Sep 08, 2021
Ferronorte Railroad Expansion in Mato Grosso One Step Closer
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The Ferronorte Railroad linking southern Mato Grosso with the Port of Santos moved one step closer to reality last week. Mato Grosso is Brazil's largest grain producing state and anything that can lower the cost of transporting grain out of the state will make Brazilian producers more competitive in the world market.
Last Friday, RUMO Logistica presented their proposal for the extension of the Ferronorte Railroad to the Secretary of Infrastructure and Logistics for the State of Mato Grosso. The 700-kilometer extension would proceed from the city of Rondonopolis in southeastern Mato Grosso to the state capital of Cuiaba (approximately 200 kilometers) and then northward to the cities of Nova Mutum (approximately 200 kilometers) and then onto the city of Lucas do Rio Verde.
A terminal in Cuiaba is expected to be completed by the second semester of 2025 and the extension is expected to arrive at Lucas do Rio Verde by the end of 2028. If approved, the extension would cost approximately R$ 12 billion and RUMO would have the right to operate the railroad for 40 years. The Secretary has 15 days to accept or reject the proposal. If approved, construction is expected to start within six months.
RUMO already operates the Ferronorte Railroad from Rondonopolis to the state of Sao Paulo and onto the Port of Santos. Nationwide, RUMO operates a 14,000-kilometer network of railroads and port facilities at the ports of Santos, Paranagua, Sao Francisco do Sul, and Rio Grande. They transport soybeans, soybean meal, soybean oil, corn, wheat as well as agricultural inputs such as fertilizers and petroleum products.
In 2015 RUMO acquired America Latina Logistica (ALL) and two years ago they won the rights to complete the North-South Railroad in central Brazil.
The news is not as optimistic for the Ferrograo Railroad in northern Mato Grosso which would link northern Mato Grosso with ports on the Amazon River. The process for approving the railroad has been in "judicial limbo" since March when the Brazilian Supreme Court ruled that President Bolsonaro's did not have the authority to alter the boundaries of the Jamanxim National Park allowing the railroad to pass through.
The Supreme Court stated that the boundary could only be altered through legislation enacted by the Brazilian Congress and not by presidential executive action. The suit challenging the President's authority was brought by groups opposed to the railroad. It is unclear when this impasse will be resolved.