Jan 15, 2010
Bunge Signs Agreement With North-South Railroad To Transport 200 Million Liters Of Ethanol Per Year
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The North-South railroad in east-central Brazil is taking on more importance as a critical link between the agricultural production areas in east-central Brazil and the ports of Itaqui and Ponta da Madeira in the City of Sao Luiz in the state of Maranhao. Agricultural production (soybeans, cotton, corn) has been growing rapidly in the states of Maranhao, Piaui, Tocantins, and Bahia and this railroad services this region.
The North-South railroad just announced a long-term agreement with Bunge to transport ethanol from one of its sugar mills. The eleven-year agreement involves the transport of 200 million liters of ethanol per year from the state of Tocantins to the Port of Itaqui. To conduct this transport, Bunge will lease 25 Brazilian made tank cars from Mitsui Rail Capital. Bunge is completing the construction of a sugarcane mill in the state of Tocantins that should start operations later this year. Over the last few years, Bunge has made a major push to become one of the largest sugarcane processors in Brazil by buying existing mills and constructing new ones. The rail transport is expected to significantly cut transportation cost for ethanol destined for the United States because the ports in Sao Luiz are much closer to the U.S. compared to ports in southern Brazil. Bunge's agreement alone is expected to eliminate 700 tanker trucks per month from Brazilian highways.
This rail line is one of the most modern in Brazil with a flat grade and few curves allowing trains to travel up to 80 kilometers per hour. This rail line also links up with the huge Carajas mining operation where most of Brazil's iron ore is produced. The rail line has also signed agreements with other agricultural companies to transport grain and fertilizers. Once the rail line is completed to Palmas, the capital of Tocantins, in mid-2010 they expect to start transporting containers as well.