The Brazilian government is set to sign a potential agreement with mining company Vale VALE3.SA related to railway concessions, which could be signed as early as this month and reach around 20 billion reais ($3.70 billion), according to the country’s transport minister, Renan Filho.
The Brazilian government has been aiming to remove discounts given to rail companies by the previous administration when they received an early renewal of their contracts. It has already reached agreements with companies Rumo RAIL3.SA and MRS.
Minister Filho stated that Vale had proposed to pay part of the amount under a potential agreement by investing in railway construction work. Vale confirmed that discussions with the transport ministry over the railway concessions contracts remain ongoing.
The agreement is expected to directly affect two of Vale’s railways in Brazil: the Northern railway of Carajas and the Southeastern Vitoria-Minas.
The potential agreement is part of the Brazilian government’s efforts to renegotiate railway concession contracts and remove the discounts granted by the previous administration. This move is aimed at generating more revenue for the government and ensuring a more equitable distribution of the benefits from the use of the country’s rail infrastructure.
The estimated value of the agreement, at around 20 billion reais or $3.7 billion, underscores the significance of the negotiations and the potential impact on the mining and transportation sectors in Brazil.