments
UHE Estate Basin Power Capaci-
ty (MW) Observations
Jirau Rondônia Madeira 3.750 75 MW em oper-
ação comercial 06/09/2013 Santo Anto-
nio 3.150 1.201,5 em op-
eração comercial - 30/03/2012 Estreito Maranhão/
Tocantins Tocantins 1.087 -
Belo Monte Pará Xingu 11.233 43% done1
Teles Pires Mato Grosso Teles Pires 1.820 71% done Santo Anto-
nio do Jari Amapá/Pará Jari 373,4 88% done
Colider Mato Grosso Teles Pires 300 85% done
Source: PAC 2 Balance Sheets p. 75
III.III. 2010’s Accelerated Growth Program II – PAC II
Created in 2007, the Accelerated Growth Program – PAC – consists of a series of projects invested on generating employment opportunities, and raising both public and private investments in important sectors under development, besides that it seeks to promote the retaking of planning and execution of major social infrastructure constructions, urban, logistics and energetical in the country.
The balance sheet published after PAC II, launched in 2013, allows us to see the amount of public investments made in the electrical setor. The main goal of the energy sector’s program is to raise energy’s generation and transmission, among tasks as exploring petroleum and natural gas, fertilizers, petroquemistry, fuels, and revitilizing the naval industry.
According to the balance sheet, the investments caused an increase in the brazilian industrial park capacity in the order of 10.200 MW, 3.434 only in 2013. Among the plants that contributed to this raise are Jirau (3.750MW) and Santo Antônio (3.150MW) in the state of Rondonia; Estreito (1.087MW) between the states of Maranhão and Tocantins, and Mauá (361MW) in Paraná (MME, 2013).
The picture bellow shows the panel of investments made public by the government, the amounts were predicted to be in the order of 94,14 billion reais for constructions in the Amazon. Of this amount, 67,38 billion are to be invested in ongoing projects and 26,78 billion in new projetcs.
IV. THE MINING SECTOR
IV. I. Methodology and data used
To understand the sector and find the last updates on the exploration interests we based our conclusions on two different types of documentation – The 2030’s Mining Plans and the records from the DNPM - Mineral Production National Department Database, showing requests for research and mining extractions on Amazonian territories. And even though it is importante to say there is a differece between the mining interests and the mining titles, approaching that would require more time and thus, won’t be adressed in this report. What we are interested in now are the amounts of requests allocated inside the basins under analysis here, the conclusions are to be found in the study cases chapter.
IV. II. Brief History
Mining extractivism and the mineral transformation industries both obey an imperative principle of submitting Amazonian spaces to the big capital, just as happened to Brazil’s energy sector. The area’s exploration has been growing as the decades pass, through legal and illegal ways, and in the end, the government doesn’t seem able, or willing, to protect the enviroment and the coutry’s natural resources.
It is worth mentioning the explorations had a peak in 1966, when two major corporations – Union Carbide and American Steel – found manganese and iron reserves in Carajas, in the state of Pará. Nonetheless, in 1978 the government made a deal with a japonese consortium called Nippon Amazon Aluminium Corporation (NAAC), creating a public company, Brazil Aluminium SA (ALBRAS), mostly owned by Vale do Rio Doce. Expanding exploration limits (Cota, 1984).
IV. III. The 2030’s Mining Plan
The plan’s aim is to establish the guidelines for development in the mining sector, adressing areas such as geology, mineral resources and mineral transformation, including metallurgy;
integrating environmental and industrial public policies, and promoting a sustainable form of development in Brazil. The amount of investments will be in the order of 270 billion dollars by 2030, with around 350 billion dollars invested in infrastructure at the same time (Brasil, 2011). The plan, as it is possible to see in next page’s table, foresees a significant growth in mineral extraction in the country:
And even though the growth in explorations and extractions seems to be inevitable, the plan states that no exploration is going to lead the reserves to an end (Brasil, 2011). There are, still, many unexplored reserves according to the plan’s conclusion. See the picture below:
VI. IV. Debate on the role of mining activities on Amazon territory.
To begin with, it is important highlighting that the 2030’s Mining Plan has a chapter specifically for the Amazon (Brasil, 2010:57), in wich they state the territory’s exploration is considered a challenge due to cartographical difficulties on mapping the region – only 50%
of the territory is properly mapped. But the intentions, also stateted in the plan, are to raise investments in mapping and exploring, specially great mineral potential areas. Note that due to these difficulties, most of the requests for mining rights were applied for prior to any scientific knowledge on the territories.
