End of a Billion-Dollar Dream

Ludwig gives up on his project to tame the Amazon region

In 1967 American Billionaire Daniel K. Ludwig paid $3 million to a group of Brazilian families for approximately 6,000 sq. mi. of dense rain forest in the country's remote Amazon region. He then set in motion a bold plan for developing the area to help meet anticipated world shortages of food, lumber and wood pulp for papermaking.

Last week, after investing more than $1 billion, Ludwig, 84 and ailing, decided to abandon his cherished "Jari" project, named for an Amazon tributary that winds through the property. Possibly the largest entrepreneurial effort ever undertaken by one man, Jari had just begun to generate significant cash flows, but they were nowhere near as large as Ludwig had originally envisioned. Jari will now be sold to a consortium of Brazilian banks, insurance companies and industrial groups.

Ludwig, who made his vast fortune in shipping, mining and real estate, did not fail for lack of trying. In vast stretches of virtually unpopulated jungle, he built a string of airstrips, thousands of miles of roads traveled by hundreds of cars and trucks, a private railway to haul freight, a deep-water port, a hospital, a school and a giant service depot stocked with spare parts and equipment. Jari's capital, Monte Dourado (pop. 35,000), is a sprawling community of neat bungalows, town houses and apartments.

Ludwig threw money and manpower at problems thrown up by the jungle. But in many cases he made costly mistakes. In attempting to start his lumber and paper business, for example, he had to clear the land to plant new trees. Several Caterpillar "jungle crushers," giant bulldozers costing $250,000 each, were brought in to do the job, but the machines proved inappropriate because they damaged the unexpectedly delicate Amazon topsoil.

Ludwig's associates said last week that the failing health of their 84-year-old boss was one reason for his giving up on Jari. But others were of the opinion that the billionaire quit simply because Jari had ceased to be a good prospect. Pesky government regulations and a xenophobic attitude among Brazilians further discouraged him.

In a letter more than a year ago to General Golbery do Couto e Silva, then Minister for Civil Household Affairs, Ludwig warned that he would begin closing down Jari if the government did not come forth with financial assistance to help offset his infrastructure expenses. No aid came. In other ways, too, the government seemed deliberately to put obstacles and uncertainty in Ludwig's path. Authorities, for example, never legalized his title to more than half the land he had bought.

Exasperated, Ludwig refused to repay loans guaranteed by Brazil's National Economic Development Bank. These included $163 million owed to Japan's Ishikawajima-Harima Heavy Industries for a $250 million floating pulp mill, and another $29 million to Lloyds Bank International.

In recent months Brazilian government officials began preparing for a possible Ludwig pullout. They implored local investors to help take Jari off Ludwig's hands. Under the plan announced last week, a consortium of some 27 Brazilian companies will pay dividends to Ludwig's Switzerland-based cancer research center for 35 years, with the backing of the government, which is expected to raise additional funds. The new owners may fulfill Ludwig's bold vision of a civilized Amazon region. In the end, not even a billionaire had enough resources alone to tame the jungle by himself.

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