The railroad concession process in Brazil attracted the interest of twenty groups – even new companies in the sector entered the dispute. This is the case, for example, of JSL (logistics), Votorantim (metals), Norsk Hydro (aluminum) and J&F (owner of the protein producer JBS). Despite this, most of the studies of companies have not even started yet and executives are already commenting: they are going to ask the government to postpone the deadline for delivering the surveys.
The authorization from the Ministry of Transport, granted in August, refers to six stretches (see map). Companies can offer, within eight months, their final surveys to Planalto to support the bidding notices. The government gave this responsibility to the companies after the studies originally commissioned by Brasília were criticized by the private sector for allegedly underestimating investments.
In all, 71 authorizations were granted and, in each stretch, there are from nine to 14 authorized groups. But only one survey will be chosen by the government in each batch. The surveys must include basic, project, environmental impact, budget and physical schedule studies of the undertakings. Subsequently, the winner of the future concession will have to remunerate whoever carried out the study of the section. The cost of each withdrawal, of up to R$ 20 million, is a limiting factor. Despite the various authorizations, companies are not obliged to make or deliver the projects (some executives mention that there will only be four or five studies per stretch).
In any case, the list reveals who is interested in the sector – despite the fact that no one has yet decided to participate as a future concessionaire.
Fernando Simões, president of JSL (formerly Júlio Simões Logística), is one of those involved in the process. In an interview with Valor, he says that the company does not currently operate in railroads, but that it has an “obligation” to evaluate opportunities in the sector. With consolidated revenues of R$ 5,2 billion in 2013, the company asked to study the six lots available (and was authorized in all cases) and will now give priority to those with the most demand. “We noticed that, in some of these lots, there are clients operating in the region. In other cases, there are potential customers. We observed opportunities and are now evaluating whether we are going to study and on which lots we are going to carry out the studies”, says the executive, mentioning eventual industrial and agribusiness clients as potential users of its stretches.
Simões recalls that the railways are still being evaluated by the company – JSL may or may not operate in the sector. Even so, he does not rule out becoming an investor (concessionaire) of the modal. “JSL is made up of business units in which you invest as long as there is economic and financial viability and there is guaranteed demand. And the railroad is still a business with this vocation”, he says. Even so, and even taking into account that the demand for each stretch is guaranteed by the State, Simões says that – if he becomes an investor in railways – he will give priority to stretches that are of natural interest to the market. “There is no healthy business that can sustain itself only from the government”, he says.
Norsk Hydro, of Norwegian origin, is also authorized to study and has a specific interest in the railroad between Açailândia (MA) and Barcarena (PA). In Pará, the company today extracts bauxite in the city of Paragominas and then forwards it to refining and production of primary aluminum in Barcarena. According to Hydro's executive vice-president, Alberto Fabrini (responsible for the bauxite and alumina area), the company wants to act as a railroad user in the future.
Ana Paula Paiva/Valor
“Our interest in supporting this stretch meets our needs in relation to the ore that is mined in Paragominas and transported to Barcarena, thus making us one of the main users of the railroad, not only for transporting bauxite, but also other inputs. ”, says Fabrini via email. According to the executive, the stretch would also serve the new factory in Barcarena da Cia. of Alumina do Pará (CAP), "which is on hold (waiting) due to the current situation of the aluminum market in the world". Currently, the company says it is looking for partnerships to contribute “with a high-quality engineering study, to make the concession and operation of the railroad technically and economically viable”.
Another interested party (on the same stretch) is Votorantim. The group claims to be a “potential user” of the North-South Railroad, which will serve the municipality of Rondon do Pará (PA). There, the company owns the Alumina Rondon project (an integrated alumina refinery and bauxite mine project that is expected to start operating in 2017). In the environmental licensing phase, it is one of the main investments of the group in Brazil. "The company's interest is due to the competitive advantages that the railway modal will give to the enterprise and to the southeast region of the State of Pará", he informed through a note. Each company can try to influence the layout of the stretches to meet their respective demands. Both Norsk Hydro and Votorantim are interested in being users, not concessionaires.
The contractor Galvão Engenharia is associated with Mendes Júnior and Promon Engenharia at this stage. “We believe that we have the conditions to make the best projects”, says Carlos Fernando Namur, vice president of infrastructure at Galvão. The group selected two stretches to study, with the justification that they know the regions: Belo Horizonte (MG) to Guanambi (BA) and Estrela D'Oeste (SP) to Dourados (MS). This last passage attracts special attention. “It is a very necessary railroad. We imagine it to be a priority [for the country],” he says.
Furthermore, Galvão confirms its interest in participating in future railway auctions. “Without a doubt, we want to compete for others as well [in addition to those already studied]”, he says. The most advanced tender is for the Lucas do Rio Verde (MT) to Campinorte (GO) stretch, which already has studies ready and is not the target of new surveys. “We are following it closely, because it is a hell of an investment effort. Depending on the conditions, we are interested [in this line]”, he says. The company still hopes, for example, that the government will add more guarantees of payment from the State to the investing company.
Owner of the largest protein producer in the world, J&F Investimentos also does not operate in railroads, but is on the list of new interested parties. At this stage, it participates in partnership with Carioca Christiani-Nielsen Engenharia and Concremat Engenharia e Tecnologia. J&F began to compete more frequently for infrastructure assets. It is already in energy and competed this month (but did not win) the Tamoios highway (in São Paulo). As Valor found out, the company is interested in becoming a railway concessionaire.
Companies such as Triunfo Participações e Investimentos, EDLP, Alusa Engenharia, Queiroz Galvão, Andrade Gutierrez, CR Almeida and Progen are also studying the sector. The government already has a lot ready for concession, but it has not yet been released. It is waiting for interested parties. Without being accredited for studies, Camargo Corrêa closely analyzes the first auction.
Source: Valor Econômico
By Fábio Pupo | From Sao Paulo