Whereas this plan predicts lots of investments in exploring the areas, the government makes clear efforts to change environmental and cultural protection legislations through lobby in the National Congress. Territories such as quilombola communities, conservation unities, agrarian reform settlements and indigenous reserves are in danger of losing it’s rights against exploitation.
Nowadays, indian reserves are about 25% of legal Amazonia, and 12% of the national territory. And according to the 1988 Constitution, title VIII – Social Order, chapter VIII – The Indians, article 231, paragraph 3, extraction is allowed in the case of regions with especific regulamentation sanctioned, under congress sanction and the indian people’s approval, including some percentage of the winnings going to the tribes. Unfortunately, according to our research, no specific legislation was ever implemented, avoiding any possibility of legal extraction, and no tribe has ever won any resource from the exploration in prohibited areas.
VALE, for example, has violated exploration limits several times. In the municipalities of São Feliz do Xingu, Tucurumã and Ourilandia do Norte (Pará), operates Onça Puma Mining Company, a canadian subsidiary eventually bought out by VALE, demonstrating the investments in the area (Almeida, 2010). The company also lobbied its way into an area once inhabited on the process of agrarian reforms, leaving dozens of people homeless to explore nickel.
The 2030 PNM considers the legislative changes in favour of explorating areas once protected of maximum importance in the drawing of scenarios for the mining future. Meanwhile, as follow-up on government’s investments to change environmental protection laws, present in the federal legislative, a work group was created with the exclusive purpose of proposing a legal mark in the legislation, allowing for exploration in conservation unities.
V. BRAZILIAN STATE AS A “CEMENT-PARTNER” ON THE PROJECTS
V. I. Flexibilizations made in ambiental law
In this section, according to our hyphotesis panel, where we state that Brazil’s government has been financing big projects along civil construction, mining and energy companies on the process of exploring Amazonian rivers, we will be discussing the role of the State as what we call a “cement-partner” on the expansion projetcs. The analysis of the three cases – Santo Antonio, Jirau and Belo Monte – will help us emphasize the government’s efforts to make environmental and protection laws more flexible in order to make the construction of the hydroelectrical power plants in Amazon possible and viable.
It is necessary to highligh that authoritarianism guided decision-making in these exploration cases, projects that happened despite all civil society’s efforts to stop them. Based on a preview of the study cases we are going to provide specific examples on how the government has been changing environmental laws and playing a role in the winning consortiums as well as funding them through public companies.
Prior to the plants constructions, IBAMA – an organ directly resposible for the environment and for keeping track of dangerous-to-nature investments –, has to approve a document already mentioned along this report, EIA/RIMA, an analytical study which seeks to dimension the areas of direct and indirect impact of the projects, foreseeing social and environmental impacts on the area’s populations. Madeira River’s EIA/RIMA was ordered by companies like Odebrecht and Furnas, that having great interest in exploring the areas, soon became winners on the biddings for building the plants in the region. The studies were considered incomplete by IBAMA’s technicians and new studies were required, causing disagreements between the organ and the Mines and Energy Ministery (RIMA, 2005).
The atmosphere became even more tense in March 2007, when IBAMA published a note condemning the projects, stating Jirau and Santo Antonio should not be built due to environmental impacts. Then, both the organ and the Environmental Ministery started suffering pressure from the entrepreneurial sectors of economy, and some government segments that felt they were losing resources because of the report. Governmental agenda was to build the grounds for the expasions planned for the PAC, and keep the government still on the Workers’ Party hands.
In April 2007, president Lula deposed six comanding posts of IBAMA, changing the organ’s decision board completely. In July of the same year, both projetcs received prior licensing, even if under protests from civil organizations linked to environmental causes, and social
In the case of Belo Monte, government’s actions were also incisive. By the end of July 2005 the project was sanctioned with only 15 days of analysis by the congress, under urgent regime, and in the form of a decret, stating that the government was authorizing studies of environmental impact in the areas for the construction of Belo Monte. It is important to say they also changed an Ordinance in the law, reducing taxes in the construction by 75%9.
