Huge AI data center project blindsides water-stressed town in Brazil

Atlas Renewable Energy is planning a 1-gigawatt data center in the Paracatu municipality that exceeds the combined power capacity of all such facilities currently installed in Brazil.The project risks depleting fragile Cerrado springs in a municipality where around 80% of the territory faces water conflicts and demand already exceeds 100% of available groundwater reserves.Local authorities and residents say they were never consulted about the multi-billion-dollar investment, which was only revealed to them through inquiries from reporters.The project reflects a global trend of tech giants seeking out resource-rich countries like Brazil to power an increasingly water and energy intensive AI boom. PARACATU, Brazil — As the president of Paracatu’s city council, Manoel Alves is used to being courted by companies and executives that want his blessing for new business. But on a Thursday afternoon in May 2026, he was upset talking on the phone about a data center planned for his city, about which he was informed by reporters. “I just heard the data center construction will start in two months. Don’t you guys know about this either?” Alves asked someone at the mayor’s office. The answer from the other side of the call was “no”, the same received from all interviewees: Local authorities, business owners, farmers, and citizens. “It is some new hotel concept?” a major restaurant owner in the city asked. “A dentist?” a citizen in Paracatu’s main square questioned. “Data center? What is this?” queried the guardian of an 18th-century church. The data center in Paracatu, a municipality located a three-hour drive from Brazil’s capital, Brasília, is not just any data center, but a 1-gigawatt data center, which will be larger than the combined total of all data centers currently installed in the country, which use around 800 megawatts. Or similar to one of the gigantic projects that are part of the Stargate initiative, one of the world’s largest artificial intelligence infrastructure networks, strongly supported by the U.S. President Donald Trump’s administration. Paracatu’s data center is being planned by Atlas Renewable Energy, owned by an arm of the global asset manager BlackRock, which already has solar energy farms in the municipality. Among the reasons listed by Atlas for choosing Paracatu, a medium-sized city in the state of Minas Gerais with close to 100,000 citizens, is that the city has an abundant water supply. “To say that there is plenty of water is controversial,” said Almir Paraca, a former Paracatu mayor. “We have many long-standing water conflicts in the municipality and the region. This is because the water allocation exceeds the flow capacity of the springs.” President of Paracatu’s city council, Manoel Alves, was informed by reporters about plans for a data center in his town: “I just heard the data center construction will start in two months. Don’t you guys know about this either?” Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Artificial intelligence data centers are under scrutiny all around the world due to their high consumption of water and electricity. And Brazil is presenting itself as a major hub for these ventures, offering its abundance of resources. “We are in a position to offer other countries the opportunity to build data centers,” Brazilian President Luiz Inácio Lula da Silva said last May, before a visit to meet Trump. Paracatu became an extreme example of a movement that shakes Brazil from north to south. Data analyzed by Mongabay and Intercept Brasil indicate that at least 68 data centers are planned for the country in 37 different municipalities. The projects have already requested access to the national power grid; several are currently seeking clients; and some have already submitted the necessary documentation to obtain licensing. Brazil doesn’t have a specific national environmental regulation for data centers, and citizens are being caught by surprise through announcements, while they are discovering the consequences this type of enterprise can cause. Often, without time to discuss properly before licenses are issued. “A project of that size that will soon start implementation … how come this information isn’t getting out?” Paraca, the former mayor, asked. Atlas disclosed its plans in a presentation delivered to the Brazilian Energy Ministry in which the company asked permission for its data center to connect to the national grid. The infrastructure is divided into three modules, with partial operations beginning in December 2027 and completion by 2030. Following an inquiry by Mongabay and Intercept Brasil, Atlas said that “the project in question is in a very preliminary study phase, therefore, no technical decisions have been made regarding it.” (Read the full statement here.) “Data center? What is this?” queried the guardian of an 18th-century church to reporter Naira Hofmeister, left. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. ‘In Paracatu, there was water’ Paracatu is encroached in the heart of the Cerrado biome, the Brazilian superdiverse savannah. Thanks to its natural capacity to absorb rainfall during the wet season and slowly release it through springs, rivers and groundwater throughout the year, this biome is considered Brazil’s water tank. Paracatu is not only the name of the city; it is also the river that flows through its territory — a Tupi Indigenous word that some say means “good and clean river,” and others “tasty fish.” With approximately 300 kilometers (186 miles) of navigable waterways, the Paracatu River is the main tributary of São Francisco, one of the gigantic rivers in Brazil. Paracatu, the city, is bordered by another critical water resource, the São Marcos River, and has a territory full of smaller streams, the veredas, a kind of swamp where buriti trees (Mauritia flexuosa) grow, compounding an iconic local landscape. The landscape is well-suited for an AI data center, a nonstop facility with supercomputers that store and process massive volumes of information. Water plays a crucial role in cooling the equipment, as dissipating the heat is essential to prevent failures, performance losses and operational risks. “In Paracatu, there was water,” said Sebastiana Neto, president of Alto da Colina Neighborhood Residents’ Association, who has spent 57 years living in the neighborhood. Like Neto, many locals remember their childhood playing in the local veredas and making picnics on river beaches in places that are now filled with concrete, asphalt or garbage dumps, with no water visible. “Further up there was a cave with a well of slightly blue water where we used to fish and bath,” she added, pointing to her left. “In the past, every little hole dug in the backyard would reveal water. But it’s all gone now, the water has disappeared.” Sebastiana Neto, president of the Alto da Colina Neighborhood Residents’ Association, has lived in the neighborhood for 57 years. “In the past, every little hole dug in the backyard would reveal water. But it’s all gone now, the water has disappeared.” Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Fifty km (31 mi) east of her house, in the rural area, Fortunato Ferreira da Costa, known as Natinho, looks at the surface of the Bezerra stream at his feet. “We’ve known this stream since we were born,” said Natinho, a respected elder man from the quilombo Cercado, a traditional Afro-Brazilian community formed by descendants of enslaved people. “It has never dried up. But this year it will definitely dry up; it will turn to dust.” Natinho pointed out the level of water that has retreated in relation to past years and now can’t even reach the nearby tree trunks, as was the case in previous years. “But the dry season has just started,” he said. Small farmer Eduardo Rodrigues de Araujo has the same impression when he looks at his artesian well in his patio located in the Buritis da Conquista settlement. He is upset because he now needs to dig much more to find water in the soil. “Back in the day, at a time like this, you’d drill down 1 meter and hit water,” he said. “Now look at that — the level it’s about five meters down.” His well is about eight meters (26 feet) deep, and he is concerned that, at the end of dry season, he and his family will struggle to have fresh water. Water shortage is not only a feeling among the population. “There are restrictions on both groundwater and surface water in the region,” said Tobias Tiago Pinto Vieira, president of the Paracatu and Urucuia River Basin Committee. Nestled within the Brazilian Cerrado, headwaters around Paracatu provide a vital ecological lifeline for a region deeply impacted by large-scale mining and agriculture. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Fortunato Ferreira da Costa, known as Natinho, from the quilombo Cercado, feels the community water supply is in jeopardy. “It has never dried up. But this year it will definitely dry up; it will turn to dust.” Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Gold mining and agribusiness causing water shortages Neto lives only a few steps from a 15-meter (49-foot) tall wall that sets the boundaries between the urban area of Paracatu and the largest outdoor gold mine in Brazil, Morro do Ouro, property of the Canadian company Kinross. From her window, she witnessed the transformation of the landscape in her neighborhood over the past 50 years: From a small community in the Cerrado to a gigantic hole twice the size of New York City’s Central Park in the U.S., according to the latest data available — from which Kinross extracts the poorest gold mine in the world (only 0.4 grams of gold per metric ton of ore). Since the beginning, in the late ’80s, the mine grew alongside the Córrego Rico (Rich Stream), a water resource whose name is directly connected to the gold stored in its body. Today, very few of its natural characteristics remain, and its water is polluted