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Chinese corporations interested in Ferrograo railway in North Brazil

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After meeting the chairman of China’s Industrial Confederation Jiang Zhaobai, Brazil’s Minister of Agriculture, Blairo Maggi, said that Chinese companies are interested to bid in an auction for the right to build and operate Ferrograo railway connecting Sinop (Mato Grosso state) to Itaituba in the state of Para. Jiang Zhaobai is also Shanghai Pengxin Group’s CEO.

The envisaged investments in the venture, a “greenfield” project, are estimated at 12.6 billion reais (around US$ 3.9 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.

It is anticipated that the total railway cargo demand will reach 25 million tons by 2020, a figure that will rise to 42.3 million tons in 2050. The estimated time for the concession is 65 years. Those with potential interest in the project would be trading companies in the agricultural sector that use the corridor for the export of their products.

It is a large scoped venture of undisputable strategic value for the Brazilian economy. The project addresses the expansion of the Brazilian agricultural frontier and the demand for an integrated infrastructure for cargo transport, producing high-impact socio-economic benefits for regions between Sinop (in the state of Mato Grosso), and Itaituba (in the state of Pará). The railway passage qualified in the PPI will fill a pivotal role for the transportation of corn, soybean and soybean meal in the state of Mato Grosso. The transport of soybean oil, fertilizers, sugar, ethanol and petroleum derivatives is also being foreseen.

Industry surveys highlight that estimates by local businesses is to drain up to 20 million tons of Mato Grosso grain through the ports in the Amazon Basin. There are already several investments being carried out in transshipment cargo terminals in waterways and port terminals, with some equipment already operating. By the end of this decade, it is estimated that investments in building these transfer stations, warehouses, terminals and vessels will be more than BRL 3 billion.

When installed, the EF-170 will offer high transport capacity and competitiveness to the corridor – a corridor already consolidating through the BR-163 highway. The project will also ease traffic conditions on that highway, reducing the flow of heavy trucks transporting grain and lowering the costs of preservation and maintenance for the existing highway infrastructure.

The corridor that will include the EF-170 and BR-163 highway will open a new route for the export of soybeans and corn in Brazil. Today, 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 kilometers 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