Mato Grosso Railroad

The idea of building a railroad from the metropolitan centers of southeastern Brazil into the vast interior of the country originated over a century ago in 1901 when engineer Euclides da Cunha proposed a railroad linking Sao Paulo and Cuiaba, the capital of Mato Grosso. Once operational, he envisioned completing the trip between the two cities in as little as 10 days. At that time, an overland trip between the two cities would have taken weeks to complete.

His idea finally started to take shape in 1987 when a Brazilian industrialist named Olacyr de Morais was given authorization to start building the railroad. The railroad was named Ferronorte (the North Railroad) and construction began in August of 1992. The first leg of the railroad linking the state of Sao Paulo and southeastern Mato Grosso began operations in the late 1990's. A subsequent bankruptcy by Mr. Morais and the sale of his assists to America Latina Logistica (ALL) halted any construction activity on the railroad for nearly a decade.

According to America Latina Logistica, they are set to resume construction on the long staled railroad before the end of 2009. The newest section to be built will connect the cities of Alto Araguaia and Rondonopolis, a distance of 250 kilometers (150 miles). The construction time is scheduled to take a year and a half, but that may turn out to be too ambitious since not all the environment impact studies have been completed. These studies need to be completed before building permits can be issued. Thus far the studies have been completed on only the first 13 kilometers.

The project is being financed by the National Developmental Bank (Banco Nacional de Desenvolvimento Economico e Social - BANDES). The total amount of the investment is R$ 2.1 billion, which includes the modernization of ALL's existing operations as well. In addition to building the 250 kilometers of a single track, the company will purchase new locomotives, new railcars, and build terminals along the rail line.

The financing for this section of the rail line seems to be in place, but this entire project has been off and on for a number of years. The construction time is scheduled for a year and a half, but if history is a lesson, it will probably extend well beyond the scheduled time. Once in place, it will greatly reduce the cost of shipping soybeans and other agricultural products out of Mato Grosso to the Port of Santos in southeastern Brazil. Additionally, it will reduce the cost of transporting fertilizers, many of which are imported, back into Mato Grosso. This will help the soybean farmers in southeastern Mato Grosso to reduce their costs, but the benefits will be limited for the farmers further north in central and western Mato Grosso.

Farmers in Mato Grosso are pressing the politicians for a firm timetable for extending the line from Rondonopolis to the state capital of Cuiaba, a distance of 210 kilometers. Constructing the rail line between these two cities will be more difficult because Rondonopolis sits atop the Mato Grosso Plateau and Cuiaba is about 1200 feet lower in elevation.

Ultimately, this rail line is scheduled to go straight north through the center of the state and terminate at the Amazon River at the port city of Santarem. The new highway going north out of Mato Grosso will also terminate in the same city. The highway is currently under construction and will be completed in 3-4 years. Eventually, the agricultural production of Mato Grosso will move into export channels via the Amazon River instead of out the ports in southeastern Brazil thus greatly reducing the cost of transportation.