BRAZIL: Mining company Vale has agreed terms with the government to extend its concessions to operate the Estrado de Ferro Carajás and Estrado de Ferro Vitória a Minas by 30 years.
The extensions had been approved by the Federal Court of Accounts in July 2020, and amendments to the contracts extending both concessions from 2027 to 2057 were agreed by the Vale board on December 16. The revised contracts were formally signed with the government at a ceremony in São Paulo two days later, being inked by directors of the National Land Transport Agency ANTT and officials from the Brazilian treasury, as well as Minister of Infrastructure Tarcísio Gomes de Freitas, who described the concession extensions as ‘the biggest step in railway history’.
In exchange for the early renewal of its contracts, Vale has made commitments valued at around R$24∙7bn over the extension period: R$11∙8bn will be paid as grants for the concessions; R$8∙7bn will be paid under a ‘cross-investment’ mechanism to fund construction of the first section of the Ferrovia de Integraçao Centro-Oeste, and R$3∙9bn will cover the expansion of passenger services and a programme of infrastructure improvements on both railways.
This infrastructure programme envisages 460 separate projects designed to improve safety and reduce trespass where the railways pass through urban areas. Works include construction of 40 bridges or viaducts and 30 footbridges as well as enhancements to around 150 level crossings, plus installation of about 200 km of fencing. All this will improve safety in 33 municipalities on EFVM and in 25 municipalities along EFC.
In addition, a 9 km section of single track on EFVM between Capitão Eduardo and Pedreira Rio das Velhas in Minas Gerais state will be double-tracked by 2024.
The agreement to expand passenger services will see EFVM run two trains a day in the high season by 2024. By 2026 further passenger trains will be added on the Carajás Railroad to provide a daily service rather than alternate days.
Work on the 383 km first phase of the FICO project between Mara Rosa and Água Boa is expected to start during 2021, for completion within six years.
A further R$300m will be used to purchase 56 000 tonnes of rail and 32 000 sleepers for the Caetité – Barreiras section of the Ferrovia de Integraçao Oeste-Leste.
The EFVM agreement also includes provision for ANTT to evaluate the construction by Vale of an 82 km extension from Santa Leopoldina to Anchieta, on the coast of state of Espírito Santo.
With the new concession contracts, the two railroads will be better equipped to transport general cargo, such as grains, fuels and fertilisers, in addition to the main traffic of iron ore and other minerals.
Vale CEO Eduardo Bartolomeo said that ‘we are very happy to take another important step in the company’s de-risking. The anticipated extensions remove a great deal of uncertainty about the continuity of a relevant part of our integrated logistics chain. Between 2006 and 2019, we invested R$35∙7bn in the two railroads, which today are among the safest in the world. We will continue to invest to maintain and expand these assets.’