This authoritarianism was, unfortunately, present in almost all processes involving concessions in the Amazon region. The State disrespected ambiental laws and reorganized them in order to destroy any barriers to the projects, regardeless the costs.
V. II. The role of the State in the construction consortiums
At its turn, when it was shown necessary, the government spared no efforts to articulate the winning consortiums. Just a few weeks prior to Belo Monte’s auction, for example, major corporations such as Camargo Correa and Odebrecht quit the bidding pleading that the investments were unfeasible economically, given that 19 billion dollars would go to them, and 30 billion to the government. President Lula was decisive stating that if they did not want to participate, the State would do it alone and would not be a hostage to any entrepreneur10.
So, through ELETROBRAS, the government made the project viable by defining the rules for the dispute, imposing the winning taxes on the endeavor and assembling a consortium called Norte Energia to run in the bidding dispute for the concession. It is needless to say their consortium won the auction with the guarantee that ELETROBRAS will operate the plant once it is finished11..
Certain of the consortium’s fragility, given such a fast assembly, the government soon instructed ELETROBRAS to make deals with the losing corporations, such as Camargo Correa and Odebrecht, and groups like the BRASKEN and GERDAU. The companies pledged they were willing to participate now for low costs in energy in the future, as promised in president Dilma’s campaing.
9 http://politica.estadao.com.br/noticias/geral,entenda-a-polemica-envolvendo-a-usi- na-de-belo-monte,540407 Acess in June 2015
10 http://www.ihuonline.unisinos.br/index.php?option=com_content&view=arti- cle&id=3160&secao=326 Acess in June 2015
11 http://www.ihuonline.unisinos.br/index.php?option=com_content&view=arti- cle&id=3160&secao=326 Acess in June 2015
V. III. BNDES and BNDESPAR’s participation on the projects
Beyond all other efforts, Brazilian State was also the big financer on the projects through BNDES, the National Development Bank, that in 2013 loaned 13 billion dollars to the projects. Meanwhile it’s subsidiary, BNDESPAR, responsible for the banks applications in stocks and participations, closed 2013 with a stock portifolio of about 141 companies, a total of 33 billion dolars invested12.
To make the projects viable the government spent more than 44 billion reais, more than approximately 17.180 billion dollars today. Also, it became a partner in the endeavors through ELETROBRAS, BNDES, it’s subsidiaries, and a lot of other companies, such as public pension funds like PREVI (Banco do Brasil) and PETROS (Petrobrás). You will notice later that most of the companies spoken about in this report count with BNDESPAR participation in many of their projetcs. The tables below illustrate the fundings on each project of the scope.
Santo Antonio
Value of the loans Resource
Origin Beneficiary
Consortium Sponsors 1 3.092.586.200,00 BNDES Santo Antonio
Energy 2 3.042.586.200,00
Total 6.135.172.400,00
Teles Pires
12 http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/
empresa/download/1213_
Belo Monte
Jirau
Value of the loans by BNDES to the winning consortiums
Resource
Origin Beneficiary
Consortium Sponsors
1 1,62 bi BNDES Brazil Sustain-
able Energy Brazil Sustainable Energy (ESBR), GDF Suez (50,1), Camargo Correia Latin America Parti- cipations (9,9), Camargo Correia Infrastructure Investments, ELETROSUL, CHESF, Camargo Correia S.A., ELETROBRAS (40)
2 3,5 bi Brazil Sustainable Energy (ESBR), GDF Suez
(50,1), Camargo Correia Latin America Partic- ipations (9,9), Camargo Correia Infrastructure Investments, ELETROSUL, CHESF, Camargo Correia S.A., ELETROBRAS (40)
3 3,6 bi
Total 8.700.000.000,00
Value of the loans by BNDES to the winning consortiums
Resource
Origin Beneficiary
Consortium Sponsors
1 1,5 bi Ordinary
Appeal from BNDES to the Workers Fund
Norte Energia S.A.
ELETRONORTE (19,98), CHESF (15), ELETROBRÁS (15), NEOENERGIA (10), PETROS (10), CEMIG (7,28), LIGHT (2,49), VALE (9), FUNCEF (5), CEVIX III (5), Siderúrgica Norte Brasil (SINOBRAS) (1), J.
