The construction of the west-east integration railway (FIOL) by iron ore producer, Bamin, has been halted by its controller, Eurasian Resources Group (ERG), due to ongoing negotiations for the sale of the project.
Bamin confirmed the suspension of work, citing the search for investors for the project as the reason for the stoppage.
Alongside the railroad, which spans a total of 537 km, the project includes the expansion of the Pedra de Ferro mine's capacity from the current 1.0 million mt per year to 20 million mt per year, and the construction of an iron ore sea terminal in Ilhéus, both located in the state of Bahia.
Additional resources required to complete the project are estimated at $5.0 billion.
The Brazilian government has suggested that iron ore miner, Vale, participate in the project, but the company is showing low interest, mentioning that the evaluation is in a preliminary stage.
Analysts believe the project is not economically viable for Vale, considering that Bamin's current annual capacity equates to roughly a single day's production for Vale. They argue that Vale would rather invest in increasing capacity at its own mines, which are already served by railroads and ports.