May 22, 2020

Bidding on Ferrograo Railroad Scheduled for First Semester of 2021

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

The Brazilian Minister of Infrastructure informed So Noticias earlier this week that the bidding for the construction and operation of the Ferrograo Railroad (Grain Railroad) will be conducted during the first semester of 2021.

The 933 kilometer railroad will connect the city of Sinop in northern Mato Grosso with the Port of Miritituba on the Tapajos River in the state of Para. The Tapajos River is a southern tributary of the Amazon River. From that point, grain would be barged down the Amazon River to various ports along the river often referred to as the "Northern Arc" of ports. It is estimated that the railroad will cost R$ 12.7 billion reals and it will take 5-7 years to complete.

When fully operational, the railroad will have the capacity to transport 58 million tons of cargo per year including 31.7 million tons of grain with 83 locomotives and 3,000 rail cars. The railroad will transport soybeans, corn, cotton, fertilizers, and fuel.

Studies concerning the proposed route of the railroad indicated that the railroad must stay in relatively close proximity to Highway BR-163 including through the Jamaxim National Park in the state of Para.

Late last year, the National Land Transportation Agency (ANTT) held the last in a series of public comment meetings in the municipalities of Itaituba and Novo Progresso in the state of Para. Contributions from these public sessions are being incorporated into the railroad proposal.

The Minister of Infrastructure also indicated that bidding is also set to occur for the concession to operate Highway BR-163 from the city of Sinop in northern Mato Grosso to the city of Santarem on the Amazon River as a toll road. BR-163, which is often referred to the "Soybean Highway", is currently the only way that grain from Mato Grosso can be transported to the Port of Miritituba. The winning bidder is expected to invest at least R$ 1 billion to operate and upgrade the highway as a toll road.

The Minister referred to Highway BR-163 and the Ferrograo Railroad as the most important logistical corridor in northern Brazil. The state of Mato Grosso is Brazil's largest producer of soybeans, corn, cotton, and cattle.