Vale and Bunge will ship ethanol on the North-South railway
A partnership between Vale and Bunge will open a new route for export of ethanol to Port of Itaqui, in São Luís, Maranhão. Vale will export ethanol produced in Tocantins beginning in the second half of 2010. There will be 100 million liters in the first year expanding to 300 million liters by 2012.
This ethanol will be produced by plants of Bunge that are currently being built in Tocantins. Bunge has plans to build three plants in the city of Pedro Afonso. The first will start operating in 2010 and milling 1.4 million tons of cane, with investments estimated around U.S. $ 350 million.
Sources at Vale, also said the shipment will be made company’s train yard in Guaraí, Tocantins. “From Guaraí, ethanol will be transported in 25 railcars of 100 thousand liters each to the Port of Itaqui on the North-South,” he said. Vale will not be responsible for storage or shipment of the product on arrival at the port. He said, storage is the responsibility of Granel Química.
The the North-South railroad between São Luis, Maranhão, and Guaraí, in Tocantins, is operational. Another passage, between Guaraí Palmas, should be come online by March 2010. According to sources, when the new route is ready, the production of other plants could be exported by this route. “We estimate that by 2014 we will be exporting around 800 million to 1 billion liters per Itaqui” he said.
The route becomes competitive as the freight costs have fallen considerably, especially by sea. The Port of Itaqui is much closer to Europe than the ports of Santos and Paranagua and also has access to markets in the Caribbean and the Pacific via the Panama Canal.
In addition, Vale can also ship ethanol from Tocantins to São Luis and there connection to the Transnordestina railroad to supply the Northeast. Currently, the Vale has no logistics operation to export ethanol. “Although we are equipped to export via the port of Santos and Victoria, we have been concentrating on the domestic market,” said Ney Fontes Filho, Fuels Manager for Vale. The company expects to shipy 350 million liters of ethanol in 2009, a volume 118% higher than the same period last year.