The EF-170 Rairoad, also known as Ferrogrão, was designed to reduce transportation costs of soy exports from the Brazilian state of Mato Grosso. Currently, cargo must travel almost 2,000 km on highways connecting the state to the seaports of Santos and Paranaguá. Ferrogrão aims to provide a shorter, lower-cost option with reduced carbon emissions. It consists of approximately 930 km of railroads running from the Southern to the Northern region, through the Amazon rainforest, to the Miritituba river transshipment terminal complex, located in the city of Itaituba, on the banks of the Tapajós river, in the state of Pará. From Miritituba, the cargo will travel on ferries to the ports and be loaded onto ships for export on the Tapajós, Tocantins, and Amazonas rivers, subsequently making its way to the Atlantic Ocean.
Ferrogrão was designed and developed by a business consortium established in 2012. In 2016, the project was added to the portfolio of the Investment Partnerships Program (Programa de Parcerias de Investimentos – PPI) and incorporated into the National Logistics Plan (Plano Nacional de Logística – PNL) for 2018-2025. This is an iconic project for several reasons. Nearly 1,000 km of greenfield railroads will be crossing the Amazon rainforest. Other data – such as the estimated cost of almost R$ 17 billion and the route the project will take in parallel to the BR-163/MT/PA highway – make the project even more challenging.
Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-Rio) aims to provide in depth analysis of infrastructure planning and development in Brazil and assess the impact such projects will have in the Amazon. As the Ferrogrão project moves forward, it offers important considerations policymakers must take into account as they seek to weigh the costs and benefits of large-scale infrastructure development and points to weaknesses in the current life cycle that go beyond Ferrogrão, offering lessons for the broader infrastructure agenda.
From a socio-environmental perspective, Ferrogrão drew attention of many Brazilian and international institutions in July 2017, when a Provisional Decree was issued to withdraw public access from part of the right-of-way of BR-163/MT/PA, where the railroad will be built. At the time, it was found that such withdrawal of public access would impact almost one million hectares of forests in conservation units. In the Brazilian National Congress, the rural caucus mobilized in favor of enacting the Provisional Decree into law; this, however, was avoided by a presidential veto, prompting worldwide commotion. Between 2017 and 2018, the quality of environmental studies and public consultation procedures under the project was challenged in court twice. The project cycle, however, has remained on course, with public hearings on the concession model held in 2019 and approved in July 2020. Shortly thereafter, the project was sent to the Federal Court of Accounts (Tribunal de Contas da União – TCU).
Prior to the COVID-19 pandemic, the PPI had announced that the concession notice for Ferrogrão would be published in the second half of 2020, but that is likely to be postponed. The government, however, has announced it expects the country’s economic recovery to be based on infrastructure investments, which would likely elevate the priority of the Ferrogrão project. Meanwhile, trends show a new investment model emerging on the global stage, with more rigid and sustainable socio-environmental standards. This trend was gaining momentum among large global investors even before the pandemic. The rise of these standards is partly motivated by the perception that investments, when socially and environmentally minded, are less risky and, therefore, more attractive from a financial standpoint.
CPI/PUC-Rio has assessed Ferrogrão’s governance, planning, and environmental risks as a way to contribute to the ongoing debate on sustainable infrastructure policies and projects in the country. This executive summary presents three studies conducted over the last year, which: (i) analyze the robustness of Ferrogrão’s planning based on a set of structuring questions, which should be prepared in the pre-feasibility stage; (ii) evaluate the administrative rites and the governance of decision-making related to the project; and (iii) develop an innovative methodology to understand Ferrogrão’s area of influence and deforestation risk.