Vale to invest R$ 3.5 billion in FCA and Terminal

Vale plans to invest R$ 3.5 billion over the next four years in the increase of the transport capacity of two important assets of the group: the Central Atlantic Railway (Ferrovia Centro-Atlântica – FCA) and the Ultrafertil Maritime Terminal (Terminal Marítimo da Ultrafertil – TUF), in the city of Santos, in the state of São Paulo. According to the General Cargo Logistics Director of the company, Marcello Spinelli, the plan is to invest in four new railway terminals in the countryside of the state of São Paulo and also in Minas Gerais, as well as acquiring more trains and expanding the TUF, with the construction of three more berths as well as the one in existence. The FCA cuts across seven Brazilian States, the four in the Southeast and also the states of Bahia, Sergipe and Goiás.

The investments are subject to approval from the company’s administration board, and part of the cash shall be obtained from commercial partners and part from own resources. Vale’s aim here is that of strengthening the presence of the port terminal in the handling of agricultural products, especially the sugar coming by rail from the Western part of the state of São Paulo and also from the Minas Gerais Triangle, which should become the second most important cargo of the FCA in terms of volume handled.

This terminal [TUF] has a unique power of connection with the railway, as it does not have any interference from the city. This was the missing piece to complete the rail corridor of the FCA to Santos, says Mr. Spinelli. The TUF was acquired by Vale with the purchase of Ultrafertil last year and the formation of a joint-venture with Vale Fertilizantes for the exploitation of the TUF concession. Vale shall have 51% participation in the joint venture, with the payment of a sum of R$ 150 million to Vale Fertilizantes, and a cash injection of R$ 432 million to finance the investment plan for this terminal.

Nowadays, the terminal is exclusive for importation of fertilizers in general. With the construction of three new berths, the terminal shall have the capacity to handle loose cargo and shall become the largest terminal in the port of Santos. The cargo handling potential shall be up to 16 million tons a year, and all the additional cargo handled shall only be transported by rail. What we shall be building in terms of storage space shall boost the capacity for handling agricultural loose products by 30%, says the executive.

There shall be the expansion of the railway terminals of the Central Atlantic Railway in the São Paulo State cities of Ribeirão Preto and Aguaí – work already started – and São Joaquim da Barra, which should start this second semester. All three should be ready by next April. A terminal shall also be constructed in the Minas Gerais city of Uberlândia. This work should start at the end of the year, with delivery penciled in for April 2013.

The expansion of the port, with larger patios and construction of warehouses, in turn, should be ready in 2015. With this investment, sugar should gain greater significance in the cargo as transported by the Center-Atlantic Railway, says Mr. Spinelli, talking about the agricultural hubs that shall be served by the new rail terminals.

There shall also be the construction of eleven kilometers of railway track inside the TUF, which shall allow the arrival of a train and the offloading of its cargo in a maximum of 6 hours, in a system like a carousel. At present, the offloading of a train’s cargo in the Port of Santos takes 48 hours, as the train is unable to enter without being split, explains the director of Vale.

One of the impacts that are expected with this investment package is the reduction in the number of trucks traveling along the roads of the State of São Paulo. According to a calculation made by the company, the increase in capacity of rail transport could remove more than one thousand trucks a day from the roads of São Paulo. This is an investment of great importance to the State, due to the saturation of road transport, says the State Secretary for Development, Paulo Alexandre Barbosa.

Today, Vale shall be signing a protocol of intentions for these investments with the Government of the State of São Paulo. This ceremony shall take place in the Governor’s Palace (Palácio dos Bandeirantes), with the presence of the state governor Geraldo Alckmin from the Brazilian Social Democracy Party (PSDB). The Government defines its activity as an inducer of investments, making the processes for the execution thereof easier, including environmental licensing, this work currently being executed by public agency Investe São Paulo. The signing of this protocol establishes this collaboration and also opens the possibility of tax benefits which need to be detailed, says Mr. Barbosa.