Oct 01, 2013

Brazil Playing Catch Up on Infrastructure Development

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

President Dilma Rousseff was recently in Rondonopolis, Mato Grosso to inaugurate the completion of 260 kilometers of the Ferronorte Railroad and the opening of the intermodal grain terminal in Rondonopolis. The railroad, which links southeast Mato Grosso with the Port of Santos in southeast Brazil, is the only railroad presently servicing Brazil's largest grain producing state. With the completion of this latest section, America Latina Logistica will now start transporting grain from the huge intermodal grain terminal under construction just south of the city. At full capacity, the terminal is expected to move 20 million tons cargo annually including grain, wood products, fertilizers, processed meats, and other products.

Within the complex there will be a soybean crushing facility and biodiesel plant operated by Noble as well as grain loading facilities operated by all the major international grain companies - Cargill, Bunge, ADM, and Maggi. Bunge and ADM already operate crushing facilities in the city and they will use the grain terminal to load-out soybean meal and soybean oil destined for the Port of Santos. The complex, which will be the largest in Latin America, will include a hotel, restaurants, shopping center, and other facilities for the thousands of workers and trucks expected at the facility on a daily basis.

The next phase of the Ferronorte Railroad is to extend it northwest another 220 kilometers to the state capital of Cuiaba. From the capital, the plan is to continue building the railroad all the way to the Amazon River and the port city of Santarem, a distance of 1,700 kilometers. Economic and environmental studies concerning the Rondonopolis/Cuiaba section of the railroad are expected to be completed by next April when construction bids will be evaluated.

The Cuiaba/Santarem section will be discussed at an open forum in the city of Sinop, Mato Grosso on October 1st. When the last section is completed all the way to the Amazon River, grain produced in Mato Grosso could head north the Amazon River at a much lower cost than shipping the grain to ports in southeastern Brazil. This last section is the most expensive part of the railroad and Chinese company officials have been in the region doing preliminary engineering studies to assess the feasibility of the project.