Sector News

Cargill may partner on $4.3 billion rail project, Brazil chief says

December 5, 2017
Consumer Packaged Goods

The Brazilian unit of Cargill Inc is in talks to form a consortium to bid for a $4.3 billion railway project that would unite grain-growing regions in central Brazil with northern ports, the business head said on Monday.

Cargill’s prospective partners to bid for the Ferrogrão railway project include rival grain traders Archer Daniels Midland Co, Bunge Ltd, and Brazil’s Amaggi, said Luiz Pretti, president of Cargill in Brazil, on the sidelines of an American Chambers of Commerce event in São Paulo.

ADM, Bunge and Amaggi did not immediately reply to requests for comment.

Running about 1,100 kilometers (684 miles), the Ferrogrão railway would link grain-producing regions to the river port of Miritituba, helping farmers avoid moving produce by truck on neglected roads.

It would also likely reduce truck traffic along the BR-163 highway, accessed by farmers to ship products through the north, and would be more efficient for grains exporters than using the ports of Santos and Paranaguá in the south.

The government plans to issue a 65-year operating license for Ferrogrão, a system that will have the capacity to move 42 million tonnes of grains annually.

The government’s modeling for the project has not yet been finalized.

There are other groups interested in building and operating Ferrogrão. A government official told Reuters in October that a group of state-owned Chinese firms is planning to form a consortium to bid for the license.

The commodities trader, which has gross sales of 36 billion reais ($11 billion) a year in Brazil, has invested $1.2 billion in the country over the past six years, the executive said.

Next year, Cargill plans a 500 million reais ($153 million) investment in Brazil, with 70 percent going to infrastructure projects, Pretti said.

By Ana Mano

Source: Reuters

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