By Lucila Sigal
BUENOS AIRES, Dec 8 (Reuters) – Argentina, a major global food supplier, plans to supercharge its grain and mining exports with privatization and an ambitious modernization of its aging railway network, which industry leaders say will halve freight costs from regions far from ports.
The first tender is for the Belgrano Cargas network, which operates the country’s three largest freight train lines. To be launched early next year, the initiative could expand production of global exports like soybeans, corn, copper and lithium. It also could help transport sand to Vaca Muerta, a huge shale formation in Argentina’s southwest.
Privatization of the network is part of President Javier Milei’s plan to transfer struggling state-owned enterprises to private hands and attract investment to replenish reserves depleted after years of economic crisis.
LESS FREIGHT “BY TRAIN” THAN IN 1970
Modernizing the railway system after years of neglect will be an enormous challenge.
“The volume of cargo transported (by train) today is below that of 1970, although agricultural production has increased almost six times in the same period,” said Alejandro Núñez, president of state-run Belgrano Cargas y Logística that runs the Belgrano Cargas network.
The network includes three lines that span nearly 8,000 kilometers (5,000 miles) and currently transport about 7.5 million tons of cargo per year, of which 60% are agricultural products and derivatives.
At times, trains travel so slowly on the dilapidated tracks that soybean loads are easily hijacked. Derailments are common.
A further 11,000 kilometers (6,800 miles) of lines will be put out to tender. These are currently out of service entirely.
Most cargo in Argentina is shipped by road. Rail freight transports only 5% of the total, minuscule compared to 20% in Brazil and more than 40% in the U.S. and Canada.
BIDDING INTEREST
The government sees improving the railways as vital to its target of increasing total annual exports by $100 billion in seven years, according to Foreign Minister Pablo Quirno. This year, Argentina has reported total exports of $71.5 billion through October.
Privatization may help by lowering the costs of transporting goods from farms in the north and west of the country to the key ports area around the city of Rosario.
Per ton, it currently costs more to transport cargo from the northern province of Salta to Rosario than to ship it from Rosario to Vietnam, said Gustavo Idígoras, president of grain export chamber CIARA-CEC.
Improving the railways will not be cheap. Núñez estimated an investment of at least $800 million would be needed to upgrade the infrastructure.
