May 08, 2015

Railroad connecting Mato Grosso to Amazon River moving Forward

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

Plans are underway in the state of Mato Grosso to complete the long anticipated Ferronorte Railroad all the way from the southeastern corner of the state northward to the Amazon River. Once completed, it would be a continuous rail line linking the Amazon River with the Port of Santos in southeastern Brazil, which is Brazil's largest port. It would allow farmers and grain companies in Mato Grosso to ship their grain by rail either north or south instead of the current system of shipping their grain primarily by truck to ports in southern Brazil.

The existing Ferronorte Railroad enters the southeastern corner of the state and extends 360 kilometers to the city of Rondonopolis. Along this route there are four grain terminals located at Alto Taquari, Alto Araguaia, Itiquira, and Rondonopolis. The largest complex by far is the intermodal grain terminal at Rondonopolis, which is the largest in Latin America. Most of the major grain companies already have operations at Rondonopolis including: Bunge, ADM, Cargill, Maggi, and Noble with more to come.

Funding has already been approved to extend the railroad another 220 kilometers from Rondonopolis to the state capital of Cuiaba at a cost of R$ 1.36 billion reals.

The third phase of the project would link the state of Mato Grosso with a port city on a tributary to the Amazon River. The Brazilian government intends to initiate the bidding process for this phase of the railroad yet this year. The proposed project is to build a 900 kilometer railroad from the city of Sinop in northern Mato Grosso to the city of Miritituba in the state of Para. Miritituba is located on the Tapajos River, which is a tributary to the Amazon River, and is the site where seven grain companies are in the process of building barging operations that will transport grain produced in Mato Grosso to various ports on the Amazon River.

The ports on the Amazon River and along the northeastern Atlantic Coast of Brazil are part of what is being called the "Northern Arc" of ports in Brazil that will eventually handle as much as 50% of Brazil's soybean and corn exports.

The proposed railroad linking Mato Grosso with the Amazon River would be built alongside of Highway BR-163 (Brazil's Soybean Highway) which is in the process of being asphalted from Mato Grosso to the city of Santarem, Para, which is a port on the Amazon River. The highway also runs alongside of the city of Miritituba which would give the grain companies the option of either shipping the grain by rail or truck to the new barging operations.

The last phase of the project would be to then complete the railroad from the city of Sinop to the state capital of Cuiaba, which is a distance of 500 kilometers. Once the entire project is complete, the railroad would extend 1,980 kilometers through the states of Mato Grosso and Para.

Moving soybeans north to the Amazon River is expected to save at least 30% on transportation costs and it could reduce the shipping time from Mato Grosso to foreign customers by as much as one week.