September 13, 2013

Rondonopolis Intermodal Grain Terminal Enters Preliminary Tests

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

The long anticipated intermodal grain terminal in Rondonopolis in southern Mato Grosso is undergoing preliminary tests and is set to be operating within several months. When fully built out, the 1,000 acre intermodal terminal complex south of the city will be the largest grain terminal complex in Latin America. All the major grain companies in Brazil (Cargill, Bunge, ADM, Maggi, and Noble) will then have operations in the city.

The complex is located at the current terminus of the Ferronorte Railroad which is operated by America Latina Logistica (ALL). ALL estimates that the complex will have the capacity to move 5 million tons of grain annually and combined with the three other terminals operated by ALL within the state (Itiquira, Alto Araguaia, and Alto Taquari); the railroad is expecting to be able to transport 17 million tons of grain per year.

After the preliminary tests are completed, the one remaining obstacle is to obtain the final operating license from the Brazilian EPA.

The grain complex is expected to handle much of the grain production from central and southern Mato Grosso where soybean and corn production has been increasing exponentially in recent years. Record high grain prices over the last three years have encouraged farmers in the state to convert pastureland into additional soybean production and to follow the soybean crop with a second crop of corn. The combination of these two crops has overwhelmed the storage and transportation system in the state and the hope is that this new complex will help to ease the chronic congestion.

The Ferronorte Railroad terminates at the Port of Santos in southeast Brazil. The port is just east of the city of Sao Paulo and there are considerations to reroute what is expected to be an ever increasing amount of grain shipments around the metropolitan area.

Once the Rondonopolis facility is in full operation, the focus will shift to the construction the next 200 kilometers of railroad between Rondonopolis and the state capital of Cuiaba. Eventually, the railroad is projected to proceed north from Cuiaba to the Amazon River port of Santarem, which is an additional 1,700 kilometers further north.