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October 16, 2018

"Grain Railroad" focus of Meeting next Month in Mato Grosso Brazil

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

Everyone who is interested in the construction of the Ferrograo Railroad ("Grain Railroad") is expected at a meeting scheduled for November 26th in the city of Sinop in northern Mato Grosso. At the meeting will be engineers and technicians from the federal government presenting the details of the project and the investments needed for construction. Participating in the meeting will also be political leaders, producers, and investors interested in financing the project.

The 1,100 kilometer railroad will start in the city of Sinop in northern Mato Grosso and terminate at the Port of Miritituba on a tributary to the Amazon River. The project is expected to cost R$ 12.6 billion including the railroad and grain terminals at both ends. Once completed, the railroad is expected to have the capacity to transport 42 million tons of grain on an annual basis.

Brazil's National Development Bank (BNDES) is expected to finance a part of the project with the remainder coming from a consortium of international grain companies, producers, and hedge funds. The majority of the investments (R$ 9 billion) will be concentrated during the first five years of the project.

The event is being organized by the mayor of Sinop in conjunction with the Soybean and Corn Producers Association of Mato Grosso (Aprosoja), the Agriculture and Livestock Federation of Mato Grosso (Famato), the Cotton Producers Association of Mato Grosso (Ampa), the Ranchers Association of Mato Grosso (Acrimat), the Mato Grosso state government, and the Brazilian Ministry of Transportation.

Last month, the directors of Aprosoja indicated to Brazil's Agricultural Minister Blairo Maggi, that they were interested in forming a consortium of producers in the state to finance 50% of the project with the remainder of the investment coming from grain companies and international hedge funds.

Aprosoja is also in discussions with the Brazilian federal government to extend the Grain Railroad further south to the city of Lucas do Rio Verde in central Mato Grosso passing through the municipality of Sorriso, which is the largest grain producing municipality in Brazil. The city of Lucas do Rio Verde would then have the potential to become the intersection of the three railroads projected for Mato Grosso. Grain could be transported from the city north via the proposed Ferrograo Railroad to the Amazon River, south via the Ferronorte Railroad to the Port of Santos in southeastern Brazil, or east via the proposed Integrated Center-West railroad to the Port of Sao Luiz in northeastern Brazil.

It is hard enough getting one railroad built, so building three railroads in the state of Mato Grosso would certainly be a daunting task.