A new formula for financing, will mean more railways are to be built in Brazil, to be completed much more quickly than in the past.
During the past few decades, the amount of most of the commodities Brazil has produced and exported, has often increased by double figures in a year. But the amount taken to ports by rail, remains at a well below the world average, and stands at about 35%. Most of the rest goes by road, as water transport has a less than 10% share. The 350–400mt (million tonnes) of iron ore exported each year, form a high proportion of the total.
Over the years, numerous efforts have been made to increase the share carried by rail. Notable amongst these has been the 1,500km North–South line as well as the Transnordestina. But although these new lines have been started with great fanfare and enthusiasm by politicians, they have all taken several times the original estimates to complete, and have cost much more than was originally planned.
Even now, the North–South line, first begun in the 1980s, remains incomplete, work having halted on numerous occasions as funds ran out. But with demand for Brazilian iron ore, soya beans, maize, sugar and market pulp, growing steadily each year, a new formula for financing rail building has finally been found.
Brazil’s railway network was privatized about 35 years ago, when three leading companies won concessions. One was mining company Vale, which now operates three lines, and has shareholdings in others. The second is Rumo, whose leading shareholder is the Cosan sugar and energy company, in a partnership with Shell. The third is MRS. The 30-year concessions awarded to these three companies have all expired in the past couple of years, and they all pressed for them to be extended. It has now been agreed that in return for allowing the concessions to be renewed, the three companies should each undertake to build and manage several major new lines.
So Vale, together with the trading companies whose grains and other commodities will use the line, will be the major shareholder in the planned 933km ‘Ferrograo’ line. This new route will link soya- and maize-growing regions in the states of Mato Grosso and Goias, to the riverside port of Miritituba, from where several million of tonnes of grains are now transferred to barges.
Barges take the grains downriver to ports at Barcarena and Vila do Conde, where they are loaded onto sea-going ships. Barges of grains, which have been loaded at up-river ports of Santarem and Itacoatiara, also now transfer their loads at these ports. Rumo is to become a partner in the partly completed Transnordestina line, which is to run west from the Bahia port of Ilheus, to link with the Norte–Sul, while both companies will have a share in the Centre West ‘Fico’ integration line. The logic behind building these new lines, is that they will enable the soya and maize grown in the ‘Northern Arc’ area to reach regional ports much more cheaply than is now the case. Demand for Brazil’s soya and maize is continuing to grow fast, notably for export to China, while the southern states of Brazil are now unable to produce more grains, so any extra will be grown in the north.
At the moment, almost half all Brazil’s grains are still exported via the ports of Santos and Paranagua, some 2,000km from where they are grown. But with road freights rising sharply in the past few years, plus the fact that northern ports are much nearer the fields where the extra grains are being grown, gives the northern ports a growing advantage.
Two other new projects will involve building roads which will run from northern and central Brazil, through neighbouring Bolivia, Paraguay and Argentina, to the Pacific ports of Antofagasta, in Chile and the Peruvian ports of Ilo and Matarani.
A steadily increasing proportion of virtually all Brazil’s higher value exports, as well as iron ore and grains, are now sold to China, and other countries in Asia. Both of these two routes will be about 2,500km long, and they start from the parts of Brazil where a steadily increasing proportion of high value market pulp, as well as beef, pork and poultry are produced.