This week, the Eldorado Brasil pulp producer presented to the government the project to build a railway under the new regulatory framework for the sector, implemented in August by a provisional measure signed by President Jair Bolsonaro (no party).
With an estimated investment of R$ 890 million, the 89-kilometer stretch will connect its unit in Três Lagoas (MS) to Ferronorte, operated by Rumo LogÃstica, in Aparecida do Taboado (MS). From there, the cargo will proceed to the port of Santos (SP) using only the rail modal.
It is the 24th stretch required after the permission for railroads to be built without the need for a tender, a proposal defended by the Ministry of Infrastructure as an impulse to double the participation of trains in the Brazilian transport matrix to 40% by 2035.
The high demand for new stretches after the change in the rules surprised the government and, according to the GO Associados consultancy, it has the potential to generate about 2.5 million jobs and an effect of R$ 342 billion in the sector’s production chain, with orders of goods, inputs and services.
The estimate is from a study carried out for the ANTF (National Association of Rail Transport) and considers the first 23 projects presented, with an investment of R$ 100 billion. With the 24th, the figure rises to almost R$ 101 billion.
The market expects some project mortality, but the Ministry of Infrastructure says it identifies robust projects in the list, generally associated with port terminals or cargo owners, such as mining and pulp companies.
The special advisor for railways at the ministry, Marcos Félix, says that the number of projects presented right at the beginning of the program was a surprise. “We expected six or seven projects. But in the first week we received 11”, he says.
The now 8,500 kilometers proposed are enough to expand by more than 25% the current Brazilian network, which has 30,000 kilometers.
It can also be an impetus for economic recovery, says the partner at consultancy GO Associados, Gesner Oliveira, who studied the potential impacts of investments on the sector’s production chain and on the job market.
His study considered the input-output matrix of the IBGE (Brazilian Institute of Geography and Statistics) to conclude that each real invested in railroads would generate almost R$ 3.50 along the chain. The 2.5 million jobs would generate another R$49 billion in income effect.
In addition, R$7.7 billion would be paid in taxes by investors responsible for building the stretches.
“This is an investment of great importance, whether for its impact on the economy and, consequently, in strengthening the economic recovery, or for its impact on the infrastructure itself, in particular for agribusiness, in the articulation of modes and in the country’s integration “, it says.
The executive director of ANTF, Fernando Paes, says that, in addition to fostering suppliers already installed in the country, such as wagon and sleeper manufacturers, the high investments can encourage the arrival of new segments, such as rail.
“Brazil has already produced rails, but this industry has ended activities due to lack of demand,” he says.
The 23 requirements create routes that serve 13 states and the Federal District. The Ministry of Infrastructure assesses that there are three types of entrepreneurs: cargo owners, such as Eldorado, companies that already operate railways and port operators.
In the first group, for example, Rumo LogÃstica and VLI LogÃstica. In the second, investors in the ports of Presidente Kennedy and Linhares, in EspÃrito Santo. The third has mining and pulp companies.
One of the projects of the last group is developed by Grão-Pará Multimodal, which plans to connect the railroad to a port terminal in Alcântara (MA) to transport ore and grains. The group, of Portuguese origin, sees a depletion of transport capacity in the region.
“The Carajás Railroad [da Vale, que liga o Pará ao Maranhão] it is getting very congested”, says the executive director of the group, Paulo Salvador. “With the perspective of agribusiness growth in the coming years, the potential of both the railroad and the port is enormous.”
The project foresees 520 kilometers of railway connecting the North-South to a deep-water port, with an estimated investment of US$ 1.5 billion (R$ 6.3 billion at current prices). Salvador says the company has been working on the project for five years and the current forecast is to start operations in 2026.
The authorization for the construction of railways only depends on the analysis of the projects by ANTT (National Land Transport Agency) and on investor appetite. The market, however, sees greater feasibility in those projects that will have dedicated loads.
The government celebrates the high number of requests as a revolution in the country’s railway infrastructure, which has already received high investments in recent years, with the works of Norte-Sul and the renewal of old concessions, which have as counterpart network expansion projects .
Some of the Pró-Trilhos projects are extensions of this process. VLI and Rumo, for example, are fighting for a stretch that will link the interior of Mato Grosso to the North-South through the Fico (Midwest Integration Railroad), whose works Vale assumed in exchange for the renewal of concessions.
This stretch goes to Lucas do Rio Verde (MT), an important agribusiness hub not yet served by the rail modal. If the system is completed, production in the region will be able to go by train to ports in the North or Southeast of the country.
The program, however, still faces questions regarding the criteria for choosing the operator on stretches where there is more than one interested party. The Ministry of Infrastructure initially proposed that authorizations not be denied, even when there are competing stretches.
The Congress debates a bill on the subject, which provides for competition among interested parties in the case of coincident bills. The same view has the representation of the Public Prosecutor’s Office at the TCU (Court of Accounts of the Union), which asked for the suspension of the process but was unsuccessful.
The ministry argues that the ideal would be to grant authorizations for more than one railroad on the same stretch, promoting competition between operators, and not limiting the number of railroads per route. And he cites the North American market as an example, in which there are several branches competing for customers.
“That’s how it works in intramodal competition,” says Felix. “The Brazilian network was not growing because the legal barrier for the market to offer the projects was too great”.
The ministry says that the new projects will benefit the current concessions, as there are feeder sections of the existing grid and others that connect these tracks to new ports, increasing demand for the current infrastructure.
Considered the backbone of the Brazilian railroad system, the North-South Railroad, for example, is in the path of nine of the 23 projects presented to the government.
Felix also assesses that the authorization model could encourage new passenger transport projects, coordinated with real estate projects further away from the big cities, in operations in which the sale of properties would finance the rails, a common model in Japan.
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