with arsenic, according to a technical report. The document is part of a judicial process that demands compensation for the impacts to local quilombola communities that lost their territories, or part of it, to the mining. As Corrego Rico was changed, many other water resources were also impacted. “Mining depends on water resources to operate, so the streams near the mine have seen a reduction in their water flow,” said José Eduardo Trevisan Moraes, Paracatu’s Environment secretary. Kinross said in a statement that “the Corrego Rico Stream has a history of environmental impacts predating Kinross’s operations and is strongly associated with the artisanal mining activities that took place over decades in the region,” and that many measures were taken to improve its environmental conditions that resulted in “a reduction in arsenic concentrations over the years.” “While monitoring conducted in 1985 and 1986 recorded high concentrations, results obtained starting in 2015 already indicated significant improvements, with values below the reference limits established by current environmental legislation,” the statement said. (Read the full statement here.) Paracá’s gold mine grew alongside streams. Today, very few of its natural characteristics remain, and its water is polluted with arsenic, according to a technical report. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Eduardo Rodrigues de Araújo’s home illustrates the daily reality for residents caught amidst Paracatu’s rapid industrial expansion. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. The local quilombola community also claims that a major mine expansion over 15 years lowered the water table of the local aquifer and transformed their territory, called Machadinho, into a big lake of mining residues. “Even if mining were to cease today, it would take at least 100 to 200 years for the watersheds to rebalance and reach a new state of natural stability,” states the report on the lawsuit. “We can’t go back home anymore because our land has become uninhabitable,” said Gilvan Lopes de Oliveira, a local who left his house in the quilombola community and moved to the city. “There’s no fresh water. The valleys have been buried. The mountains and fields, where we used to grow our medicinal plants, where the fruit trees stood — the piqui, the mangaba, the guabiroba — all of that is buried or has turned into a giant crater. How can anyone live in a crater like that? Everything is uninhabitable, everything is poisoned, everything is ruined.” Kinross recognizes that lowering the water table is a “common practice in open-pit mining operations,” but highlights that it has authorization for it and regularly reports about flow and water quality to the authorities. “From the perspective of public water supply, it is important to note that approximately 95% of the water supplied to the population of Paracatu comes from the Ribeirão Santa Isabel watershed, which is not affected by Kinross’s operations,” the company said. While Paracatu’s water was impacted by expanding mining in urban areas, Paracatu’s farms also saw an increase in water usage through irrigation pivots — a system in which a long sprinkler arm rotates around a fixed central point to irrigate crops. It started in the ’70s, with a project supported by the federal government that aimed at transforming this region into a hub for high-yield irrigated agriculture, but has expanded beyond the original project. “The municipality of Paracatu currently has 86,000 hectares [212,510 acres] of irrigated farmland, encompassing the watersheds of its two rivers, the Paracatu and the São Marcos,” Vieira said. This is an area slightly larger than the U.S. city of Austin that collects water from nearby sources and pumps it to the fields, enabling cultivation and multiple harvests even in dry periods, such as in Brazil’s Cerrado. The environmental cost, though, is high, according to a study. “The intensive use of the watershed for irrigation has contributed significantly to the decline in river flow, causing major conflicts,” the authors wrote. “We can’t go back home anymore because our land has become uninhabitable,” said Gilvan Lopes de Oliveira, a local who left his house in the quilombola community and moved to the city. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Captured from above, the sheer scale of Kinross’ open-pit mine in Paracatu dominates the landscape, illustrating the stark proximity between the industrial crater and the city’s residential neighborhoods. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. 