Brazil remakes the railroad map

The Brazilian railroad map is going to change. Today, nearly 3,000 kilometers of works on rails are in progress throughout the country, which will expand the capillarity of the existing network. Within the next four years, more than US$ 22 billion should be invested in this segment. In the Northeast region, Nova Transnordestina – investment initially budgeted to US$ 3 billion – and that will be extended along 1,728 kilometers to connect the city of Eliseu Martins (PI) to Ports of Suape (PE) and Pecém (PE) – is advancing.

According to the last PAC balance, announced this month, the railroad 522-km section in the state of Pernambuco, from Salgueiro to Port of Suape, has almost 50% of the infrastructure works and 38% of artworks already completed. The delivery of the railroad, expected for 2014, could create a new option of transport for the new agricultural border of the states of Maranhão and Piauí, and attract new freight types, such as cement and fuel.

As an enterprise of the state-owned company Valec, Ferrovia Norte-Sul – which has been designed to interconnect the Midwest and Southeast regions – has approximately 1,300 kilometers of works. The 855-km South I section, between cities of Palmas (TO) and Anápolis (GO) is 95% completed and the delivery is expected for July. By its turn, the 682-km South II section between Anápolis (GO) and Estrela D’Oeste (SP) has more than 15% of works completed and its inauguration is expected for June 2014. This railroad may have impact on agribusiness activities, as it will be capable of carrying 20 million tons of grains within ten years, states Luiz Fayet, Consultant at CNA (National Confederation of Agriculture).

In parallel, Valec is also working in the construction of Fiol (Ferrovia Integração Oeste-Leste) railroad, connecting the city of Ilhéus, in the seacoast of Bahia, to Figueiropólis, Tocantins, thus crossing Bahia from east to west.

The two new Valec railroads will bring a novelty to the regulatory milestone in the sector: the state-owned company should be responsible for the infrastructure and maintenance in the sections, while operators and users could buy freight capacity, trains and cars for carrying their products, by paying the right-of-passage to Valec. “This reinforces the role of the investor user, which should become an important player in the sector, thus opening a new source of funding,” says Luis Baldez, Chairman of ANUT (National Association of Freight Users). At Fiol, one mining company has already assumed the compromise of buying ten million tons to be carried in the new railroad.

In the Midwest region, ALL is investing US$ 415 million in the expansion project of its North network, by constructing 260 km of rail track between the Alto Araguaia Terminal and Rondonópolis (MT). This year, US$ 83 million should be invested for the enterprise completion, which should start in commercial operation by the end of the year. This will enable using the modal for transporting the crop early in 2013. By using the railroad, the producers should earn gain ranging from US$ 16.5 to US$ 19 per ton of grains, when compared with road transport.
Operation in the first phase of the work, between Alta Araguaia and Itiquira, has been recently started. This region had no railroad logistics, and most of the production was transported on BR-163 Highway. The current transportation capacity is 1 – 1.5 million tons of corn and soy. By the end of 2012, according to Eduardo Pelleissone, Superintendent Director, it will be delivered the final section of the work, which will enable greater proximity with the farmers of Rondonópolis, one of the largest agribusiness frontiers in the Midwest region. The project has been fostering investments in other links f the chain.

An area of 400 hectares for terminals alongside the railroad has already exhibited great demand by companies. The current estimation of availability is 20 hectares only. This will be one of the most complex intermodals of the country, with transshipment terminals for grains and fertilizers, and soy bean grinding companies, states Pelleissone. The railroad may be also an option for cotton producers of Mato Grosso, which currently have access by roads only, and for food manufacturers located in the region. Another potential freight that can be carried on rails is biodiesel, for which Mato Grosso is one of the greatest producers. “With the operation start-up of this section, we count now on the connection to Rondonópolis, and will stay closer to the biodiesel production areas, thus enabling us growing in this segment, which is still incipient,” he emphasizes.

MRS is also preparing investments. This year, they should amount to approximately to US$ 900 million, with an increase of 32% over 2011. The key projects are the deployment of the new signaling system (CBTC); acquisition of track equipment for modernization of the maintenance processes; conclusion of the East Segregation for improving the access to Port of Santos; utilization of new GE locomotives, manufactured in Contagem (MG), to increase transportation capacity; and delivery of the first machines for the Rack-and-Pinion System, located at Serra do Mar mountain range, between the cities of São Paulo and Santos.

The operator expects to start this year the operation of new locomotives produced by Stadler Rail, Switzerland, for the Rack-and-Pinion System. The two first machines, from a total order for seven machines, are expected to arrive in Brazil by the end of August and enter in test activities until December, in an assisted operation regime supervised by technicians of the manufacturer. In January 2013, MRS should receive two other machines, and the last three in March. The replacement process will be gradual, as it is necessary to assure the efficiency of the new machines without affecting the production. Initially, the old locomotives, manufactured in the 1970s, will proceed operating simultaneously with the new ones. The new locomotives will support the estimated production growth for this section, jumping from 500 tons to 750 tons (gross) per trip, with higher operating speed.

In order to increase the production capacity to 500 million metric tons of iron ore in the next four years, Vale is investing in the expansion of its port capacity and in the expansion of Carajás railroad. The second largest mining company of the world should invest more than US$ 2.9 billion to expand the capacity of Ponta da Madeira (MA) port terminal and Carajás railroad: 605 kilometers of rails will be duplicated and the track will be extended in 100 km to be connected to the south mountain range of Carajás.

The company will also interconnect 56 yards along Carajás rails, which should reduce the stop times and enable the trains reaching average speeds up to 80 km/h.