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September 1, 2020

Ag Expansion in Mato Grosso Supported by Three New Railroads

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

The government of the state of Mato Grosso, Brazil is betting on the construction of three new railroads within the state to insure adequate infrastructure for future agricultural expansion in the state.

First up is the extension of the Ferronorte Railroad from the city of Rondonopolis, which is located in southeastern Mato Grosso, to the state capital of Cuiaba and then north to the cities of Nova Mutum and Lucas do Rio Verde, which are in the heart of the state's grain production region. The railroad is operated by Rumo Logistica and it connects Mato Grosso with the Port of Santos, which is Brazil's largest port.

The Ferronorte Railroad passes through the state of Sao Paulo before arriving at the Port of Santos and Rumo received permission in May to begin renovation of the section of the railroad in Sao Paulo called the "malha paulista." This is one of the oldest railroads in Brazil built during the time of the coffee boom. Rumo is expecting to invest R$ 7 billion in the renovation of malha paulista and another R$ 9 to R$ 11 billion to extend the railroad into central Mato Grosso.

The Ferronorte Railroad currently transports 30 million tons of grain annually and once the extension is completed, it is expected to transport 75 million tons of grain annually.

Second is the Interrogated Railroad of the Center-West or Fico as it is called. The 348 kilometer railroad will connect the city of Agua Boa in eastern Mato Grosso with the city of Mara Rosa in the neighboring state of Goias. At that location, it will connect with the North-South railroad which will allow grain to be shipped either to the Port of Santos in southern Brazil or to the Port of Itaqui in the state of Maranhao in northeastern Brazil. Work on the Fico Railroad is expected to begin in early 2021 and it will benefit farmers in eastern Mato Grosso.

The third and biggest project is the construction of the 1,142 kilometer Ferrograo Railroad which will connect the city of Sinop in northern Mato Grosso with Port of Maritituba on a tributary to the Amazon River. The railroad is expected to cost R$ 12.6 billion and take five years to build. Bidding on the project is expected in late 2020 with construction starting sometime in 2021.

While the Brazilian Minister of Infrastructure has declared that the Ferrograo Railroad is the most important infrastructure project in Brazil, not everyone agrees. The Kayapos indigenous tribe in the state of Para is opposed to the railroad because it will run through their indigenous land. In fact, the Kayapos blockaded Highway BR-163 in northern Brazil off and on for most of a week to protest among other things the construction of the Ferrograo Railroad, which will run parallel to Highway BR-163. How their concerns will be resolved is yet to be determined.