May 26, 2015

Viability Studies for Ferronorte Railroad to be completed in August

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Producers in central Mato Grosso have been pressing for a railroad linking the northern part of the state with new barging facilities being built by seven different grain companies on the Tapajos River at the city of Miritituba in the state of Para. The Brazilian government recently announced that viability studies for the 950 kilometer railroad linking the cities of Sinop and Miritituba should be completed by August 8th. The hope is that the process of applying for environmental and construction licenses could begin by the end of the year.

The Mato Grosso Soybean and Corn Producers Association estimates that the R$ 6 billion railroad could eventually transport as much as 30 million tons of grain by the year 2020. The railroad would be built alongside of highway BR-163 (Brazil's Soybean Highway) and would transport soybeans, corn, cotton, meats, and lumber produced in the region to export facilities on the Amazon River.

If and when completed, this would be the third of four segments of the Ferronorte Railroad. The first segment of 360 kilometers linking the southeast corner of the state with the city of Rondonopolis has already been completed. The second phase will be a 220 kilometer segment linking Rondonopolis with the state capital of Cuiaba. The R$ 1.36 billion funding for this segment has already been approved, but there is yet no timetable when the construction will be completed. The final phase of the railroad would be a 500 kilometer segment linking the city of Sinop with the state capital of Cuiaba. If all four segments are completed, there would be a continuous railroad linking the Port of Santos in southeast Brazil with the Amazon River.

Transporting soybeans and corn north by rail instead of south, either by rail or by truck, is expected to save 30% on transportation cost and save as much as a week in getting the grain from the producer to the end user overseas.