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Brazil’s Bahia Mineracao to operate Fiol railway

Segment of the East-West Integration Railway (Fiol) Credit: Bamin.

Brazilian miner Bahia Mineracao (Bamin), a subsidiary of Kazakhstan’s Eurasian Resources Group, will operate the stretch of the West-East Integration Railway (Fiol 1), which goes from Ilhéus to Caetité, in Bahia state, Brazil.

In an auction without competitors, Bamin offered R$32 million ($5.8 million) and will be responsible for the completion of the project and for the operation of the stretch, in a concession that will last 35 years, totaling R$3.3 billion ($590 million) in investments.

Fiol 1 Railway – Credit: BAMIN

Construction of the railroad started in 2010 and should have been delivered in 2014, but the federal government claimed a lack of funds. About 75% of the works are completed and the other 25% will be paid for by Bamin.

Bamin’s Pedra de Ferro iron ore mine in Caetité depends on the completion of the railway to become economically viable.

“Our business plays a strategic role in Bahia’s socioeconomic development, and the addition of the FIOL railway marks an important achievement for our integrated portfolio of mining, processing, energy, logistics and marketing operations.” said Benedikt Sobotka, CEO of Eurasian Resources Group.

The company plans to double output at the mine to 2 million tonnes of iron ore by next year and expects to produce up to 18 million tonnes per year.

The Pedra de Ferro mine has reserves of 550 million tonnes of ore, about one-third of which is hematite that contains roughly 65% iron content.

The miner is also building a private terminal at Porto Sul port in Ilhéus.

Fiol construction faces criticism from environmentalists, who believe that the project could impact biodiversity in southern Bahia.