New panoramas and investments in railroads in Brazil
Considering the territorial extension of Brazil, the national rail modal is a relatively little used sector. Currently, it is possible to perceive a preference for road transport in relation to rail transport when it comes to the the flow of products, both those destined for the domestic market and goods for export. To be more specific, in 2018, highways were responsible for transporting 75% of national production, while railways only 5.4%. Despite this, the recent trend in favor of investment in railways in Brazil promises to transform this scenario.
One of the ways to understand the role of the railway sector in the national transport matrix is to examine its history. In fact, there was a time when the construction of railroads was the interest of many state and private investments that sought, above all, ways to speed up the transport of coffee. From the mid-nineteenth century to the 1920s, the Brazilian rail network grew a lot. In 1919, the country already had more than 28 thousand kilometers of railroads.
It was during the first term of Getúlio Vargas that the first attempts were made to prioritize the road system over the rail system. However, it was in the government of Juscelino Kubitschek, in the 1950s, that the road modal became the main focus of investment in land transport. According to the central motto of the JK government, which promised rapid economic growth, the construction of railways was an excessively long process. Therefore, promoting road construction and the implementation of automobile industries in the country was the chosen path.
Even today, it is possible to perceive the consequences of this road prioritization. Despite this, there are more and more government projects, such as the Marco Legal da Ferrovias, which seek to encourage investment in railways in Brazil and restore the potential of this very promising means of transport. Let's get to know some of the most important measures that can change the panorama of Brazilian railroads..
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Investment in railways in Brazil: Marco Legal
In the 1990s, in an attempt to attract investments to the railway sector, the Brazilian government began a process of privatization of the railways. In this way, the federal government held auctions, where private companies won concessions for certain railway sections. It is worth remembering that the concessions were always temporary, and at the end of the validity period, the administration of the stretch was returned to the government.
This strategy did not achieve great results, as this model involved long bureaucratic processes. As a way of streamlining the procedure, the Legal Framework for Railways was created.
This project proposes replacing the concession model with a simplified authorization system. That is, instead of acquiring ownership of roads through auctions, the interested entrepreneur must present to the federal authorities a project describing his proposal and his intentions in relation to the chosen stretch. The same goes for companies that want to build new railroads.
In addition, the entrepreneur can also stipulate a longer term for the authorization contract, the maximum duration being 99 years.
Since its sanction in December 2021, the federal government has received more than 80 projects. According to the Minister of Infrastructure, Tarcísio Freitas, there are more than 20,000 kilometers of new tracks, totaling around R$ 240 billion in investment in railways in Brazil.
Pro Rails Program
A large part of the authorization requests in response to the Marco Legal das Ferrovias were carried out through the federal program Pro Trilhos, and of the 80 requests issued, 27 have already been authorized.
The program was created in September 2021 as a way to implement the changes made possible by the Legal Framework. Therefore, its objectives are in line with those of the project: to attract private investment so that it can stimulate the development of the railway sector, encourage technological innovation and increase competitiveness between different modes of transport.
In the long term, investment in railways in Brazil by private companies can considerably increase the railway network and even reduce the cost of freight in the country.
Minas Gerais is the state with the highest number of investments
Among the 27 projects that were authorized by Pro Trilhos, 7 pass through the territory of Minas Gerais, totaling more than 3 thousand km of new rails and R$ 58 billion in investments. Currently, the rail network comprises about 2,500 km, that is, it is expected to double in size in the coming years.
This attention given to the state of Minas Gerais is justified by its important role in the Brazilian economy. For example, Minas Gerais is the third state that produces the most beef, being the leader in the national production of milk. The state is also the largest coffee producer in the country: of the entire 2021 crop, Minas Gerais was responsible for 46%.
In addition to the agricultural sector, the state of Minas Gerais has large mineral reserves. Minas Gerais is the leader in the production of iron ore,in addition to being a major producer of bauxite, zinc and gold.
It is important to remember that the state of Minas Gerais does not have a coastline. Therefore, it depends a lot on the transport infrastructure to carry out the flow of its products through the rest of the country and, mainly, to export zones, such as the Port of Santos, for example.
Investment in railroads in Brazil in 2022
As stated in the introduction, railroad construction is a long-term investment. That said, let's get to know some of the most recent projects that promise to revitalize the Brazilian rail sector.
The construction of the Nova Transnordestina railroad is a very important project in the flow of agricultural and mineral products from the Northeast. It was designed to connect the ports of Pecém (CE) and Suape (PE) to the municipality of Eliseu Martins, in the interior of Piauí. Totaling 1,753 km of tracks, Transnordestina promises to become an essential route for the transport of iron ore, sugar, beans, corn, etc.
Although its construction has been stopped since 2016, the Legal Framework made it possible to transfer the management of Companhia Siderúrgica Nacional to businessman Daniel Dantas, who plans to continue the works in 2022.
Another recent target for investment in railways in Brazil is the expansion of the Malha Central, which is part of the North-South Railway. Managed by Rumo Logística, the roads will receive 3 more terminals by the end of 2022. The schedule foresees the construction of the Iturama (MG) terminal in the second quarter, Rio Verde (GO), in the third, and Anápolis (GO) ), in the bedroom. The new stretch will contribute to the flow of products from the region, mainly fertilizers, sugar and soy.
Conclusion
With this new trend in investment in railways in Brazil, the sector can reach unprecedented levels of development. This will be very advantageous for the country's economic balance, after all, the construction and administration of railways will reduce dependence on the road modal and can solve many logistical challenges in national cargo transport.
