The Impacts of the Vale–Government Disagreement on the Northern Railway of Espírito Santo
- Sep 1, 2025
- 4 min read
Updated: Sep 2, 2025
The highlight of the week in Espírito Santo’s economy is Vale’s setback in the agreement to renew its railway concessions and the investments it was supposed to make as part of it. The disagreement impacts the contract, and even more so what was not a contractual obligation, such as the investment in the 80 km of EF 118 between Santa Leopoldina and Ubu. This latter point has left Governor Renato Casagrande (ES) displeased.
On July 3, 2024, Vale presented to the Government, in a ceremony at Palácio Anchieta, the basic engineering project for the much-anticipated railway stretch connecting the Vitória-Minas Railroad to the Port of Ubu. However, to date, the project has not advanced, lacking even a Public Utility Declaration (DUP), which would allow for land expropriation for federal interest.
According to Infra agency, irreconcilable differences between the Federal Government and Vale frustrated the attempt to reach a multibillion-dollar agreement to renegotiate the concession contracts of the Vitória-Minas and Carajás railways, which had been renewed by the previous government until 2057 and have now become the subject of dispute in the current administration, dissatisfied with the bases and values of the deal sealed in 2020.
After a tumultuous start to discussions in 2023, the government and the mining company agreed last year to bring the matter to the TCU (Federal Court of Accounts) Consensus Secretariat to renegotiate the contracts. Negotiations had been taking place since March of this year but ended on Thursday (28) without a solution.
In addition to the repercussions for the two railways operated by Vale — with the possibility of the matter going to court —, the lack of consensus has cascading implications for the Lula government’s railway program, whose dream of connecting the port of Ilhéus to Brazil’s border with Peru by rail is starting to falter.
This renegotiation was expected to provide the largest portion of funds to fill what is classified as a “viability gap” for new railway concessions, which are too costly for the private sector to enter without state support. The Ministry of Transport was counting on another R$ 7 billion in this agreement with Vale, in addition to the R$ 4 billion that had already been advanced by the company but ended up deposited directly into the Treasury’s account at the end of 2024.
FICO–FIOL
The immediate impacts focus on the concession project of the Fico-Fiol corridor. Based on what had been planned so far, Vale would be a key player in three fronts to make feasible the concession of the railway intended to carry agricultural production from Mato Grosso to the coast of Ilhéus, in Bahia.
In addition to the renegotiation funds potentially being used in a dedicated account for the future concession, the project scheduled for auction next year also depends on Vale because it is responsible for executing, as a counterpart to the renewal, the first stretch of the Fico (Railway of Integration of the Midwest), between Mara Rosa (GO) and Água Boa (MT). This would relieve the future operator of this investment, estimated at R$ 2.7 billion.
This obligation, negotiated in the 2020 renewal, is still expected to be carried out by Vale. But the failed renegotiation talks revealed problems for the project. According to sources, one of the reasons the TCU deal fell apart was Vale’s attempt to withdraw from executing the 80 km of Fico, arguing that the planned deadlines could not be met due to environmental requirements. Without securing this section, the concession of Fico-Fiol faces yet another layer of uncertainty.
Furthermore, the government was betting heavily on the mining company to solve the current issue with Fiol 1, a concession designed to connect Ilhéus (BA) and Caetité (BA), and essential to keeping the Fico-Fiol project alive. However, Fiol 1 was abandoned by Bamin, which won the asset in a 2021 auction.
As reported by iNFRA, Vale and the government had been in talks to find an operator for the new port of Ilhéus and thus persuade the company to take over Fiol 1. But with no consensus in the renegotiations of EFC (Carajás Railway) and EFVM (Vitória-Minas Railway), a solution seems increasingly unlikely.
PETROCITY
Far from this dispute, the Petrocity Group continues to move forward with its network project, linking São Mateus, in Northern Espírito Santo, to Barra de São Francisco, and from there to Brasília (DF) and Mara Rosa (GO), where it connects with the North-South Railway (Itaqui-MA to the Port of Santos-SP).
“We are making progress with the railways as well as with the Urussuquara port project. Everything is on schedule. Expropriations have been carried out through federal Public Utility Declarations (DUPs) for the four sections (São Mateus-Santana do Paraíso-MG, Barra de São Francisco-Brasília, Brasília-Mara Rosa and Corumbá de Goiás-Anápolis), and teams are in the field working on environmental licensing. Soon we will begin the compensation process along the railway route,” said Petrocity president José Roberto Barbosa, without addressing the Federal Government’s dispute with Vale.
He further emphasized that “Petrocity’s railways are the best alternative to connect Espírito Santo’s ports to the country’s Midwest.” Unlike Vale’s railways, which are concessions renewed every 25 years with payments to the Union, Petrocity’s railways are authorized projects, built with private resources, and their authorization contracts are valid for 99 years.
(From the Editorial Staff with information from Agência Infra and A Gazeta)
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