At the end of September, Brazil will launch public consultation on Ferrogrão railway project that will create a railway corridor for commodities. The rail is 1,142 km long, connecting the grain producing region of the Midwest with the State of Para, ending at the Miritituba Port (in the Northern region of Brazil). The envisaged investments in the venture, a “greenfield” project, are estimated at BRL 12.6 billion (USD 4 billion), including earthmoving, waterway structures and drainage, railway superstructure, complementary construction, special engineering structures, environmental compensation, expropriation, rail signaling systems and energy, railway equipment, offices and facilities, job site, engineering and rolling stock.
The line that will be constructed mostly for transport of grain, it will have a length of 1142 km and after its completion, the line will allow transport up to 20 million tonnes per year of grain by 2025, cutting the costs by 40%. It is estimated that the total railway cargo demand will reach to 42.3 million tons in 2050.
The estimated time for the concession is 65 years and the rail concession must be published at the beginning of 2018 with a contract awarded in the third quarter of 2018.
Under the project, the government may grant the winner of the concession exclusive rights to operate along the rails to compensate for USD 4 billion in needed investments. Cargill Inc, part of a group of grain trading companies, is analyzing the project on the construction of the line.
At the end of last year, Shanghai Pengxin Group, said, during a meeting with President of the Republic Michel Temer, that is interested in the railway’s concession contract. The Chinese group has been operating in Brazil as the controller of Fiagril, a company that processes and exports grains.
The corridor that will include the Ferrogrão (called EF-170) and BR-163 highway will open a new route for the export of soybeans and corn in Brazil. Currently, more than 70% of crops from the state of Mato Grosso pass through the Santos Port (in the state of São Paulo), and Paranaguá Port (in the state of Paraná) – more than 2,000 km apart from the origin. These circumstances make this an extremely important project within the system of cargo logistics in the country, a differential for its attractiveness to potential investors.
The project is included in the Logistics Investment Program that, in railway sector, involves a new model of investment and exploration of railways, breaking of monopoly in the provision of rail transport services, as well as the expansion, modernization and integration of Brazil’s railway network.