Chinese investors eye Brazil rail project

Brazil is in the process of preparing to find investors for a $2.4 billion railway project that will link the center and western portions of the country and serve as a major route for grain transportation, according to a report from Agência Brasil, Brazil's state-run news agency.

Some initial interest in the railroad project has come from investors in China, including the China Railway Construction Corp (CRCC) and the China Railway Engineering Corp (CREC), according to a report from BNamericas, an online Latin American business publication.

Agência Brasil said the new line would be the first railway concession offered under Brazil's national logistics investment program.

Sergio Passos, Brazil's minister of transportation, said sourcing foreign investment for the project is a topic of utmost priority.

"We clearly need to attract investments from the private sector," Passos said in an Aug 22 interview with BNAmericas.

Brazilian officials have long expressed their wish to see Chinese rail companies get more involved in the nation's infrastructure program, highlighting the competitiveness and experience of China, home to one of the world's largest rail networks.

On July 17, China and Brazil signed a long-awaited memorandum of understanding (MOU) on railway construction.

"China has a strong interest in Brazilian commodities, so they want to invest in railroads in Brazil to reduce transport costs. This is a win-win situation, because the Brazilian government wants to attract investments in infrastructure," Charles Tang, chairman of the Brazil-China Chamber of Commerce based in Sao Paulo, said in a July interview with The Wall Street Journal.

Production for this Centro-Oeste project is set to be split into two phases. Phase one entails building an 833-kilometer stretch from Campinorte in the state of Goias, before connecting to a major north-south line. From there the Centro-Oeste line will run westward to Lucas do Rio Verde city in Mato Grosso state.

Phase two includes a 600-km extension from Lucas do Rio Verde to Vilhena, in the state of Rondonia.

CRCC and CREC could not be contacted for comment.

Brazil's investment program, announced in August 2012, calls for the construction of more than 11,000 km in railways throughout Brazil.

And the Centro-Oeste railroad project is part of a larger plan to build the Ferrovia Transcontinental railroad, which falls under Brazil's state-run growth acceleration program, the BNamericas report said.

The Ferrovia railroad will run more than 4,400 km from the northeastern state of Acre to the southeastern state Rio de Janeiro.

China became "the No 1 buyer of Brazilian exports" in the beginning of 2010, according to a publication by The Brookings Institution, a Washington-based nonprofit public policy organization.

Brazilian exports to China increased to more than $21 billion in 2009 from $1.1 billion in 2000, while imports from China also rose to $15.9 billion from $1.2 billion over the same period, the report said.

Brazil's Trade and Development Minister Mauro Borges told the Journal that Brazil and China are looking to change the way the two countries interact economically.

Trade between China and Brazil soared to $83.3 billion last year from $3.2 billion in 2002, with iron ore, soy and oil making up the bulk of Brazilian exports, according to Reuters.