Vale May Bid for New Brazil Railway Rights, CEO Says

Vale may bid for new Brazil railway rights, CEO says (Photo : REUTERS/Ueslei Marcelino)

Brazil's Vale SA (VALE5.SA)(VALE.N), the world's No. 2 mining company, wants to participate in auctions for new Brazilian railway concessions, the company's chief executive, Murilo Ferreira, told reporters in Brasilia on Wednesday.

Vale, already Brazil's largest railway operator, hopes to bid for some of the 10,000 kilometers (6,200 miles) of rail projects the government wants built under a program announced on Wednesday.

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Vale is interested in the plan "anywhere it affects the transport of Vale products," Ferreira said.

Brazilian President Dilma Rousseff hopes to attract $133 billion of private investment in the country's over-stretched and decaying roads, ports, railways and other transportation infrastructure under the plan. Winners will be eligible for subsidized credit from state banks.

Rio de Janeiro-based Vale may participate in the auctions alone, with third parties or as a facilitator or strategic customer for outside bids, Ferreira said.

Vale depends on railways to move the bulk of its output and earns money carrying cargo for third parties. Railways connecting giant iron ore mines in Brazil's Amazon and highland state of Minas Gerais move about a third of the world's 1 billion tonnes a year of sea-borne iron-ore exports to port.

From there the ore is shipped around the world to make steel. Vale is Brazil's biggest net exporter.

Vale's 10,000-kilometer rail network includes the right to operate the Ferrovia Centro-Atlantica, (Central-Atlantic Railway), Estrada de Ferro Vitoria a Minas (Vitoria to Minas Railway), Estrada de Ferro Carajas, (Carajas Railway) and Ferrovia Norte-Sul (North-South Railway).

The Vitoria to Minas railway is one of the world's busiest.

Vale preferred shares, the company's most-traded class of stock, fell 2 percent to 35.50 reais in Sao Paulo on Wednesday.