Two railway projects are at the center of debates about the country's logistical challenges. One of them is 477 kilometers long, has an estimated capital expenditure of R$ 11 billion, and a 7-year implementation period. It passes through already consolidated regions of Pará, leads to an ocean port with deep waters capable of receiving large ships year-round, and integrates with existing railways.
The other line is 933 kilometers long, has a capital expenditure of R$ 23 billion, and a 14-year completion timeframe. It crosses environmental protection areas and indigenous lands to end at a river port, from where cargo is transported by barge along a river subject to severe droughts, and operates in isolation from the national rail network.
The first project is the EF-151, the final stretch of the North-South Railway, destined for the Port of Vila do Conde, in Barcarena, Pará. The second is the EF-170, known as Ferrogrão.
“Extending the North-South Railway to Vila do Conde is, in economic and socio-environmental terms, a far superior solution to Ferrogrão,” says Cláudio Frischtak, an economist with experience at the World Bank, managing partner of Inter.B Consultoria, and author of the study Ferrogrão (EF-170): Lessons for Infrastructure Planning in the Amazon, published by the Amazon 2030 project.
Both projects are part of the Northern Arc, a network of routes that allows the flow of production from the Midwest through the ports in the North of the country, shortening the distance to markets in Europe and China compared to the ports in the South and Southeast.
Despite twice the costs, twice the timeframe, greater environmental impact, and dependence on an unstable waterway, the Ferrogrão railway continues to receive the most attention in Brazil.
“Extending the North-South railway to Vila do Conde is, in economic and socio-environmental terms, a far superior solution to Ferrogrão,” says Cláudio Frischtak, managing partner of Inter.B Consultoria.
It's easy to understand why one project is superior to the other when you look at what each one actually delivers. The EF-151 railway enables not only agricultural exports and fertilizer imports, but also the movement of diesel, biofuels, and containers, opening a route that connects the Manaus Free Trade Zone to the Southeast and Midwest regions of Brazil.
Ferrogrão, on the other hand, is intended solely for the transport of agricultural cargo and fertilizers – and even then in a precarious manner. Without connection to any other railway and dependent on a river that operates seasonally, it would be at the mercy of weather conditions. During the 2023 drought, for example, the Tapajós River operated at half capacity due to insufficient draft.
As if that weren't enough, the figures for Ferrogrão presented to the Federal Court of Accounts (TCU) are, according to Frischtak, very far from reality.
The official project, it should be noted, estimated a capital expenditure of R$ 23 billion and a timeframe of 14 years. Using more realistic parameters, Cláudio Frischtak's study arrives at a capital expenditure of R$ 36.8 billion and a timeframe of almost 22 years.
The Internal Rate of Return (IRR), which in the official model reached 11%, falls to 1.6% in the realistic scenario. Without a billion-dollar investment from the Treasury, therefore, no private investor would come close to the project. “Ferrogrão is a public works project disguised as a concession,” says Frischtak. “It will only stand if 90% or more of the capital expenditure is financed by the government.”
The study's calculations showed that, to guarantee an IRR of 11% and maintain the attractiveness of the concession, the National Treasury would have to contribute approximately R$ 32.5 billion – equivalent to 70% of the budget needed to rehabilitate the entire federal highway network in four years.
The environmental issue makes the project even more questionable. Ferrogrão needs to cross 72.7 kilometers within the Jamanxim National Park, a federal conservation unit of 863,000 hectares of Amazon rainforest in southwestern Pará, created in 2006 and protected by law.
The environmental risks are, in fact, quite significant. Studies cited by Frischtak project a potential deforestation of more than 2,000 square kilometers of native vegetation in nearly forty municipalities in Mato Grosso.
Studies cited by Frischtak project a potential deforestation of more than 2,000 square kilometers of native vegetation.
The carbon emissions resulting from this deforestation would have an estimated cost of US$1.9 billion – an amount that, if incorporated into the project, would further compromise its viability. "The construction of the Ferrogrão railway, with its large flow of vehicles and people, will be a vector of destruction for this national park," says Frischtak.
Brazil has a long history of infrastructure projects with underestimated costs and missed deadlines. In 2024, the TCU (Brazilian Federal Court of Accounts) reported nearly 12,000 stalled projects – half of which were financed by the federal government.
In the two main greenfield railways being implemented in the country since the 2000s, projected costs have increased by an average of 63% in real terms, and deadlines have been extended by 13 to 15 years. The Ferrogrão railway replicates this pattern, with the added complication of being planned for the interior of the Amazon region.
According to Frischtak, there is therefore no justification for any government to move forward with the Ferrogrão project, especially considering the commitment to preserving the Amazonian biome.
The choice is obvious. On one side, there is a shorter, cheaper, faster-to-build railway that integrates with the existing network. On the other, a corridor that only exists on paper and would require tens of billions of reais from the National Treasury to be carried out. Insisting on the second option is a mistake that Brazil cannot afford to make.