Meeting with the mining company’s leadership allowed federal government to explore Vale’s interest in other railway projects
11/20/2024
Brazil’s Transportation Minister Renan Filho met with executives from Vale on Tuesday (19) to advance negotiations over the revised terms of the renewed contracts for the Carajás (EFC) and Vitória-Minas (EFVM) railways. The two-hour meeting included Daniel André Stieler, Vale’s chairman.
According to sources, the meeting also served as an opportunity for the federal government to gauge Vale’s interest in other strategic railway projects.
Discussions on revising the concession fees for the railways have been contentious at times. Mr. Renan Filho previously threatened legal action to hold executives and public officials accountable for the original contract renewals, which he claims were unfavorable to the federal government.
At this stage, the minister is pushing for Vale to commit R$15 billion in investments, though the final amount has not been settled and may be spread over several years. This figure is already significantly lower than the R$27 billion initially demanded by the government earlier this year.
The Ministry of Transportation is under pressure from the economic team to finalize negotiations with Vale to secure revenue for federal coffers. Renan Filho’s aides have emphasized that the funds would be allocated to future investments, enabling the construction of new railways in Brazil.
Notably absent from the meeting was Vale CEO Gustavo Pimenta, who took over the company recently. However, the meeting was attended by Fábio Ferraz, Vale’s business director, and Marcelo Sampaio, the company’s regulatory affairs director. Mr. Sampaio previously served as executive secretary of the Ministry of Infrastructure and briefly led the ministry under the previous administration.
Representing the federal government were Dario Durigan, executive secretary of the Ministry of Finance, and George Santoro, executive secretary of the Ministry of Transportation.
Another topic reportedly discussed during the meeting was Section 1 of the Oeste Leste (West-East) Railway (Fiol 1), connecting Ilhéus and Caetité in Bahia. Vale has been linked to speculation about acquiring Bahia Mineração S.A. (Bamin), the company holding the Fiol 1 subconcession, which is struggling financially. Rumors suggest the government has pressured Vale to take over its competitor’s operations.
Since taking office, Renan Filho has focused on raising funds to expand Brazil’s railway network by renegotiating concession fees established during the Bolsonaro administration. In addition to Vale’s railways, the government is also seeking higher concession fees from Rumo (Malha Oeste) and MRS Logística (Malha Sudeste).
Government estimates initially suggested that R$30 billion could be raised for railway expansion, though recent projections have been revised to a more conservative R$20 billion.
When asked for comment, Vale stated it is in “advanced discussions with the Ministry of Transportation regarding general terms for optimizing the investment plans for the EFC and EFVM concession contracts, which are currently being executed in accordance with the terms established and disclosed to the market in December 2020.”
Bamin declined to comment on speculation regarding potential talks with Vale.
By Rafael Bitencourt — Brasília
Source: Valor International