Malucelli Energy S.A. (0,25)
2 300 million ELETRONORTE (19,96), ELETROBRÁS (15), CHESF
(15), FUNCEF (15), Belo Monte Participations (10), PETROS (10), J. Malucelli Energy S.A. (0,25), VALE (9), SINOBRAS (1), CEVIX III (5), Amazonia Energy Participations (9,77), VALE (9)
3 9 bi ELETROBRÁS (49,98), ELETROBRÁS, CHESF, PET-
ROS (10), FUNCEF (10), Belo Monte Participations, J. Malucelli Energy S.A. (0,25), VALE (9), SINOBRAS, Amazonia Energy Participations, CEMIG TRANS- MISSION GENERATION, CEMIG ENERGETICAL DE MG (41,79), LIGHT (4,98), Neoenergia (10), Neoen- ergia Investments S.A.
4 9,8 bi ELETROBRÁS (49,98), ELETRONORTE, CHESF, PET-
ROS (10), FUNCEF (10), Belo Monte v, J. Malucelli Energy S.A. (0,25), J. Malucelli Administration e ParticipationS.A., VALE (9), SINOBRAS (1), Amazo- nia Energy Participations, CEMIG TRANSMISSION GENERATION, CEMIG ENERGETICAL DE MG (4,79), LIGHT (4,98), Neoenergia (10)
5 3,6 bi
6 1 bi
Total 25.200.000.000,00
Estreito
In the end, the consortiums look like this:
Belo
Monte CHESF 15% Grupo
ELETROBRAS:
BNDESPAR- 11,88%
VALE 9% VALE –
5,1% do BNDESPAR, que ainda possui gold- en shares da empresa ELETROBRAS 15%
ELETRONORTE 19,98%
FUNCEF 10% Pension Fund
for CAIXA employees
AMAZON ENERGY (CEMIG e LIGHT)
9,77% CEMIG - 49,57%
da LIGHT – 10,3% do BNDESPAR
PETROS 10% Oil Related
Pension Funds
FURNAS 10% BNDESPAR–
11,86%
BNDES – 6,86%
Santo
Antonio FURNAS 39%
CEMIG 10% CEMIG -
49,57%
da LIGHT – 10,3% do BNDESPAR
Investment Fund on Am- azon Energy Participa- tion (ODE- BRECHT e CEF)
20% CAIXA
(FGTS) – 49,99%
Jirau ELETROSUL 20% Grupo ELETROBRAS:
BNDESPAR- 11,88%
Camargo
Correa 9,1% Camargo
Correa con- trols, with 33,8% CPFL (São Pau- lo energy company), which counts with 6,7%
BNDESPAR participa-
CHESF 20% Grupo
ELETROBRAS:
BNDESPAR- 11,88%
Value of the loans by BNDES to the winning consor- tiums
Resource
Origin Beneficiary
Consortium Sponsors
1 687.286.400,00 BNDES ALCOA
2 808.350.800,00 VALE
Total 1.495.637.200,00
UHE Brazil’s partic- ipation on the consortiums
% % of State control over shareholder public compa- nies
Private Companies with State participa- tion
% in the consor- tium
% of State control over shareholder private com- panies Teles
Pires ELETRO- BRAS-ELETRO- SUL
24,5% Grupo ELETROBRAS:
BNDESPAR- 11,88%
ELETRO-
BRAS-FURNAS 24,5% BNDESPAR–
11,86%
BNDES – 6,86%
Neoenergia 50% PREVI 22,24%
BB Invest- ment Bank 11,99%
Mutual Fund PREVI – 26,77%
Total of State’s par- ticipation – 61%
VI. STUDY CASES
This study cases chapter consists of the primary conclusions on the research. Along the research we concluded companies such as Odebrecht and Camargo Correa have expanded it’s horizons so much, we can barely call them civil construction corporations anymore. They now place investments in many sectors – such as energy, mining and petroquemistry, for example.
Camargo Correa, big investor in the energy sector, controls 38% of a major energy company in São Paulo – Paulista da Força Company, besides being part of the Sustainable Energy Consortium, the entity in control of Jirau. Odebrecht Brazil Energy, a Odebrecht subsidiary company founded for energy investments only, has won the rights to operate both Teles Pires and Santo Antonio (ANEEL, 2014).
Note that theses companies have also guaranteed their ways to profit from operating the plants, not only building them. Their plan is not just to assure they’ll have enough cheap energy to attend their lines of business; they want to make money from the selling of that energy as well. Since the network is well settled by now, it is only logical to these companies to invest in sectors they know are going to be greatly expanded.
