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TCU approves the early renewal of the concession contract for the Estrada de Ferro Carajás (EFC) and the Estrada de Ferro Vitória-Minas (EFVM)

Home > PPI English > News > TCU approves the early renewal of the concession contract for the Estrada de Ferro Carajás (EFC) and the Estrada de Ferro Vitória-Minas (EFVM)

29 de julho de 2020

TCU approves the early renewal of the concession contract for the Estrada de Ferro Carajás (EFC) and the Estrada de Ferro Vitória-Minas (EFVM)

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The Brazilian Federal Court of Accounts (TCU) approved, on 7/29, the early renewal of the concession contracts for the railways “Estrada de Ferro Carajás (EFC)” and “Estrada de Ferro Vitória-Minas (EFVM)”, both operated by Vale SA. The decision allows the concession contracts (which expire on 6/30/2027) to be extended for another 30 years, with investment commitments worth of BRL 17 billion, and the creation of more than 65,000 jobs.

The inclusion of the two projects in the portfolio of the Investment Partnerships Program (PPI) was decided at the 2nd Meeting of the PPI Council, in March 2017, and formalized in Decree 9059/2017. The National Land Transportation Agency (ANTT) filed the documents related to the amendment to the concession contracts on 7/1/2019.

The report approved by TCU’s plenary determined that ANTT should comment on which goods are essential for the provision of the rail service.  It also required the creation of a mechanism for periodic review of the revenues for risk sharing, as a compensation for the difficulty of calculating the "transfer price", which corresponds to the cost of transporting iron ore.

The new contracts involve investments projected at BRL 17 billion: BRL 8.8 billion in EFVM, and BRL 8.2 billion in EFC. Out this amount, BRL 2.73 billion will be allocated to the construction of the Midwest Integration Railway (FICO), through the cross-investment mechanism provided for in Law 13448/2017.
 

Estrada de Ferro Vitória-Minas (EFVM)
With 905 km length, EFVM connects Belo Horizonte (MG) to the Port of Tubarão, Vitória (ES) and has connections with the Centro-Atlântica Railway (FCA) and with MRS Logística. Although it is a metre-gauge railway (narrower than the standard-gauge), it has great capacity and efficiency in cargo transportation, being responsible for about 20% of the total railway cargo transported in Brazil annually. The main items transported are iron ore, steel products, mineral coal and cellulose.

EFVM also carries out passenger transport, being one of the few Brazilian railways to offer the service: there are 664 km of extension dedicated to this purpose, with 30 stations in 42 municipalities. Daily, about 3000 people use the service, including for tourism ends.

The extension of the EFVM concession contract for another 30 years was conditioned upon early investments on works such as viaducts, retaining walls, footbridges, among others, in addition to the expansion of cargo capacity.

Cross investments are also foreseen involving the execution of a 383 km stretch of FICO (EF-354), between Mara Rosa (GO) and Água Boa (MT), an important alternative for the flow of production from the states of Goiás, Mato Grosso and Rondônia to the ports in the North and Northeast Regions. 
 
Estrada de Ferro Carajás (EFC)
EFC connects the mining areas of Serra dos Carajás, in the state of Pará, to the Port of Itaqui, in the state of Maranhão. Inaugurated in 1985, EFC is 1167 km long and has a broad-gauge (1.60 m), in addition to being almost entirely duplicated, which gives it a high capacity in cargo transportation. The main product transported is iron ore, followed by steel products and fuels.
 
The EFC is connected to the Norte Sul - Tramo Norte Railway and the Transnordestina Railway. Due to the S11D project (Vale's mining complex in Canaã dos Carajás, in the state of Pará, established in 2016), it has gained an additional 101 km. The railway also carries out regular passenger transport between São Luiz (MA) and Parauapebas (PA).

The extension of the concession contract was also conditioned upon investments to resolve urban conflicts (construction of 14 viaducts, 49 adjustments to level crossings and 12 footbridges). Investments will also be made to duplicate the railway over an extension of about 630 km and to remodel it over 226 km.


 

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