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September 10, 2018

Extension of Railroads debated in Capital of Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The feasibility of extending the existing railroad in Mato Grosso from the city of Rondonopolis to the state capital of Cuiaba and then onto to the city of Sorriso in central Mato Gosso will be the subject of a meeting on Monday, September 10th in the city of Cuiaba. The railroad, which used to be owned by America Latina Logistica and called the Feronorte Railroad is now owned by Rumo Logistica S.A. and is called Senador Vicente Vuolo Railroad.

Directors from Rumor will meet with interested groups to discuss construction financing, construction timetable, and the length of the concession to operate the railroad. Rumo Logistica S.A. will be the company responsible for building and operating the railroad.

Currently the railroad only operates in the southeast corner of Mato Grosso and the rail line terminates at the city of Rondonopolis. There are currently four grain terminals on the railroad at the cities of Alto Taquari, Alto Araguaia, Itiquira, and Rondonopolis. The railroad links Mato Grosso with the Port of Santos in southeastern Brazil.

Extending the railroad from the city of Rondonopolis to the state capital of Cuiaba (approximately 220 kilometers) is expected to cost R$ 2 billion. Extending it further northward from the state capital to the city of Sorriso in central Mato Grosso (approximately 350 kilometers) is expected to cost R$ 3.6 billion.

At the city of Sorriso, the railroad could connect with the proposed railroad from Sorriso straight north to the port city of Santarem on the Amazon River. Once these two railroads are completed, there would be a continuous connection between the Port of Santos, which is Brazil's largest port, and the Amazon River, which of course is Brazil's largest river.

Completion of these projects is critical for grain production in Mato Grosso, which is Brazil's largest producer of soybeans, corn, cotton, and cattle. Producers in northern Mato Grosso would send their grain northward to export facilities on the Amazon River while producers in southern Mato Grosso would send the grain southward to existing export facilities in southeastern Brazil.

Local officials feel these projects will also be critical for industrial development throughout the state. The proposed route of these railroads would parallel the two major existing highways in the state, BR 163 which extends northward from the state capital to the Amazon River and BR 364 with extends southward from the state capital to the border with the state of Mato Grosso do Sul.