Sep 24, 2021

Contracts Signed to Extend Railroad in Mato Grosso, Brazil

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

The governor of Mato Grosso, Mauro Mendes, signed the contracts earlier this week to extend the Ferronorte Railroad from its current terminus in southeastern Mato Grosso northward into the center of the state. The company RUMO Logistica won the contract and will invest R$ 11.2 billion in the project with the right to operate the railroad for 45 years.

The 730-kilometer extension will start at the city of Rondonopolis and proceed to the state capital of Cuiaba and then northward to the cities of Nova Mutum and Lucas do Rio Verde. The governor indicated that the environmental licenses should be approved with six months and that construction would start six months after that during the second half of 2022.

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. The president of RUMO indicated that they have been working with Ibama (the Brazilian environmental agency) for two years to choose a route insuring that the extension does not impact any environmentally sensitive areas or indigenous lands.

RUMO Logistica already operates the Ferronorte Railroad from Rondonopolis to the state of Sao Paulo and onto the Port of Santos in southeastern Brazil, which is Brazil's largest port. 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.

Mato Grosso is Brazil's largest producer of soybeans, corn, cotton, and cattle and this extension will position RUMO into the heart of grain production in the state.

In 2015, RUMO acquired America Latina Logistica (ALL) and two years ago, they won the right to complete the North-South Railroad in central Brazil.

Governor Mendes indicated that the construction phase will generate 230,000 direct and indirect jobs and he proposed a vocational job training program to fill the new professional jobs that will be created by this new railroad. He also indicated the possibility of future expansion of the Ferronorte Railroad into other parts of the state.