Brazil's Rumo greenlights construction start of US$3bn rail project

Brazilian logistics firm Rumo‘s board authorized the 4.5bn-real (US$894mn), 211km first phase of a 15bn-real rail project in Mato Grosso state. 

"This project is transformational for Rumo and for Mato Grosso state, the region with the highest grain production in the country. Our investment thesis is based on an expectation of growing food demand in Asia. Our projection is that the production of grains in Mato Grosso will grow by 30% by 2030, which will require a lot of logistical structure to be served," Rumo CFO Rafael Bergman told a conference call to present project details. 

"We have not yet defined which financing lines will be used, but we have a good long-term relationship with [development bank] BNDES, and we are going to look for a diversified financing source," said Bergman.

The first phase will connect the cities of Rondonópolis and Campo Verde. Works are expected to take three years and operations should start in 1H26. The complete line will connect 16 municipalities, involve 22 bridges and 21 viaducts, and demand 108,000t of rails.

It will also link to railroads in São Paulo state and to Santos port.

Works commence under the authorization regime, enacted last year, enabling private players to build and operate small rail networks under government-issued rights-of-way. Previously, companies interested in such projects had to go through a lengthy tender process.