SAO PAULO, BRAZIL – The world's big four agriculture traders and Brazilian rival Amaggi are considering making a joint bid to operate a road connecting Brazil’s grain belt to northern ports as well as an investment in a parallel railway, the firm that conducted a study on the potential venture told Reuters on March 11.
Reuters reported that Archer Daniels Midland Co (ADM) Bunge Ltd, Cargill Inc., Louis Dreyfus Co (LDC) and Amaggi have commissioned a study on operating a 968-kilometer stretch of the BR-163 highway for 10 years, according to infrastructure and logistics business development firm EDLP.
ADM, Bunge, LDC and Amaggi did not immediately respond to requests for comment. Cargill referred questions to EDLP.
Roberto Meira, a director at São Paulo-based EDLP, told Reuters the plan with a proposed model for handing over the roadway to private investors will be submitted to the government later this week. It would involve convincing the government to offer a 10-year concession on the road, far shorter than the typical 20- to 30-year tenure on projects currently approaching auction.
The shorter tenure would account for the fact that grains shipped by truck would gradually be migrated to the proposed Ferrograo rail line that runs a similar route to BR-163 starting in 2025 until eventually the road concession expired, Meira told Reuters.
The government's privatization secretary said in January that the Ferrograo rail project could be ready for bidding this year or early in 2020.
He said the companies hope making logistical investments will cut costs and remove the uncertainty of trying to move grains up north without a railroad.