CONSTRUCTION work has begun on the Port of Sao Luis project in northeastern Brazil. The new port will play a role in exporting soybeans and corn to China under long-term contracts signed last September.

The project consortium is led by China Communications Construction Company which owns a 51% stake. It has two Brazilian partners, WPR and Lyon Capital. Estimated project cost is US$244 million. Around 4,000 jobs will be created during the construction phase.

The city of Sao Luis is located in the state of Maranhao. The foundation stone was laid at a ceremony on March 19, which was attended by Flavio Dino, governor of Maranhao, and Chinese ambassador to Brazil, Li Jinzhang. Li said that the port will help drive regional development and attract more companies to northeastern Brazil.

“Once the port is completed, it will integrate the logistics corridor of Brazil's northeast region and solve some of the bottleneck issues Brazil faces in logistics,” says China Communications Construction Company representative Chen Zhong.

The agreement for China Communications Construction Company to lead the port project was announced last September during a visit to Beijing by Brazilian President Michel Temer. He met with Chinese President Xi Jinping ahead of the BRICS summit in Xiamen.

During the visit the two countries signed a US$9.9 billion agreement on iron ore and soybean exports to China. This will require a new network of railways and ports, which China is supporting.

Sao Luis Port will be able to handle 10 million tonnes annually. Around seven million tonnes will comprise soybean and corn. The port will also handle fertilizer and oil products. Brazilian exports of soybean to China hit an all-time high in 2017.

Also announced in Xiamen last September was an agreement for China Merchants Port Holdings (CMPort) to pay US$925 million for a 90% stake in Terminal de Contêineres de Paranaguá, one of the biggest container ports in South America. The sellers were private equity firm Advantage International and APM Terminals.

And while Temer was in Beijing, another Chinese consortium announced that they will be building a new port north of the city of Ilheus in Bahia state. Porto Sul will form part of an integrated mining and logistics project, supplying China with iron ore. The deep water port will be capable of handling Capesize vessels (the largest dry cargo ships) shipping iron ore from the Pedra de Ferro mine located near the city of Caetité.

Last September, Kazakhstan-based Eurasian Resources Group’s (ERG) signed an agreement with the state of Bahia and a consortium of Chinese companies to develop a US$2.4 billion integrated mining and logistics project. ERG will be the majority owner with the state of Bahia as partner. The mine will produce 20 million tonnes of concentrate per year.

ERG and Chinese firms are also interested in participating in a planned West-East rail line (Fiol) which will connect the landlocked state of Tocantins to the coast of Bahia. Work is already well progressed on Phase 1, which will be used to transport iron ore from the Caetite mine to the coast. Two more phases will go inland and will also be important for the transport of agricultural products.

Bidding documents are expected to be filed in the third quarter of 2018, with the winner announced in the fourth quarter.

Chinese involvement in Brazilian infrastructure is also being supported by the Cooperation Fund for the Expansion of Productive Capacity. The fund is a mechanism established by the Secretariat for International Affairs of the Ministry of Planning, Development and Management of the Federative Republic of Brazil (SEAIN) and the China-LAC Industrial Cooperation Investment Fund Co., Ltd. (CLAIFUND) that will classify projects deemed as a priority by the Brazilian government in sectors of infrastructure and that can facilitate the cooperation of industrial capacity between Brazil and China.

Brazilian media have reported that a railway line linking Sinop, in Mato Grosso, to Miritituba in Para, will likely receive support from the fund.

Meanwhile Chinese companies are also interested in bidding for Line 6 of the Sao Paulo metro. The state government of Sao Paulo has launched a new bidding process after the previous concession winners (including Odebrecht) failed to complete the project and requested the termination of their concession contract.