Rumo starts operation

Even before making an agreement for the entry of a future investor, which is to be set in the coming weeks, Rumo Logistica, currently 100% controlled by the Cosan group, is already on track. The company has started  operations earlier this month, using the trains and cars of ALL, to haul sugar between the interior of Sao Paulo and the port of Santos (SP),said the company’s president, Julio Fontana Neto.

The company is negotiating the entry of a strategic partner that could take up to 35% of their capital, according to previous announcements. There are early talks with two potential partners working in the field of infrastructure, but Fontana  added he can run the business alone if a settlement is not reached.

The goal is to move 10 million tons of sugar per season – a third of the total production of the Center-South of the country – by 2013 and reach between 15 and 18 million with future contributions, generating an annual turnover of US$ 500 million. In this first year of operation, Rumo plans to move towards the 5 million tons of sugar by rail. Fontana, who for 12 years was CEO at MRS Logistics, is spearheading this ambitious project.

Rumo is in a hurry. The company has started up ordering 50 AC locomotives and 729 cars, which total investment of about US$ 242 million. The GE plant in Contagem (MG) will be responsible for the assembly of the locomotives. Amsted-Maxion and Randon will deliver the cars in proportion to two-thirds and one-third each, respectively. “We will receive 32 engines this year and another 18 by the end of the first half of 2011”, said the executive.

According to Fontana, the inicial thought was to acquire 78 second hand locomotives, 3000 HP each. The company decided to change to 50 AC brand new locomotives, 4400 HP. “We will have advantages such as reduction in fuel consumption, less emission of pollutants, among others”, he said.

In the second half of next year, the executive wants to be with the entire fleet operating at 100%. And he expects that the investments in improving and doubling the track, including duplication of rail sections, will be well advanced. Brazil is the biggest producer and exporter or sugar in the world.

The company has made applications for environmental permits to duplicate stretches of the railroad that connects the city of Itirapina to Santos, which has 330 km, and the construction of a large terminal in Itirapina. The company also has operations in Sumaré (Airosa Galvão) and Pradópolis. Sumaré had its section of 180 km duplicated. The trucks will bring sugar from a 300 kilometer radius.

Currently, about 15% of the sugar production in the country is drained by trains. Trucks account for 85% of the transport of the commodity to the ports. In the future, this equation should be reversed. According to Fontana, 30% and 35% of the volume sold will come through Cosan sugar production. Two-thirds come from other producers of the commodity.

The Rumo project has an estimate cost of US$ 672 millions, of which about 80% will be financed by BNDES, through Finame, with interest of 4.5% per year for 10 years.