MercoPress. South Atlantic News Agency

Amazon railroad project faces ballooning costs and environmental concerns

Ferrogrão solves no logistical issues while creating significant problems instead

New data provided by researchers from the University of São Paulo, the Federal University of Minas Gerais, and environmental groups like the Climate Observatory showed that the Ferrogrão railroad, a 933-kilometer project linking Mato Grosso’s grain-producing region to Atlantic ports, could cause significantly greater environmental damage than previously estimated. The study criticizes the government’s feasibility analysis, conducted under former President Jair Bolsonaro, for underestimating deforestation risks and cumulative impacts, especially in the Amazon rainforest and indigenous areas.

As per the new investigations, agricultural expansion would be limited to degraded pastures, citing evidence of over 1.3 million hectares of forest converted to pasture and another 1.3 million hectares of pasture to soybean crops between 2012 and 2023 in the project’s area. The report calls for a Strategic Environmental Assessment and suspension of the project’s licensing until risks are better addressed, “considering its high socio-environmental vulnerability and the presence of other current and future economic ventures and activities related to the logistics corridor.”

The technical report titled “Ferrogrão: assessment of cumulative impacts and deforestation projection” carried out by researchers from the University of São Paulo (USP) and the Federal University of Minas Gerais (UFMG), as well as specialists from the Climate Observatory (OC) and the Socio-Environmental Institute (ISA) was released Thursday at the Federal University of Western Pará (UFOPA).

“The dynamics of agricultural expansion show a clear trend of deforestation in the direction of northern Mato Grosso,” the study notes.

Economically, the project faces challenges too. The ”Ferrogrão (EF-170): Lessons for Infrastructure Planning in the Amazon” study led by economist Claudio Frischtak, in partnership with the Amazônia 2030 project, estimated that the railroad would cost R$11.45 billion (US$ 2.02 billion). However, legal hurdles, including the route’s overlap with the protected Jamanxim National Park and a Supreme Federal Court (STF) ruling on the matter still pending, further complicate its viability.

These financial, environmental, and reputational risks had costs ballooning so high that R$ 32.5 billion (US$ 5.73 billion) of public funding would be needed to complete it. Furthermore, critics argue that Ferrogrão solves no logistical issues while creating significant problems instead. Yielding merely 1.6% a year, the idea has become too unattractive to private capital.