The operator of railways and port terminals VII plans to invest around R$10.5 billion in the Southeast Corridor, where the company projects an increase in movement of 80% in 30 years, said the company’s CEO, Fábio Marchiori.
Investments are part of a R$24 billion package which must be invested by VLI as part of the obligations for the early renewal of the concession of the Central-Atlantic Railway (FCA).
FCA connects seven states and integrates the Southeast, Northeast and Central-West regions, allowing access to ports such as Santos (SP) and Tubarão (Espírito Santo).
A FCA concession expires in August 2026but the company that has the Canadian manager Brookfield As the largest shareholder, it considers it important to anticipate renewal so that investments in increasing capacity can also be brought forward.
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Thus, the railways could receive more cargo given the growing demand for products from Brazil, the largest global exporter of soybeans and sugar, and one of the main suppliers of soybean meal and corn, among others.
“We are trying to bring forward (the renewal) as much as possible. In the worst case scenario, the longest deadline we see is March 2026. But we are working together with the Ministry (of Transport) and ANTT (National Land Transport Agency) to bring this forward, including trying to finish it now next year,” said Marchiori. “The sooner the better, even so we can anticipate investments.”
The specific contributions of the Southeast Corridor, which accounts for around 25% of the cargo transported by VLI, had not yet been disclosed, as had the forecast increase in cargo during the period of the concession to be renewed.
The other part of the investment negotiated with the government for the renewal of the FCA, in an amount of around R$10 billion, will be made in the Eastern Corridor, which accounts for approximately 50% of VLI’s total movement, said Marchiori.
To complete the R$24 billion, the Minas-Rio and Minas-Bahia corridors, also from FCA, will receive R$3.5 billion in the same period.
Grains drive demand
Last year, total movement on all railways operated by VLI jumped to 61.3 million tons, versus 58 million tons in 2022.
Soybeans, corn and soybean meal accounted for around 43% of the company’s net revenue in 2023, whose main customers are tradings of the sector, as ADM, Cargill, Bunge. Revenue also takes into account gains from “increases” in the company’s port terminals, which reached 43 million tons.
The company has its own terminals, such as Tiplam, in the Santos region, one of the largest for exporting sugar, a product that accounts for around 10% of the company’s revenue.
The range of goods transported also includes ores, fertilizers, fuels and products for the steel industry — although Vale is one of VLI’s main shareholders, the company does not transport iron ore from the mining company.
VLI also projects that transport through the Eastern Corridor will grow by 50% in 30 years, which indicates an increase in the Southeast’s share of the company’s total share, as in this case the perspective is an increase of 80%, admitted the CEO.
Financing
VLI will have to pay another R$5 billion in the FCA renewal process, which will be mostly paid as compensation, due to the return of non-operational sections.
“We have sections that are no longer in operation, the loads that historically existed there no longer exist… just one customer, and the customer no longer exists”, explained Marchiori. “This money is also intended for investments in railways, but then we depend on a decision from the public authorities.”
Regarding investments of R$24 billion, they will be spread over the 30 years of the concession, but the majority will be concentrated in the first half of the concession, revealed Marchiori.
“We are interested in accelerating this investment,” he said, highlighting that this also means more loads and revenue.
Asked about the origin of the resources, the executive stated that part of it must come from the company’s own cash generation, which generates more than R$5 billion in operating cash. He also recalled that VLI has the capacity to increase its debt rate.
“And, eventually, if there are new projects, and there should be, we still have the capacity to do the IPO, the company is not yet listed, it is in its plans, when there is a window of opportunity…”, he said.
