Both railways are crucial for both passenger and cargo transport in Brazil. Credit: SERGIO V S RANGEL via Shutterstock.

Brazil-based mining company Vale, along with the Brazilian National Land Transportation Agency and the Ministry of Transportation, have agreed upon the general basis for the renegotiation of the concession contracts for the Carajas Railway (EFC) and the Vitoria a Minas Railway (EFVM).

These railways are crucial for both passenger and cargo transport in Brazil.

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The Carajas Railway, connecting Parauapebas in Para to Sao Luís in Maranhão, and the Vitória-Minas Railway, linking the Metropolitan Region of Vitoria to Belo Horizonte, are set to have their concession contracts extended until 2057.

This follows the additional terms established in December 2020.

The renegotiation under the existing concession contracts aims to modernise and update the railway services.

Vale has committed to a maximum global contribution of approximately $11bn reals ($2.3bn) for asset base reviews, contractual obligation optimisations, and investment replanning for both EFC and EFVM.

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This contribution encompasses all investments and obligations outlined in the concession contracts, ensuring a definitive resolution on contractual obligations, including construction works and investments.

The terms of the transaction will also result in an increase of $1.7bn reals in provisions related to the railway concessions.

The general basis for the renegotiation will be subjected to formal evaluation and approval by the authorities.

Additionally, a consensual solution will be discussed with the bodies involved at the Brazilian Federal Accounts Court.

Once finalised, this renegotiation will clarify Vale’s obligations and investments in its two railway concessions, providing certainty for future operations.

In May 2024, the state of Sao Paulo announced that the governor approved a 14.2bn reals contract. The 101km Intercity Eixo Norte project will connect Sao Paulo, Campinas, and Jundiai with an express rail service.

Vale pledges up to $2.3bn for asset reviews, contract optimisations, and investment plans for EFC and EFVM.

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