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DP World and Rumo ink agri terminal deal

DP World and Rumo, the Cosan group logistics operator, have signed a Memorandum of Understanding for the construction of a new grain export and fertiliser import terminal at the Brazilian Port of Santos.

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Brazil’s Valor Econômico reported that the project will still be the subject of studies and will have to be analysed by regulatory and environmental agencies, but the projection is that the works may begin in 2022 so that they can be delivered between 2023 and 2024.

 

The idea is to build the new structure inside the DP World private terminal, on the left bank of the port. In addition to containers, the company has been moving pulp since 2019 in a long-term partnership with manufacturer Suzano. To build the two new berthing berths, a pier will be built perpendicular to the quay.

 

For Rumo, the new DP World terminals at are part of a major expansion of its logistics operations, with the aim of transporting agricultural products from the country’s Midwest to Santos.

 

With billion-dollar investments in its rail network, the group wishes to ensure that there are no bottlenecks at the port. Today, the company already has a stake in other terminals in the port of Santos: Terminal XXXIX (partnership with Caramuru Alimentos), the Guarujá Bulk Terminal (TGG, in partnership with Amaggi and Bunge), and the Guarujá Maritime Terminal (Termag, with Bunge).

 

However, the assessment is that an expanded structure will be needed to support the projected growth. By 2026, Rumo will have to expand the capacity of Malha Paulista, a railway that ends at the port of Santos, from the current 35 Mt per year to 75 Mt. The commitment was signed during the early renewal of the concession in exchange for Rs$ 6B in investments.

 

The company is also nearing completion of the North-South railroad works, which was finalised in March 2019 at an auction promoted by the federal government. The operation is expected to start in the first half of 2021 and will connect the producing regions of Goiás, Tocantins, and Minas Gerais to the Santos pier.

 

With the new terminals in partnership with DP World, the port is expected to expand its grain-export capacity by 8 million tons per year. In the case of fertilizer imports, the increase will be 3 Mtpa, according to preliminary studies.

 

The value of the investment has not been revealed. For comparison purposes, a market source estimates that the resources invested in the new port complex should be approximately half of the Rs$2.3B investment made in the VLI terminal in Santos – or in the range of Rs$1B.

 

It is not yet defined how Rumo will enter into the partnership – whether with a portion of the resources or just as a guarantor of the cargo that will arrive at the terminal, through take-or-pay contracts, in which the user undertakes to pay a minimum remuneration for the provision of the service, regardless of the movement.

 

The project also foresees the construction of a new railway access, regardless of the branch used today by the terminal.

 

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