September 2009

Construction Set To Resume On Mato Grosso Railroad

Construction on the long-stalled railroad in southeastern Mato Grosso may resume within a month according to America Latina Logistica (ALL), the operator of the rail line. The newest section to be built will connect the cities of Alto Araguaia and Rondonopolis, a distance of 250 kilometers (150 miles). The construction time is scheduled to take a year and a half, but that may turn out to be too ambitious since not all the environment impact studies have been completed. These studies need to be completed before building permits can be issued. Thus far the studies have been completed on only the first 13 kilometers.

The project is being financed by the National Developmental Bank (Banco Nacional de Desenvolvimento Economico e Social – BANDES). The total amount of the investment is R$ 2.1 billion, which includes the modernization of ALL’s existing operations as well. In addition to building the 250 kilometers of a single track, the company will purchase new locomotives, new railcars, and build terminals along the rail line.

The financing for this section of the rail line seems to be in place, but this entire project has been off and on for a number of years. The construction time is scheduled for a year and a half, but if history is a lesson, it will probably extend well beyond the scheduled time. Once in place, it will greatly reduce the cost of shipping soybeans and other agricultural products out of Mato Grosso to the Port of Santos in southeastern Brazil. Additionally, it will reduce the cost of transporting fertilizers, many of which are imported, back into Mato Grosso. This will help the soybean farmers in southeastern Mato Grosso to reduce their costs, but the benefits will be limited for the farmers further north in central and western Mato Grosso.

They are pressing the politicians for a firm timetable for extending the line from Rondonopolis to the state capital of Cuiaba, a distance of 210 kilometers. Constructing the rail line between these two cities will be more difficult because Rondonopolis sits atop the Mato Grosso Plateau and Cuiaba is about 1200 feet lower in elevation.