Cargill should invest 350 million BRL in new pier at the Paranaguá port

The American company Cargill, the largest in the agribusiness sector in the world, gives yet another step in to elevate its port competitiveness in Brazil. Two months after acquiring another grain terminal in Santos for 300 million BRL – a consortium with Louis Dreyfus Commodities-, the company may receive from the federal government the lease contract renewal for more 15 years of its terminal in Paranaguá (PR). In exchange, the company promises to invest 350 million BRL in a new pier at the port.

According to Valor’s assessments, Cargill proposed to contribute to the construction of a new pier in the shape of a “L”, which would add two new berths and would elevate up to 10 million tons per year the flow capacity of the export corridor of grains in Paranaguá. The American trading would have priority for docking ships.

“Cargill has signalized that, in case of prorogation of the contract in force, it would perform the investment. And we communicated positively, if SEP [Port Secretariat] agrees”, the President-Director of the Port Management of Paranaguá and Antonina (Appa), Luz Henrique Dividino, stated to Valor.

When asked, Cargill confirmed, through its press office, that it made the presentation of the investment proposal in the port terminal, and that case is currently under analysis in Appa and SEP. SEP states the prorogation request of Cargill’s lease with the investment counterpart is being legally assessed.

Originally, the project elaborated by the Paranaguá management foresaw a pier in “T” shape, parallel to the waterfront and advancing 400 meters inside the ocean. On this format, it would have four berths and would encompass up to 20 million more grains per year. But the cost projection – 280 million BRL in water and 70 million BRL in terminal and interconnection – versus the investment return made the trading adapt and shorten the tracing.

The idea of a pier that would serve the grain export corridor was presented by APPA in 1995, but only gained momentum with the launch in 2012 of a portfolio of investments that would give competitiveness to Paranaguá. The project was not developed for lack of public funds.

The Paraná port loses in volume of agricultural cargo to Santos – 18 million tons of grain were shipped in 2015, against 33 million tons in Santos – and it witness the port of Rio Grande (RS) gain market share in soy and soon will also witness part of the production in the Midwest migrate to the terminals installed in Pará.

In addition, the export corridor, which would serve the pier, reached the limit of 16 million tons of grain handled even after investments in dredging of berths and new shiploaders.

For Cargill, the investment is justified because it would give more efficiency to shipment – reducing the ship queue time – and raise the operating capacity of the trading in Paraná. The company handles 3.5 million tons of grain per year in the Paraná port and prefers the berthing of vessels – but not exclusively, since the pier would be in the public port. More importantly, it would extend the lease for 15 years in Paranaguá.

According to Mário Povia, General Director of the National Agency of Waterway Transportation (ANTAQ), the lease expires in March and it is up to SEP to decide for its extension or not.

By 2010, Cargill owned four areas in Paranaguá, unified by the port authority in Paraná because they are considered hard to operate independently. “With that prevailed one of the existing agreements – one that had the possibility of renewal,” he said. The unification of the areas was approved by Antaq in 2013.

A source close to the government told Valor that the Minister of Ports Helder Barbalho see Cargill’s proposal in a “optimistic” way, citing Brasilia’s efforts in unlocking the positive agenda.