80% of Paracatu has water conflicts To say that irrigation caused “conflicts” is not something merely abstract: Since 2006, the state government of Minas Gerais has formally declared 110 areas of water conflict in the state, which means that, in these areas, it is impossible to obtain an individual license to use superficial water resources, according to 2024 data. “The water conflict areas in Minas Gerais don’t necessarily mean a fight between you and me. It’s a struggle — there’s greater demand for water than there is water available,” Vieira said. In total, water conflicts in Minas Gerais cover 26,000 square kilometers (10,038 square miles). In these areas, each individual user needs to join a collective management committee to negotiate with others how much water each one can withdraw, especially during droughts. The state also declared 39 quadrants as groundwater restriction and control areas, in which the water table is being exhausted as a source to wells — 35 of the 39 are places in which the demand already exceeded 100% of the reserves. Seen on a map published by public authorities, both categories of water restriction areas are mostly located in the west of Minas Gerais — and Paracatu seems to be at the center of this issue. Considering the Minas Gerais territory, around 90% of it is free of water conflicts. But in Paracatu, the ratio is only 20%. “There are restrictions on both groundwater and surface water in the region,” said Tobias Tiago Pinto Vieira, president of the Paracatu and Urucuia River Basin Committee. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Atlas’ data center is expected to be located in the same plot of land where “Atlas’s projects currently are in operation and/or under development in the Paracatu region,” according to the plans provided by the company to the Brazilian government. It’s located 30 km (18.6 mi) from the Neto’s urban neighborhood and about 15 km (9.3 mi) from the quilombo Cercado and Buriti da Conquista settlement, in the countryside. The coordinates reported to the government place the data centers exactly in the limit of the Córrego do Engenho Velho water conflict area and 6.4 km (4 mi) from an area with 100% underground water restriction that overlaps with another water conflict area. “The springs are already exhausted, they just can’t handle it,” said Jueli Cardoso Jordão, an engineer who works on planning farm activities and management. Jordão criticizes even the mere possibility of considering an increase in demand, “especially since there’s already a water management plan in place to reduce consumption in this region.” Atlas didn’t disclose in the documents or to Mongabay and Intercept Brasil the amount of water needed for its projects or where it would collect this water. “Depending on where the data center draws its water from, it will have to enter these conflict zones and follow a very specific procedure to determine whether it can use the water or not. It may never be able to use the water at all,” Vieira said. But even in the best-case scenario, where the data center will be supplied by a resource outside the water conflict zones, there are concerns. “Government’s control over water concessions is extremely weak,” said Paraca, the former mayor. “There are areas where people have an individual water license but are still unable to use it because the volume is too low — a sign that other users are withdrawing more water than authorized.” Atlas’s 1 GW data center in Paracatu could consume up to 1.2 million liters of water per day at full capacity to meet the efficiency standards established in REDATA, a new bill approved by Congress in early September that offers tax incentives for data centers that use less water. In total, that’s 438 million liters per year, assuming the data center achieves the benchmark Water Usage Effectiveness (WUE) threshold proposed under REDATA. The volume would be enough to supply water for Paracatu’s population for a month. In its statement, Atlas Renewable Energy said “as a non-negotiable principle of the company, decision-making regarding the advancement of any project rigorously considers the local impact, the availability of resources, and the socio-environmental feasibility of the region.” Massive irrigation systems draw heavily on local water resources to sustain expansive agribusiness operations across the region’s dry landscape. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. “The springs are already exhausted, they just can’t handle it,” said Jueli Cardoso Jordão, an engineer who works on planning farm activities and management. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. New solar panels feeding data center One of Atlas’ solar power plants in Paracatu sits on the left side of a dirty local road that connects the urban area to the quilombo Cercado and the Buritis da Conquista settlement. Called the Luiz Carlos Solar Complex, it’s now operating on a plot of over 1,300 hectares (3,212 acres) of solar panels and a power station, and it will supply the new data center on the other side of the road. The land for the new venture is currently an empty plot, but by July 2030, it is planned to house 13 buildings filled with supercomputers designed to handle and process data for “major global AI and cloud companies,” among other applications. To build the 1-gigawatt data center, Atlas will invest 35 billion reais ($6.8 billion). Behind the project lies a strategy that several energy companies operating in Brazil are adopting: Creating demand for their own plants. Atlas reports that it had to cut power generation at its Paracatu facilities by nearly 40% in 2025 (37.6%) due to curtailment — mandated generation cuts by authorities to balance power demand. Data centers, which are highly energy-intensive, have become a solution for these companies. The Luiz Carlos Complex, to which the data center will be connected, however, has an installed capacity of 661.5 MW. It will likely need to expand its solar panels to generate more electricity to feed its 1-gigawatt data center. The company already has an environmental license to develop a new solar power plant in the same location, but it has an even more ambitious plan, disclosed in the documents sent to the Brazilian Mining and Energy Ministry. The presentation projects that data centers in Paracatu could incorporate a third plot of land, entirely inside water conflict areas. Atlas also asked for a license for a 1 GW data center in Janaúba, in an even drier area of Minas Gerais, in the Caatinga biome, and it is planning a unit close to Belo Horizonte, the state capital. “Maybe Janaúba has an even more serious water problem, as they are in fact in a semi-arid region. If you go there, you’ll pass by many watercourses completely dry,” Paraca said. “We have many long-standing water conflicts in the municipality and the region,” Almir Paraca, a former Paracatu mayor, said. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Paracatu’s State Park preserves water and humidity Paracatu is making efforts to improve water security. Recently, the Paracatu State Park, a conservation unit created in 2011 as an environmental compensation for damages caused by Kinross, incorporates within its boundaries the headwaters that supply the municipality. “It’s a marsh headwater, it flows from several different places,” said Paulo Bruno Pereira Brito, an environmental monitor at Paracatu State Park. “It’s not like a spring that flows from a single spot. The marsh springs from several points and gradually forms a pond.” Before it became a park, the spring had been dammed and was a fishing spot. Many residents fished in the park, which was open and easily accessible, but that isn’t allowed anymore. “Today the water resource is protected,” Brito said. Looking from the ground, the headwater is surrounded by forest and home to Cerrado birds. But the view overhead from a drone flight, you see crops and irrigation pivots 500 m (1,640 ft)) outside the park boundaries. Inside the most dense area in the park, other small streams are being preserved. But the expansion of agribusiness is leading to new deforestation areas around the park that can put it in danger. “When you clear the Cerrado, that rainwater that used to slowly seep into the ground starts to run off, turns into a torrent and washes away,” Paraca said. “Likewise, without vegetation, the soil — which is very sandy here — is exposed and erodes very easily and very quickly. This is destroying the watercourses throughout the region, which is why the drought in the northeastern semi-arid region is spreading into Minas Gerais, toward the headwaters.” In the park, Paulo Brito and his colleague Edney Moraes (Timon and Pumbaa, from the Disney “Lion King” movies, as they describe themselves) are doing their job, including fire prevention. “I see progress among small-scale farmers here in the region, around the park,” Moraes said. “They even let us know themselves when there’s a fire nearby, so we can prevent it from spreading.” There was a major fire at the facility in 2016, when it was still being set up. “Today, if a fire breaks out here inside the park, just imagine what it would look like. It all comes to an end, right? Even the water. If a spring dries up, next year there won’t be a single drop of water left. I don’t even want to think about it,” Brito said. Paulo Brito, left, and his colleague Edney Moraes are the guardians of the Paracatu State Park, a conservation unit created in 2011. “Today, if a fire breaks out here inside the park, just imagine what it would look like,” Brito said. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Bordering the urban neighborhoods of Paracatu, the massive open-pit gold mine serves as the region’s primary economic engine, while remaining a focal point for ongoing environmental and health controversies. Image by Jerônimo Gonzalez/Mongabay and The Intercept Brasil. Banner image: Illustration by Giovana Abreu/Intercept Brasil. This story was published in partnership with The Intercept Brasil, with support from the Pulitzer Center’s AI Accountability Network. Wind energy surplus fuels unregulated data centers in Brazil’s dry land Brazil’s unique data center boom rides on clean power despite social burden FEEDBACK: Use this form to send a message to the author of this post. 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