Mining Company Vale Reports That Railway Construction May Cost R$ 8.7 Billion

Vale Will Execute the Works of the Midwest Integration Railway (Fico) in Mato Grosso. Mining Company Highlights It Will Spend R$ 6 Billion More Than the Government Budgeted

The mining company Vale recently announced that the works of the Midwest Integration Railway (FICO) in the state of Mato Grosso could cost up to R$ 8.7 billion, a figure that exceeds the initial projection by R$ 6 billion made by the company to the Ministry of Infrastructure. The railway will be approximately 400 kilometers long and will connect the cities of Mara Rosa in Goiás and Água Boa in Mato Grosso. The works were supposed to start in April this year, but the project remains in its initial stage. Also see this news: Infrastructure Minister Says Ferrogrão Railway Will Be a Model of Sustainability

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Vale Will Carry Out the Construction Works of the Railway

The mining company Vale previously signed a contract with the Federal Government at the end of last year and expected to invest around R$ 2.73 billion in Fico over the estimated four years for completion. However, the company announced it will spend R$ 6 billion more than planned.

According to the Ministry of Infrastructure, “the project of the railway to be built by the mining company Vale underwent fine adjustments to meet the environmental component, which is essential to ensure the sustainability of the enterprise, implying changes in the engineering project.” The ministry says that the installation of the construction site for the railway and the housing facilities started this month and that the manufacturing of the pre-molds to be used in the undertaking will occur in September.

In the ministry, it states that it used the instrument of “cross investment” to reach an agreement with Vale, which means that the granting amount was deducted so that the company could execute and deliver the railway. “The estimated amount by study and agreed upon between the State and Vale is R$ 2.7 billion. That is, this is the amount necessary to carry out the undertaking.”

The Execution of the Works

Vale also noted that the construction of FICO is part of an agreement signed with the federal government for the extension of the contract related to the Vitória to Minas Railway (EFVM), another project under development by the company. “Thus, Vale will assume the total costs of the works, which includes the difference in amounts. The rectified basic project is budgeted at R$ 8.7 billion.”

The mining company Vale agreed to carry out the railway works after obtaining authorization to renew two concessions already operated by its logistics companies, the Vitória-Minas Railway in the southeast region of the country, and the Carajás Railway in Maranhão. When the company completes the works, it will hand the project over to the government, which will hold an auction, and the railway operations will be carried out for any interested company on this route.

Vale confirmed, through a statement, that it has begun activities related to the pre-implementation of the works, including field exercises, development and implementation of projects, and hiring engineering companies. The mining company stated that, at the same time, the company is awaiting the responsibility of the Federal Government to provide the lands for the first 30 kilometers of the railway to commence the next phase of the railway infrastructure construction project.