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November 29, 2019

Expansion of Ferronorte Railroad in Mato Grosso a Step Closer

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The railroad company Rumo Logistica (formally ALL) recently announced that they have been given the green light by the Brazilian government to extend their contract to operate the Malha Paulista rail line, which goes from the Port of Santos across the state of Sao Paulo to the border with Mato Grosso do Sul. Their contract to operate the railroad, which was set to expire in 2028, has been extended for 30 years until 2058.

This development is important for the farmers in Mato Grosso because the Malha Paulista railroad connects to the Ferronorte Railroad in the southeast corner of Mato Grosso. This is the only railroad in the state of Mato Grosso and it is an important connection to the Port of Santos, which is Brazil's largest port.

With the contract extension until 2058, Rumo Logistica will now invest R$ 15 billion to upgrade the rail line within the state of Sao Paulo and extend the Ferronorte Railroad further into the center of Mato Grosso.

Currently, the Ferronorte Railroad ends at the city of Rondonopolis, which is located in southeastern Mato Grosso. There are four existing grain terminals on the Ferronorte Railroad with the largest being at the city of Rondonopolis. With the extension of their contract, Rumo now intends to extend the rail line to the state capital of Cuiaba (distance of 215 kilometers) and then from Cuiaba straight north to the cities of Nova Mutum and Lucas do Rio Verde (distance of 332 kilometers), which are centers of grain production in the state. Included in the expansion will be three new terminals for grain and industrial products.

So Noticias is reporting that Rumo is already scouting potential routes for the new rail line and the locations of the new terminals. For the part of the railroad that goes north from the city of Cuiaba, the route will likely be in close proximity the Highway BR-163, which is often referred to as the "Soybean Highway."

The state of Mato Grosso is Brazil's largest producer of soybeans, corn, cotton, and cattle and currently 60% of the grain production is transported by truck, which is the most expensive mode of transportation. The extension of the Ferronorte Railroad is expected to lower the high cost of transporting the state's ever expanding grain production.