Amaggi and ABCD traders consider investment in Brazilian road and rail projects
March 26, 2019
Brazilian commodities giant, the Amaggi group, and the world’s big four ‘ABCD’ agricultural traders could make a joint bid to operate a road connecting Brazil’s oilseed belt to northern ports, while also considering an investment in a parallel railway, Reuters reported on 11 March.
Archer Daniels Midland Co (ADM), Bunge Ltd, Cargill Inc, Louis Dreyfus Co (LDC) and Amaggi had commissioned a study on operating a 968km stretch of the BR-163 highway for 10 years, according to infrastructure and logistics business development firm EDLP.
That highway was the main route to northern ports that were responsible for 28% of Brazilian soya and corn exports in 2018.
EDLP director Roberto Meira said the plan – with a proposal for handing over the BR-163 highway to private investors – would involve convincing the government to offer a 10-year concession on the road, shorter than the typical 20- to 30-year tenure on projects currently approaching auction.
The shorter tenure would allow for oilseeds and grains shipped by truck to be migrated to the proposed Ferrograo rail line that would run a similar route to the BR-163 starting in 2025, Meira said.
In January, the government’s privatisation secretary had said that the Ferrograo rail project could be ready for bidding this year or early in 2020.
Meira said the grain traders could invest in both the road and the rail projects, although the bidding could attract other investors.
He said the firms hoped that making the investments would cut costs and remove the uncertainty of trying to move crops up north without a railroad.
“Every year, long lines of trucks form at certain towns in Mato Grosso and Pará state because of the BR-163’s poor condition,” the Reuters report said.
Amaggi is active in large-scale soyabean, corn and cotton production and trading in Brazil. It transports crops from the northwestern regions of Mato Grosso and southern Rondônia via the Northwest Export Corridor; and also operates in the Tapajós Corridor, in a joint venture with Bunge to transship grains between Miritituba and Barcarena, in the state of Pará (Unitapajós).
The group has 157 barges, one of the largest river fleets in Latin America, and also operates three soyabean crushing units in Lucas do Rio Verde, Mato Grosso; Itacoatiara, Amazonas, and Denofa, in Norway.