Megaport in Brazil Makes No Contribution to Local Development

One of the terminals of the port of Açu on its inner side, in a channel dredged to a depth of 14.5 metres to receive vessels of up to 3.7 metres draught and a variety of cargoes. Credit: Mario Osava / IPS

By Mario Osava
SÃO JOÃO DA BARRA, Brazil, Jul 10 2024 (IPS)

With barely 10 years in operation, the port of Açu is now the second in Brazil in cargo transport and seeks to become an industrial and energy transition hub. But so far it has contributed little to local development, causing environmental and social damage.

The megaproject, which is presented as “the largest private deep-water port and industrial complex in Latin America”, occupies 130 square kilometres in the municipality of São João da Barra, some 30 kilometres from the city and 320 kilometres northeast of Rio de Janeiro, in the state of the same name.

It channels 30% of Brazil’s oil exports and 24 million tonnes of iron ore transported through a 529-kilometre-long pipeline from the mine of the Brazilian subsidiary of the British transnational Anglo American, in Conceição do Mato Dentro, a municipality in the neighbouring southern state of Minas Gerais.“It’s an enclave without social, political and economic interests in the surrounding territory, with no connection to local reality": José Luis Vianna da Cruz.

In 2023, 84.6 million tonnes of cargo will pass through this port, 27% more than in 2022. This growth averages 30 % annually since it started operating in October 2014, according to its management.

“Here you can arrive and leave by sea and land without the queues of trucks that affect other ports, such as Santos,” Brazil’s largest, located in the neighbouring state of São Paulo, said Eugenio Figueiredo, president of the Port of Açu Operations management company.

Its location outside urban centres is one of the local advantages he mentioned to a group of journalists, including from IPS, who visited the port on 4 July. In addition, the main export products do not arrive by road. Oil comes by sea from offshore wells in the Atlantic and iron ore by pipeline.

The depth, of 14.5 metres at the terminals sheltered within a canal and 25 metres at the advanced jetty in the sea, is another favourable point to facilitate access for giant ships. Being private speeds up the operations, lacking the bureaucracy of public ports, according to Figueiredo.

So far, the company reports that it has invested the equivalent of 3.7 billion dollars in this mega-infrastructure, and plans to invest a further 4.070 billion over the next 10 years.

Oil, energy transition and industry

Being some 80 kilometres away from the Campos Basin, where offshore oil fields were discovered in the last four decades, allows Açu to offer a base for oil companies that is not only a port. A helicopter pad enables the rapid transport of people and light equipment to the oil platforms.

The large industrial area already hosts two flexible pipeline factories for deepwater oil exploration and extraction. A 1300 megawatt natural gas-fired thermal power plant is also operating in the area and another with a capacity of 1700 megawatts is under construction.

Of the 130 square kilometres of the industrial port complex, 40 kilometres make up the Caruara Private Natural Heritage Reserve, the largest conservation area of restingas, a coastal ecosystem of sandy, not very fertile soils and low vegetation. The remaining 90 square kilometres are under port and industrial occupation, with 22 companies already installed.

The reserve was created after the company that owns it delimited the area of the port and industrial complex, with two objectives: the environmental protection of the restinga and, in the part closest to the urban centre, to prevent encroachment by the population.

The complex also aims at energy transition, initiated by the natural gas-fired power plants. Plans include the future production of green hydrogen, harnessing the great potential of photovoltaic and wind power generated in the sea near the coast, where favourable winds blow.

The increasingly large wind turbine blades will have to be manufactured locally, and space available for this industry is another advantage of the Açu complex, Figueiredo said.

Logistical bottleneck

The port is now seeking to attract more agricultural exporters from the closest states, Minas Gerais and Goiás, already present since 2020. For this, Minas Port, one of the companies operating in the port, inaugurated on 4 July two warehouses with a capacity for 65,000 tonnes of grain.

“It is a super-port, with a fantastic terrain, successful in the export of iron ore and oil, and with a strategic location in the centre-east of Brazil, which demands large scale ports. But it has a fragility: its land connection”, said economist Claudio Frischtak, specialised in infrastructure and president of Inter.B Consultoría, interviewed in Rio de Janeiro.

The port is remote from major agro-export production regions and access roads are inadequate. Its future expansion depends on a railway connecting to the existing network of Brazil’s Vale group, the country’s largest iron ore exporter, which lies some 300 kilometres away, he said.

That distance could be more than halved if Vale builds an 80-kilometre section already agreed with the local government, and another 87-kilometre section under study.

But Prumo Logística, controlled by US fund EIG and owner of the port of Açu, is hoping that a railway will be built between Rio de Janeiro and Vitoria, the capital of the central-eastern state of Espírito Santo, which would reduce to 50 kilometres the stretch needed to connect the port to an extensive rail network, Figueiredo said.

Moreover, the success of the industrial project requires attracting investors, a difficult feat without “reasonable logistics”, with rail and good roads, said Alcimar Ribeiro, an economist and professor at the State University of Northern Rio de Janeiro (UENF).

Economic alternatives to the Açu complex are necessary because the Campos basin, a nearby source of oil, is already “mature”, with a declining production. “In 2010 it represented 87% of Brazilian oil production, today only 20%,” Ribeiro told IPS in São João da Barra.

Far from local development

The area of influence of Açu, mainly São João da Barra, with its 36,573 inhabitants according to the 2022 census, and Campos dos Goitacazes, with 483,540 inhabitants, has been in economic decline for several decades, after the sugar cycle ended.

The port offers 7,000 direct jobs, including those of companies installed in the area, 80% of them to local workers, according to Caio Cunha, manager of Port Relations and the Caruara Reserve.

But most of them are temporary jobs, in the construction of port expansions and currently of the second thermoelectric plant, Ribeiro explained.

In addition, local employees are generally low-skilled, with outsiders being hired for more skilled jobs, says Sonia Ferreira, leader of the neighbourhood association SOS Atafona, a beach district in São João da Barra, which has lost more than 500 homes to erosion by the sea.

One positive effect of the port is that it has sparked young people’s interest in studying, she acknowledged. But she hopes the port will make structural investments in health, education and urban infrastructure, to effectively improve the quality of local life.

The central problem is that the megaproject is “an enclave without social, political and economic interests in the surrounding territory, with no connection to local reality. It only lacks a wall to separate itself, having its own heliport, hotel and shopping mall, for its self-sufficiency”, said sociologist José Luis Vianna da Cruz.

Having automated operations, the port and the companies located here employ few workers, said this professor at the Fluminense Federal University with a doctorate in regional development, by phone with IPS from Campos.

The megaproject did increase tax revenues for local municipalities, but did not reduce poverty nor unemployment in the region.

Da Cruz also questions the number of jobs reported by the port – 7,000 – and argues they would not compensate for the unemployment caused by the expropriation of the land of 1,500 families who lived there to make way for the port and industrial complex.

Many of these families received less than fair compensation or are still fighting for their rights, he added.

The current owners of the port are not to blame. It was the Industrial Development Company of the State of Rio de Janeiro (Codin) which prepared the land where the port is located at the beginning of this century.

But the salinisation of lagoons and the water table, which affected farmers and even the water for urban consumption, was due to the improper disposal of mud removed for deepening the canal where 11 port terminals were installed, according to Da Cruz, author of several studies on the socio-environmental impacts of local projects.