Based on these premisses, we built the societary chains involved in the hydroelectrical power plants investments, along with tables and graphics on requests for exploration in the same areas, showing clear raises in the amounts as the power plants are approved and built.
VI. I. Madeira River
This case encompasses two hydropower plant projects – Santo Antônio and Jirau.
V. I. I. Santo Antonio
This is the societary chain building, owning and operating Santo Antonio, one of the plants in the Madeira River. Note that the modus operandi established on this project was reproduced on the other experiences.
State’s direct participations, through FURNAS and CEMIG, sum up to 49%, corroborating to the theory that Brazilian government has been acting like an articulator, making the projects in the Amazon possible, and delivering the operating profits to the private iniciative. It is also clear how the private iniciative acts in the businesses and how much they control the operating consortium - MESA. Odebrecht, for example, other than the 18,5% in direct
participation, also owns 50% of a the Amazonian Energy Participation Fund, which owns 20% of the operating consortium, maximizing their influence in decision-making.
VI. I. II. Jirau
Madeira River’s privatisation process wasn’t funded only by civil construction companies.
Transnational groups, such as GDF Suez, also played key roles in the operations.
As is it shown in the slide above, GDF Suez, a company controled by the French government, owns alone, 50,1% of the investment. Another important detail is the same company’s ownership on Tractebel Energia SA, operating on Estreito’s consortium with 40% ownership.
This shows how these corporations are working to profit from energy production by investing in several projects, through many subsidiaries. Also note that the Mitsui & Co. LTD. are said to be a part of the societary chain on the projetc’s website, but not on ANEEL’s database.
It is important to say the construction areas of Santo Antonio and Jirau are situated in integrated territories, close to urban centres, not isolated ones like in the cases of Belo Monte and Teles Pires. The municipality taken as direct influential area of the project is Porto Velho. There, we found 1.986 requests for mineral rights, a total of 968.607 hectares of land.
The next chart shows the number of requests per year.
Chart 1
Number of Requests per Year Porto Velho – Madeira River
While between the fourty years period prior to the Worker’s Party government there were 1.220 requests, a total of 218.940 hec., in the eleven year period since this party is in charge there were 776 new requests, a total of 750.666 hec. Showing a significant growth in the explored areas. In this case specifically, 36.107 hec are inside conservation unities. It is also important to notice that, from all the endeavors spoken about in this report, this area is the one with the highest potential to the expansion of infrastructure and mining investments.
The chart shows how much area (in hectares) was explored in each year:
Chart 2
Amount of Area Requested per Year Porto Velho – Madeira River
VI.II. Estreito
This case stands out for the change in context. As you can see, there is a similar case of appropriation by the private iniciative here, except this time, instead of civil construction corporations, the players are mining companies. VALE and ALCOA control, together, 55,49%
of the investment, while GDF Suez has 40,07% and Camargo Correa the remaining 4,44%. It is important to note that VALE specifically needs the energy produced in this plant to keep the Carajás Complex in business.
It becomes even more clear how much mining companies are investing in energy production, corroborating our hyphotesis. It is fundamental to state that this project shows the most complex corporation network domination we have seen, as it was shown in the slide.
The municipalities under direct influence in this case are – Carolina, Estreito, Aguiarnópolis, Babaçulandia, Barra do Ouro, Goiatins, Palmeirante, Palmeira do Tocantins and Filadélfia, a total of nine. In this region we found 570.291.76 hectares of mineral rights requests in the following years. Next page’s chart shows the number of requests per year.
Chart 3
Number of Requests per Year Carolina, Estreito, Aguiarnópolis, Babaçulandia, Barra do Ouro, Goiatins, Palmeirante, Palmeira do Tocantins and Filadélfia – Estreito
Next chart points to an increase in requests, and in explored areas, starting in 2011, when the auctions started being planned- they actually happened in 2012. Estreito is the result of a union among VALE, ALCOA, Camargo Correa and Tractebel. Its construction was based, prioritarily, on fulfilling the mining sector’s energetical needs. It is worth to mention ALCOA reached 70% of its self-sufficient energetical operations therefore, the company can now supply energy to VALE’s mining activities.
