The amendments to both contracts, which extend the concessions from their previous expiry date of 2027 to 2057, were agreed by the Vale board on December 16, and follow their approval by the Federal Audit Court (TCU) in July 2020.
The revised contracts were formally signed on December 18 in São Paulo, by Mr Tarcísio Gomes de Freitas, minister of infrastructure, as well as representatives from Vale, the National Land Transport Agency (ANTT) and the Brazilian treasury.
As part of the agreement for the early renewal of the contracts, Vale has made commitments worth around Reais 24.7bn ($US 4.67bn) over the 30-year period. This will include Reais 11.8m of grants for the concessions, and Reais 3.9bn for the expansion of passenger services and infrastructure improvements on both railways. Vale will also provide Reais 8.7bn to fund construction of the first Mara Rosa - Água Boa section of the Central-West Integration Railway (Fico), due to begin construction in 2021, as well as Reais 300m for the provision of rail and sleepers for the line’s Caetité - Barreiras section.
Passenger services on the EFVM and EFC, the only long-distance passenger trains in Brazil, will be expanded. Frequency on the EFVM will increase to two services a day in the ‘high season’ by 2024, and services on the EFC will increase to daily from alternate days at present.
The infrastructure programme covers track doubling on the 9km Capitão Eduardo - Pedreira Rio das Velhas section of the EFVM in the state of Minas Gerais, which will be carried out by 2024. The programme also includes 460 projects designed to improve safety and reduce trespassing in urban areas, and includes 40 new bridges and viaducts, 30 footbridges, 200km of fences and improvements to around 150 level crossings.
Under the agreement, ANTT will also evaluate the construction by Vale of an 82km line in the state of Espírito Santo, between Santa Leopoldina and the coastal town of Anchieta.
“The extensions remove a great deal of uncertainty about the continuity of a relevant part of our integrated logistics chain,” says Vale CEO, Mr Eduardo Bartolomeo. “Between 2006 and 2019, we invested Reais 35.7bn in the two railways, which today are among the safest in the world. We will continue to invest to maintain and expand these assets.”
The news coincides with the publishing of a tender notice by ANTT for an operating concession for the 537km first stretch of the new West-East Integration Railway (Fiol), between the cities of Ilhéus and Caetité in the state of Bahia. The tender will be auctioned on April 8 on the B3 stock exchange in São Paulo.
The government has set a minimum fee of Reais 32.7m for the auction. The contract will comprise the conclusion of construction works on the project and operation of the line. State-owned company Valec is responsible for construction, which is around 74% complete.
The contract will require investments of up to Reais 5bn, with most expected to be made in the first five years of the concession.
The line will transport mining products and grain from western Bahia to a new port in Ilhéus, with 18.4 million tonnes of freight expected to be transported in the first five years of operation, rising to 41.2 million tonnes by 2035.