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Railway and port terminal operator VLI announces investment of R$10,5 billion in the Southeast Corridor to increase cargo movement by up to 80% over the next 30 years

Written by Bruno Teles
Published 05/11/2024 às 18:44
Railway and port terminal operator VLI announces investment of R$10,5 billion in the Southeast Corridor to increase cargo movement by up to 80% over the next 30 years
VLI's billion-dollar bet to expand rail transport in Brazil (Image: Reproduction)

Imagine a trail of opportunities that stretches for 30 years. This is exactly what railway and port terminal operator VLI envisions when it announces a massive R$10,5 billion investment in the Southeast Corridor. This investment is just one part of a robust R$24 billion plan to modernize and expand rail transportation capacity in Brazil, especially in the Southeast Corridor, which is expected to see an impressive 80% growth in cargo movement over the next three decades.

The R$10,5 billion earmarked for the Southeast Corridor is part of a commitment made by VLI in the early renewal of the concession of the FCA (Ferrovia Centro-Atlântica), an essential route that connects seven Brazilian states and provides access to strategic ports such as Santos (SP) and Tubarão (ES). This investment is seen as crucial for the Southeast Corridor to absorb the growing demand for exports of Brazilian products, including soybeans, sugar, corn and soybean meal — sectors in which Brazil is a world leader.

According to Fábio Marchiori, CEO of VLI, anticipate the renewal The concession renewal is a priority to allow the increase in capacity to be carried out as quickly as possible. “We are trying to anticipate as much as possible. The longest term we see is March 2026, but we are working with the Ministry of Transport and ANTT to make this renewal viable as early as next year,” said the executive. This strategy aims to strengthen the role of the Southeast Corridor, which is currently responsible for around 25% of the cargo handled by VLI.

Planned growth beyond the Southeast Corridor

Railway and port terminal operator VLI

In addition to the Southeast Corridor, the total investment of R$24 billion will also be directed to the East Corridor, which moves approximately 50% of VLI's volume and is expected to grow 50% over the next 30 years. Additional corridors, such as Minas-Rio and Minas-Bahia, will receive R$3,5 billion, completing the renewed and expanded railway network. to meet the demands of the domestic and foreign markets.

VLI Financing and Growth Strategy

To cover these financial commitments, the railway and port terminal operator VLI plans to use both its own cash generation and explore new financing opportunities.

The company currently generates more than R$5 billion in operating cash, but is also studying the possibility of an IPO, should a favorable strategic moment arise. The company will also pay an additional R$5 billion for compensation and return of non-operational sections, allocating resources to the restructuring of railway lines.

According to Marchiori, most of the investments will be made in the first half of the concession, maximizing returns and rapidly expanding the company's transportation capacity. With major clients such as ADM, Cargill and Bunge, and moving a wide range of products ranging from grains to fertilizers and steel products, VLI sees the Southeast Corridor as a key element to consolidate its position in the logistics sector and further increase its revenue.

The investment by railway and port terminal operator VLI in the Southeast Corridor represents a significant milestone for the future of Brazilian logistics, transforming the railway infrastructure and meeting the growing global demand for Brazilian products with efficiency and sustainability.

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Bruno Teles

I talk about technology, innovation, oil and gas. I update daily about opportunities in the Brazilian market. With more than 3.000 articles published in CPG. Agenda suggestion? Send it to brunotelesredator@gmail.com

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