Brazil , Australia and China
Analysis

Double-digit cargo increase boosts prospects for Brazil's port concessions

Bnamericas
Double-digit cargo increase boosts prospects for Brazil's port concessions

Cargo handled by Brazilian ports increased in double digits in the first quarter, generating optimism among market participants regarding privatization and concession plans for terminals. 

Brazil’s ports handled 279Mt in the first quarter, up 10.5% from the same period 2020, according to waterways authority Antaq. Solid bulk cargo increased 8.85% while liquid bulk rose 13.9%.

The increase was "driven by demand for commodities and the scenario is expected to remain very positive for the port segment, also considering that the trade tensions between China and Australia will likely benefit demand for Brazilian iron ore from China," Fernando Fialho, a partner at port asset consultancy Modal Consult and former head of Antaq, told BNamericas. 

Australia is Brazil’s main global competitor in iron ore exports. 

The federal government offered in recent quarters a series of concessions and leases for port terminals and is planning to offer various others through 2022.

The government expects to attract investment in the ports concerned of up to 27bn reais (US$5.1bn) in 2021 and 2022.

Earlier this month, the infrastructure ministry signed the final contract for the leasing of seven ports terminals, which combined will generate investment of 935mn reais.

The ones requiting the most investment were ATU12 and ATU18 in Bahia state.

The crown jewel of the port sector is Santos port authority (SPA), the state-run company that operates South America’s busiest port – Santos in São Paulo state. It is expected to be auctioned next year.

"The port sector is benefiting from a program of concessions, which also include railroads and highways used to take products to ports, with more competitive costs. This is a factor that’s attracting investments to the port sector as well," said Fialho.

In April, mining firm Bahia Mineração won the 35-year concession for a 537km stretch of the Fiol railway between Caetite and Ilhéus. The company is expected to invest 3.3bn reais to finish construction of the line and start operations. With the railway concession awarded, construction of the Porto Sul port in Bahia is expected to advance.

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