Vale and government seek solution for disputed railway concessions

The federal government and Vale have resumed discussions in recent weeks to try to resolve the impasse over the rail concessions operated by the mining company—the Carajás and Vitória-Minas railways. According to sources who requested anonymity, both sides are interested in reaching a consensus, but there is still substantial disagreement over the final amount to be paid by the company.

At this moment, the government is finalizing a technical note with a proposal on how to proceed with the discussions, one of the sources said.

Vale signed the early renewal of the rail concessions in 2020, during the administration of Jair Bolsonaro (PL). The addendum provides for an extension of the contract until 2057, in exchange for an 11.8-billion-real concession fee and another 12.9 billion reais in additional commitments (in values released at the time).

Starting in 2023, the new government began questioning the agreed-upon figures and demanding an additional payment. After tough negotiations, at the end of 2024, the parties announced a preliminary agreement establishing the basis for renegotiating the addendum, with a planned 11-billion-real contribution from Vale, of which 4 billion reais had already been paid to the Treasury. However, several issues remained unresolved, and no consensus was reached on the final amount.

The negotiation involves Vale’s two concessions, but each faces different points of contention, the sources said.

In the case of the Carajás Railway, the dispute centers on calculating the concessionaire’s asset base. The government argues that the amount calculated in the 2020 renewal resulted in a payment far below what would be fair, given the company’s expected returns through 2057. For that reason, it is demanding additional compensation.

For the Vitória-Minas Railway, Vale’s obligation was to build a section of the Ferrovia de Integração Centro-Oeste (Fico), between Mara Rosa (GO) and Água Boa (MT). The project, however, turned out to be far more complex and costly than initially expected, generating new discussions.

During the negotiations, the mining company attempted to shed the obligation to deliver the whole Fico segment, proposing to complete only part of it. That possibility, however, is no longer on the table, a source said. Internally, the company believes it is meeting its obligations. The government, meanwhile, says the works will be delayed and that the company will need to answer for it.

Despite the impasse, people involved say both sides are willing to reach an agreement later this year. Public-sector sources believe Vale will have to concede to some extent, since it will require flexibility in the obligations defined in the concession contracts. They also point out that maintaining a good relationship with the federal government is in the company’s interest beyond the transport sector.

At the same time, the government also wants to conclude the negotiation quickly, as the additional amounts to be paid by Vale will help fund new projects that the economic team intends to auction in 2026.

When contacted, the Ministry of Transport, the Civil House, and Vale did not comment on the matter.

Source: Valor Econômico

Sharing is caring!