By Lucila Sigal<\/p>\n
BUENOS AIRES, Dec 8 (Reuters) – Argentina, a major global food supplier, plans to supercharge its grain and mining exports with privatization and an ambitious modernization of its aging railway network, which industry leaders say will halve freight costs from regions far from ports.<\/p>\n
The first \u200btender is for the Belgrano Cargas network, which operates the country’s three largest freight train lines. To be launched early next year, the initiative could \u200cexpand production of global exports like soybeans, corn, copper and lithium. It also could help transport sand to Vaca Muerta, a huge shale formation in Argentina’s southwest.<\/p>\n
Privatization of the network is part of President \u200cJavier Milei’s plan to transfer struggling state-owned enterprises to private hands and attract investment to replenish reserves depleted after years of economic crisis.<\/p>\n
LESS FREIGHT “BY TRAIN” THAN IN 1970<\/p>\n
Modernizing the railway system after years of neglect will be an enormous challenge.<\/p>\n
“The volume of cargo transported (by train) today is below that of 1970, although agricultural production has increased almost six times in the same period,” said Alejandro N\u00fa\u00f1ez, president of state-run Belgrano Cargas y Log\u00edstica that runs the Belgrano Cargas network.<\/p>\n
The network includes three lines that span nearly 8,000 kilometers (5,000 miles) \u2060and currently transport about 7.5 million tons of cargo per \u200cyear, of which 60% are agricultural products and derivatives.<\/p>\n
At times, trains travel so slowly on the dilapidated tracks that soybean loads are easily hijacked. Derailments are common.<\/p>\n
A further 11,000 kilometers (6,800 miles) of lines will be put out to tender. These are currently out of \u200dservice entirely.<\/p>\n
Most cargo in Argentina is shipped by road. Rail freight transports only 5% of the total, minuscule compared to 20% in Brazil and more than 40% in the U.S. and Canada.<\/p>\n
BIDDING INTEREST<\/p>\n
The government sees improving the railways as vital to its target of increasing total annual exports by $100 billion in seven years, according to Foreign Minister Pablo Quirno. This year, Argentina \u200bhas reported total exports of $71.5 billion through October.<\/p>\n
Privatization may help by lowering the costs of transporting goods from farms in the north and west of the \u200ccountry to the key ports area around the city of Rosario.<\/p>\n
Per ton, it currently costs more to transport cargo from the northern province of Salta to Rosario than to ship it from Rosario to Vietnam, said Gustavo Id\u00edgoras, president of grain export chamber CIARA-CEC.<\/p>\n
Improving the railways will not be cheap. N\u00fa\u00f1ez estimated an investment of at least $800 million would be needed to upgrade the infrastructure.<\/p>\n
One probable bidder for the tender is Grupo M\u00e9xico Transportes (GMXT), which operates Mexico’s largest rail network and several freight lines in the U.S., said a source with direct knowledge of the matter who declined to be named. Given the magnitude of the upgrade needed, GMXT plans to invest $3 billion \u2060if it wins, the source said.<\/p>\n
An agricultural consortium made up of Bunge Global, Cargill Inc., Louis \u200bDreyfus Co., Asociaci\u00f3n de Cooperativas Argentinas and Aceitera General Deheza SA has also expressed interest in \u200bthe bidding, as has Anglo-Australian mining company Rio Tinto, according to local media reports.<\/p>\n
Representatives of the companies declined to comment.<\/p>\n
EXPANDING THE FRONTIER<\/p>\n
According to Alfredo Ses\u00e9, technical secretary of the transportation commission at the Rosario Stock Exchange, lower freight costs could help expand the agricultural frontier \u200din the north of the country.<\/p>\n
At least half \u2060of Argentina’s agricultural production takes place more than 300 kilometers from Rosario. Ses\u00e9 estimated that transporting a ton by truck costs between 7 to 9 cents per kilometer, while doing so by rail costs less than 5 cents. The further the farm, the greater boost a modernized railway could bring.<\/p>\n
Argentina’s \u2060mining sector could also benefit. Argentina is the world’s No. 4 lithium exporter and has copper mining projects that could begin production in the next several years.<\/p>\n
“The mining industry needs logistical solutions that allow \u200cit to supply projects and move production,” said Roberto Cacciola, president of the Argentine Chamber of Mining Companies.<\/p>\n
(Reporting by Lucila Sigal, additional reporting \u200cby Maximilian Heath; Writing by Leila Miller, editing by Rosalba O’Brien and David Gregorio)<\/p>\n","protected":false},"excerpt":{"rendered":"By Lucila Sigal BUENOS AIRES, Dec 8 (Reuters) – Argentina, a major global food supplier, plans to supercharge…\n","protected":false},"author":2,"featured_media":181817,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[98758,98760,98762,3858,98759,72,113,98761,98764,67201,61,60,98763],"class_list":{"0":"post-181816","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-agricultural-production","9":"tag-agricultural-products","10":"tag-alejandro-nunez","11":"tag-argentina","12":"tag-belgrano-cargas","13":"tag-business","14":"tag-economy","15":"tag-freight-costs","16":"tag-freight-train","17":"tag-global-exports","18":"tag-ie","19":"tag-ireland","20":"tag-privatization"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/181816","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=181816"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/181816\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/181817"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=181816"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=181816"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=181816"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}