Vale gets extension for railway expansion

Brazil’s mining giant Vale was granted a 12-month extension to fulfill non-financial obligations under the concession contracts for the Carajás and Vitória Minas railways.

The decision by federal land transportation agency ANTT, issued on July 11, was granted following legislation enacted in 2021. The Railways Act postponed for 12 months all non-financial obligations under federal railway concession contracts.

Non-financial obligations include presenting reports and offering at least two pairs of passenger trains per day on the railways over the months of January, July, and December, among others.

The primary mandatory investment is the construction of a new railway between Goiás and Mato Grosso, the Fico (a Portuguese acronym for Center-West Integration Railway), as compensation for the renewal of Vale’s concessions. The construction work is already underway.

However, there will be a specific process to renegotiate the timeline for the implementation of Fico, which is five years from the government’s delivery of a number of expropriations, which occurred last year.

In late 2023, Transportations Minister Renan Filho had requested that ANTT suspend the analysis of Vale’s request to extend the deadline, amidst a dispute over royalties.

Earlier this year, Mr. Filho said the government could sue Vale in order to obtain an additional BRL 25 billion (USD 4.5 billion) for the concessions of those two railways. 

The contracts were renewed in late 2020, before their expiry date, during the Jair Bolsonaro administration; the Luiz Inácio Lula da Silva administration believes Vale underpaid.

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