Sep 02, 2010
America Latina Logistica Will No Longer Build Railroads in Mato Grosso
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in Mato Grosso had high hopes a decade ago when the first railroad reached the border of their state that finally they would have an economical way of shipping their ever-expanding soybean crop to ports in southern Brazil. Their hopes faded when work on the railroad ceased nearly eight years ago.
That is how long it has been since America Latina Logistica (ALL) has laid any new track on the Ferronorte railroad in Mato Grosso. ALL is the largest railroad company in South America, but the inability of the company to get its financial house in order has led the Brazilian Congress to take away the company's right to build the remainder of the proposed railroad. Within a few days, the railroad concession will be back in the hands of the Transportation Minister. Once ALL is formally out of the picture, the government will start the process anew of auctioning off the rights to build the remainder of the railroad.
The current Ferronorte Railroad is only operational until the city of Alto Araguari which is approximately 50 miles inside the southeastern corner of the state. From there, trains carry grain from Mato Grosso to the Port of Santos in the state of Sao Paulo. The original plan was for the railroad to continue northwest through the city of Rondonopolis (the second largest city in the state) on its way to the state capital of Cuiaba. From there one branch was to head straight north the city of Santarem on the Amazon River. Another branch of the railroad was to continue northwest to the city of Porto Velho, which is the capital of the neighboring state of Rondonia.
It remains unclear as to what happened to all the funds already appropriated for the railroad. With the current uncertainty, there is now no time line for when the remainder of the railroad will be completed.
Agricultural producers and agribusiness people in central Brazil have complained for decades about the lack of infrastructure - railroads, highways, rural roads, barging operations, etc. in the center-west region of Brazil. The state of Mato Grosso is as big as the entire U.S. Midwest and it is the main region of agricultural expansion in Brazil, but the lack of transportation alternatives makes the state of Mato Grosso the most expensive region in Brazil to grow soybeans. The high cost of transportation makes it more expensive to grow soybeans in Mato Grosso than in any other region of Brazil, or in Argentina, or even in the United States.