Chart 4
Amount of Area Requested per Year Carolina, Estreito, Aguiarnópolis, Babaçulandia, Barra do Ouro, Goiatins, Palmeirante, Palmeira do Tocantins and Filadélfia – Estreito.
VI.III. Teles Pires
Note that this area is the home of a very wealthy mineral soil, which raises the interests from mining companies. The plant is mostly controlled by Neoenergia S/A, the consortium articulated by the Brazilian State after Odebrecht and Camargo Correa’s drop out. You will find that the company is now controlled by pension funds, one of Banco do Brasil’s subsidiaries and Iberdola Energy SA.
The direct influence areas on this endeavor are the municipalities of Paranaíta, Alta Floresta, in Mato Grosso and Jacareacanga, in Pará. This basin is part of a geological complex of more than 1200 km. The requests sum up to 385 in the three localities. See the next chart:
Chart 5
Number of Requests per Year Paranaíta, Alta Floresta and Jacareacanga – Teles Pires
Chart 6
Amount of Area Requested per Year Paranaíta, Alta Floresta and Jacareacanga – Teles Pires
The year of 1996 was the most expressive, with 48% of the total amount of requests, but 2006 was the winner in area explored, and even though the bidding happened in 2010, 2011 doesn’t show a big number of requests. In the period between 2006-2011, 2.183.769,52 km were explored, which means less requests, but wider areas of exploitation, including inside conservation unities and indigenal reserve areas.
Reasserting that the project’s locations will open a gateway to the growth in exploration, in 2005 Canadian transnacional company Megellan Minerals bought, from small and medium explorers, the rights to mining extraction in the area; in 2012 the government expedited a primary licence to Eldorado Gold Corporation, also canadian, predicting 12 years of exploration in an open sky mine.
VI. IV. Belo Monte
In this case, if we count VALE’s 9%, Amazon Energy S/A’s 9,8% and Neoenergia’s 10%, we reach 28% of transnational interests in this project, the remaining amount belongs to the brazilian state. Belo Monte is taken as a very strategic project polically and economically, since it is happening according to the government’s opening to the big capital’s interests.
But note that this opening process is happening without proven economical viability nor a stable study for the country’s energetical needs.
The direct influence areas on this endeavor are the municipalities of Altamira, Senador José Porfírio and Vitória do Xingu, all regions rich in minerals, specially gold. We were able to find 1.723 mineral requests in the area, a significant amount. From those, 696 are located inside indian reserves, a total of 6.621.203 hectares.
Chart 7
Number of Requests per Year Altamira, Senador José Porfírio and Vitória do Xingu – Belo Monte
This amount of requests show how much interest there is in the soil, and explains the rush and pressure for changes in environmental and protection legislation. As you see in the chart, the year of 1996 also represents a large percentage of the total requests, as did the Teles Pires case, unfortunately, we were not able to find out why, that would require further research. You will also see that, between the years of 2003 and 2012, the Worker’s Party government, 490 processes were initiated. See the amount of explored area:
Chart 8
Amount of Area Requested per Year Altamira, Senador José Porfírio and Vitória do Xingu – Belo Monte
To illustrate the private iniciative’s approach, the canadian Belo Sun, owner of a mine in Volta Grande do Xingu, at only 10km from the plant, has 111.596,53 hectares in mining requests from 1976 to 2013. In this mine they’re said to be capable of producing 5,1 million ounces of gold, 88 tons, in industrial scale.
Anglo American, owner of the Jacaré repository in Félix do Xingu, announced one the richest corporations in the world, has 170.868,21 hectares in requests in Altamira, one of Belo Monte’s direct influence territories.
Silvana Minerations, a company controled by Santa Elina, which is controlled by the Yamana Gold – a canadian company –, owns 3.758.879 hectares in the three localities, most of it inside indian reserve areas. VALE has interests in the order of 333.470 hectares of mining requests, 300 thousand only to explore gold reserves.
Other than those, companies like english mining company Rio Tinto (169.739 hec.), BHP Billington (19.824 hec.), Coal and Cooper (13.661,2 hec.), and Anglogold Ashanti (696 hec.) also have requests, therefore, have mining interests in the area.
VI. V. BNDES/BNDESPAR
As far as BNDES and BNDESPAR investments go, this is the picture drawn from the participations in the power plants.
It is also important to note that the subsidiary’s BNDESPAR participations are also complemented by the presence of several BNDES executives in other companies’s boards.
