Entrepreneur Eike Batista started the year boasting, to whoever wanted to hear, that he was the richest man in Brazil. By his own calculations, he was worth US$ 16 billion. By the calculations of Forbes, the Bible that discloses an annual list of top 200 magnates in the world, he had a little less. He occupied third place – and not first – on the podium of the well-to-do. In 2009, Batista will certainly remain on the list, but with a few billion less.

MMX Mineração e Metálicos — the first of his companies to go public, collecting R$ 1.1 billion – suffered a harsh blow in the second half of the year. The financial crisis worldwide and consequent drop in demand for commodities led the company’s directors to announce a steel and iron ore production shutdown at MMX Corumbá, in the state of Mato Grosso do Sul. There, US$ 200 million in investments to construct a dowel factory were also put o hold.

“This new scenario requires that MMX adjust its metal and iron ore production programs, which would imply a slower pace of operations in this final quarter of 2008”, the company stated. “We believe that this decision will contribute to reduce our operation costs and avoid an increase of inventory.” MMX also said that it will not cut down on personnel. Contrary to expectations, two days after announcing production cuts and suspensions of investments, MMX disclosed a purchase of mines in Chile, in a transaction estimated to be worth US$ 50 million.

From April 30 to October 31, the mining company’s share prices plummeted by 83.21%. It was quite a fall for a company that entered the exchange, in July 2007, with grandiose projects that would require investments upward of US$ 3.5 billion. The initial idea was to produce everything from iron ore, pellets, and pig iron to semi-finished steel products, including logistic integration by port and railway. The dream, proposed by Batista himself, was to turn MMX into a mini-Vale.

Let’s be honest: those were different times. The global market lacked raw materials, and China hungered for commodities to feed its expansion. In 2004, there was even a pig iron shortage in the world market. Now, in contrast, there’s more than enough. The price of iron ore is sliding downhill. A 15-40% drop is expected for 2009. In the spot market, the product is currently worth US$ 60 to US$ 70 per ton. That number, however, reached US$ 200 last year. The demand for steel is also in free-fall. Raw steel production in Brazil fell 3.7% in October in comparison with the previous month, according to the Brazilian Steel Institute. Sales to the foreign market, which had already been falling, dropped by 26.4% as compared with the same period in 2007.

The international market’s frailty did not go so far as to impact MMX's performance in the third quarter. Red ink left its mark on their bottom line; the company’s balance sheet recorded net losses of R$ 343.3 million and killed the second quarter’s R$ 24 million profit, but the damage was due to voluminous financial expenses with hedging operations and exchange rate variations. Gross revenues added up to R$ 252.7 million, more than double the R$ 121.3 million of 2Q 2008. And operational generation of cash, measured by EBITDA, went from minus R$ 24.6 million to minus R$ 1 million. The upcoming quarters, however, are likely to be less promising. “The current financial crisis, which brought a general credit crunch, is leading to a slowing down of global economic activity at a pace never seen before”, MMX said in its quarterly report.

In addition to suffering from a market retraction, Eike Batista is also suffering from being targeted by a Federal Police investigation, in the operation known, ironically, as “Midas Touch”. The operation is still ongoing, and is investigating accusations of supposed irregularities in the bidding for Estrada de Ferro do Amapá (Amapá Railway), a concession held by MMX. The investigation even became a threat to the already announced sale of part of MMX to the South African multinational Anglo American. After offering personal guarantees, however, the Batista was able to seal the deal, worth upward of US$ 5 billion. In April 2007, Anglo had already paid US$ 1.5 billion to take home 49% of the Minas-Rio system, where reserves may amount to 2 billion tons of iron ore.

Notwithstanding all his troubles – and a few billions less – the ever eccentric Eike Batista already made capital market history with honorable mention. Without a doubt, the best example is OGX, his oil and gas company, which raised R$ 6.7 billion in July, in what is considered the largest offering in the history of the Bovespa. A detail: it did it without producing one drop of oil. Hats off to him.

The selection of companies for this section is made based on an Economática survey of the oscillation and monthly traded volume of shares with a minimum daily turnover of R$ 1 million. From there, the companies that stand out the most for positive or negative variation in the past six months are chosen.