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October 30, 2015

Soy Producers Want Rail Link from Mato Grosso to Amazon River

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

There are numerous railroad projects being proposed in Brazil including one that would go from central Mato Grosso straight north to the city of Miritituba, which is situated on the Tapajos River. This river is a southern tributary to the Amazon River and at that location, numerous grain companies are constructing barging operations that would transport the grain via barge to ports near the city of Belem at the mouth of the Amazon River.

The proposed railroad is still undergoing feasibility and environmental studies and the Brazilian government estimates that the 1,140 kilometer railroad would require an investment of R$ 9.9 billion. The railroad would start at the city of Lucas do Rio Verde in central Mato Grosso and pass through the heart of the state's grain producing region. The proposed railroad would transport soybeans, corn, cotton, meat, and lumber produced in Mato Grosso at a savings of up to 30%.

The construction of this railroad is being promoted by the Soybean Producers Association of Brazil as a way to reduce the high cost of transporting grain. Currently, the cost of transporting grain to export facilities in Brazil is approximately four time greater than in the United States and Argentina. If this railroad is completed, it is estimated that it could transport 30 million tons of grain by the year 2020.

Eventually the railroad could be extended southward to the state capital of Cuiaba where it would connect to the Ferronorte Railroad thus making a continuous rail link from the Port of Santos in southeastern Brazil to the Amazon River in northern Brazil.

A much larger transoceanic railroad is being proposed as well. This "mega railroad" would stretch from Rio de Janeiro on the Atlantic Coast and pass through the states of Minas Gerais, Goias, Mato Grosso, Rondonia, and Acre before entering Peru and ending on the Pacific Coast. This 3,650 kilometer railroad would have a price tag of R$ 40 billion.