For example, BNDE’s president is a member of VALE’s Council; the representative of BNDES’s Fiscal Council is an administrative member of NEOENERGIA’s board; VALE’s vice-president is a member of ELETROBRÁS’s council; and so on.
In the end, we can only conclude that along the years, the State has been delegating the exploration of amazonian soil to major corporations, submitting the rivers to energy production in a growing “integration process”, and obeying the interest of international capital markets. The materialization of this projects opens a gateway to several other forms of exploring Amazonian soil, specially for the mining sector.
VII. A FINAL PIECE OF HISTORY
In time, both mining and energy sectors became expansive, they needed space to keep evolving. So another aspect of the projects is the integration of unhabbited spaces, not yet dominated by the big capital interests through energy companies. Growing business in the areas soon lead to infrastructre necessities, that lead to big constructions and expansion of the big capitals. In the Xingu River Valey cases, Teles Pires, Madeira and Tapajós River all experienced delocated work forces, expanding of roads and basic infrastruture in some inhospitable municipalities, all promoted by the consortiums operating the areas. The raise in energy offers in these locations is what makes the regions interesting to the mining companies.
In the end, regions once explored by small and medium mining entrepreneurs, more like prospector cooperatives, are now being sold to the interests of major mining corporations, which only judges the projects viable once they build the infrastructure necessary to allocate it. Note that most of the infrastructure developments are partly financed by BNDES through BNDESPAR, as we saw on these chapter’s tables. It is almost needless to say these activities and expansions on Amazon locations converge with a geopolitical government interest in occupy ing the Amazon region economically.
Given the high prices of energy, in order to make the energy sector economically viable, and to make energy prices attracting in Brazil, government is always injecting subsidy on the national companies. That is how the energy sector still profits considerably. In the second trimestre of 2014, for example, LIGHT experienced a 129,5% raise in profits, and CEMIG 44,5%. Government investments are calculated to be in the order of 186 billion reais between 2014 and 2017. And even thought government’s argument for the endeavors is
the country’s electrical needs, the real agenda has more to do with the growth of industrial sectors, than it does with personal consumption13.
The problem here is – this growth, as it’s been conducted, isn’t going to generate income to the State, but to the companies involved in the construction, maintenance and operation of the plants. The “Four Sisters” as we call these major civil construction companies – Camargo Corrêa, ODEBRECHT, Andrade Gutierrez, and OAS –, are powerful companies that, along with their subsidiaries and partners, are earning unspeakable amounts of money on the projects.
And note that, as shown in the societary chain slides, corporations create lots os subsidiaries to fund the projects through different origins, there are three specific reasons for that: the first is the dispersion of legal liability; the second is dispersion of taxes payment; the third, and last, dispersion of social accountability, making harder for the social iniciative to find one specific guilty actor.
The networks eventually became so complex and out of control that justice promoted a kind of “clean hands operation”, arresting dozens of big names in the civil construction corporations world. The operation was known as the “Car Wash Operation”, and it revealed a major licitation fraud scheme in Petrobras involving the country’s biggest civil construction companies. In its deposition to the Congress, Petrobras’ ex-director affirms this scheme has been happening for a long time, and in all State’s companies, including Eletrobras. In the end, while the corporations are interested in available cheap energy, there is a very specific reason why governments spends tons of money to keep specific sectors pleased – campaign investments.
As mentioned before, all spoken interests lead to strong lobby in the National Congress in favor of changes on the current Mineral Code – a legal mark for the mining sector. The main goal was to remove obstacles to mining activities, facilitating the sector’s development, especially in protected areas, turning Amazonian soil into a free area for the mining interests.
The proposal is specially disadvantageous to traditional populace in the areas, the Indians living in wealthy areas, mostly. The changes absurdly propose a submission to conservation unities and indigenous reserves creation to the National Mining Council annual meeting, in other words – the creation of new conservation units now serves the interests of the Council also responsible for allowing, regulating and monitoring the explorations.
It is important to highlight that the parliamentary who created such proposal got 1,8 million reais in donations from mining corporations in 2012’s election. And most of the parliamentarians in favour of the changes are also in the election donation’s pay list of most 13 http://www.brasil.gov.br/infraestrutura/2015/08/programa-de-energia-injetara-r- 186-bilhoes-no-setor Acess in May 2015
