08/18/2014 16h55

Santos Brasil and CSN authorized to expand port infrastructure

Valor International

The National Agency for Waterway Transportation (Antaq) authorized two expansion projects for the port infrastructure of Santos Brasil and the Companhia Siderúrgica Nacional (CSN), which require total investments of R$3.7 billion in the coming years. In exchange, the two companies will be entitled an extension of their leases in the ports of Santos (São Paulo) and Itaguaí (Rio de Janeiro), respectively, until 2047. The original contracts for the exploration of their terminals expire in 2022. To definitely get off the drawing board, the projects still need to receive approval from the Secretariat of Ports (SEP), which has already signaled its intention to adopt this type of arrangement.

The early renewal of leases was possible due to the Ports Law, in force since last year. Before, operators could only send last-minute requests to the Government in order to keep managing terminals in state ports, with no guarantee of success. The new mechanism allows economic rebalancing of contracts.

The expansion of the existing infrastructure is offset by ensuring that businesses gain more time to explore its facilities. "With an extended contract horizon, they have enough security to recover their investment," says Antaq director general Mário Povia.

One of the projects approved by the agency on Friday is Tecar, a solid bulk terminal owned by CSN in Itaguaí, through which flows the iron ore heading to other continents. Antaq director Adalberto Tokarski, who reported the company’s request, says the pledged investments total R$2.5 billion in exchange for a contract extension of 25 years. He adds that works to expand the terminal will generate 1,700 direct jobs and double capacity to 60 million tonnes. Mr. Tokarski is in favor of the early renewal of the lease. "Large projects need institutional security. No company spends these values looking at a short period."

According to information in the CSN’s latest earnings report, the terminal’s expansion began in 2009 and has received investments of R$410 million so far, with completion scheduled for 2016. Valor has learned that the terminal’s capacity is already at 44 million tonnes per year. Sources say the company may even surpass the capacity increase promised to Antaq, since it may gain 25 more years ahead of Tecar.

Santos Brasil, responsible for 43% of containers handled in Santos, has also won the regulatory agency’s approval to operate the terminal in the country’s biggest port until 2047.

The project to expand Tecon Santos requires investments of R$1.2 billion by 2018. Two major interventions are planned: the lengthening of the berthing pier to 1,200 meters from the current 980 and increase the cradles’ depth to 15 meters from 13. With this, the company will be able to raise its capacity to 3.4 million from 2.6 million TEUs (unit of reference in the sector), while maintaining the service quality.

"Only with the contract’s original term we could not repay the investment," says Mauro Salgado, Santos Brasil commercial director, referring to 2022. In addition to the R$1.2 billion amount that will be initially disbursed, the company will invest R$1.9 billion by 2044 — three years before the end of the lease — replacing short-lived equipment. Mr. Salgado points out that upgrading Tecon is essential to allow unrestricted berthing of larger vessels (366 meters), which did not even exist when the terminal was transferred to the private sector, in 1997. The expansion of the Panama Canal will increase the presence of these vessels in the Brazilian coast.

Besides the CSN and Santos Brasil, Antaq also approved the project of ADM, which asks for 20 more years exploring the grain terminal at Ponta da Praia. The region is located in a prime area of Santos and the company intends to invest around R$200 million, not only to expand terminal capacity but in reducing emissions of particulate material. The agency agreed to extend the lease to 2037 from 2017.

So far, only two small-scale projects had received Antaq’s green light, still in the first half. They are liquid-bulk terminals in Santos and are awaiting SEP authorization. Valor has learned that Transport Minister César Borges is expected to sign the early renewal of these first two contracts — of AGEO and Copape — in the coming weeks. The delay has occurred because the government is to preempt potential questioning by the Federal Court of Accounts (TCU), clarifying in advance any doubts from the controlling body.