The railroad most desired by agribusiness to transport grain from the Midwest is one step closer to becoming a reality. The trading companies Cargill, Bunge, Louis Dreyfus Commodities and Amaggi, in partnership with the business structuring company EDLP, have already submitted their Expression of Interest Proposal (PMI) to the federal government for the construction of the railway section between the municipalities of Sinop, in Mato Grosso Grosso, and Miritituba, in Pará.
The railroad, called by the consortium of trading companies “Ferrogão”, was included in the second phase of the Investment Program in Logistics (PIL 2), after pressure from agribusiness. With an estimated cost of R$ 11,5 billion, 70% financed by the BNDES, the 930-kilometer stretch will have the capacity to transport 30 million tons of grains (soybeans and corn) per year from Mato Grosso to the ports in the North. For agribusiness, this is quite a gain: the estimated freight reduction reaches 40%, depending on market conditions.
With more than 4 pages, the PMI is a detailed survey of the technical, economic and environmental viability of the railway section and will serve as the basis for the launch of the bidding notice. Now, the document must be evaluated by the federal government so that public hearings can then be called. Finally, the study will be forwarded to the Federal Court of Accounts (TCU).
“It is an important milestone for us”, says Maurício Muniz, secretary of the Growth Acceleration Program (PAC) of the Ministry of Planning, referring to the unlocking of the logistics agenda. Proposals have also been filed for the stretches from Barcarena (PA) to Açailândia (MA), by Triunfo Participações, and from Estrela D'Oeste (SP) to Três Lagoas (MS), by J&F, the holding company that controls JBS (animal proteins) and Eldorado (pulp and paper).
In the case of “Ferrogão”, the expectation of the consortium is that the notice will be published in the first half of next year. If the concession takes place in 2016, the project would start operating in a period of five to seven years, that is, until the 2022/23 harvest.
“We want the railroad to come out [of paper]. We made the most 'bidable' study possible and if someone with vision or competitive resources invests in it, that's great. But we want the railroad”, says Paulo Sousa, director of grains and processing at Cargill in Brazil. According to the executive, around 30 grain flow routes were analyzed over a year by the consortium until reaching the conclusion that the railway modal, along the lines presented at the PMI, would be the most interesting way to transport grain from the Center- West.
Leaving from Sinop, in the mid-north of Mato Grosso, the railroad should “go up” through the area of influence of the BR-163 until reaching the river district of Miritituba. From there, the idea is for the cargo to go on barges to the ports of Santarém and Barcarena, in Pará, and Santana, in Amapá.
Named Pirarara, in honor of the Amazonian fish, the trading companies' plan to enter the rail transport segment came to light at the beginning of last year. But Cargill, Bunge, Dreyfus and Amaggi had already joined the EDLP a year earlier, in view of the delays in the BR-163 works and the saturation of the routes to the South.
Agribusiness was also apprehensive about the change of command at ALL “a delicate moment for any major freight user in Brazil”, says Sousa and Brasília's efforts to advance in rail concessions. For the flow of grains, the trading companies thought it best to create their path.
Three options are considered by the consortium: an investor paying the entire cost of the project; an association with another company (with the trading companies and EDLP as minority shareholders); or paying all the necessary contribution. The second alternative is preferred.
According to Guilherme Quintella, president of EDLP, if the consortium retains the railway concession, it will act independently, with no ties to the companies.
The study funded by trading companies and EDLP was the only one presented for the Sinop-Miritituba stretch. Another group that had initially manifested itself was UTC involved in LavaJato and, therefore, with the focus on other matters at this time.
Source: Valor Econômico
By: Bettina Barros
