BBF Brazil Report Railway Market

The Brazilian Market
for Railway Technologies.

December 2010
osec.ch

2 | The Brazilian Market for Railway Technologies

Executive Summary. ............................................................ 4
1. Overview of the Railway Market. ............................. 5
1.1 Brazils Transport System ......................................... 5
1.2 Historical Development ............................................ 7
1.3 Future Growth .......................................................... 8
1.4 Driving Forces in the Sectors Future Development. . 9
1.4.1 Network interconnection .................................... 9
1.4.2 Containerization of transport............................ 10
1.4.3 Domestic railway suppliers .............................. 10
1.4.4 Major sports events .......................................... 10
2. Railway Transport Policy in Brazil. ........................ 11
2.1 Legal and Regulatory Framework. ..........................11
2.2 Visions and Plans. ...................................................11
2.3 Financing Investments ............................................ 12
2.3.1 BNDES ........................................................... 12
2.4 Key Institutions and Industry Associations ............. 12
2.4.1 Ministry of Transports ..................................... 12
2.4.2 Ministry of Cities ............................................. 13
2.4.3 National Association of Rail Transporters ........ 13
2.4.4 National Public Transport Association ............. 14
2.4.5 Tourist Train Operators Association ................. 14
2.4.6 Railroad Industry Association .......................... 14
2.4.7 Rail and Road Materials and Equipment .......... 15
3. Railway Operators................................................... 16
3.1 ALL Amrica Latina Logstica. ............................... 16
3.1.1 General Information ........................................ 16
3.1.2 Business Focus and Market Strategy ................ 16
3.1.3 Business Development Capacities .................... 17
3.1.4 Traction ........................................................... 17
3.1.5 Safety and IT Systems ..................................... 17
3.1.6 Investment and Procurement ............................ 17
3.2 MRS. ...................................................................... 18
3.2.1 General Information ........................................ 18
3.2.2 Business Focus and Market Strategy ................ 18
3.2.3 Business Development Capacities .................... 18
3.2.4 Traction ........................................................... 18
3.2.5 Safety and IT Systems ......................................19
3.2.6 Investment and Procurement ............................19
3.3 Vale. ........................................................................19
3.3.1 General Information .........................................19
3.3.2 Business Focus and Market Strategy.................19
3.3.3 Business Development Capacities ....................20
3.3.4 Traction ............................................................20
3.3.6 Investments / Procurement ...............................20
3.3.7 EFC Estrada de Ferro Carajs ...........................21
3.3.8 FNS Ferrovia Norte Sul ....................................21
3.3.9 EFVM Estrada de Ferro Vitria-Minas .............22
3.3.10 FCA Ferrovia Centro Atlntica ......................22
3.4 TLSA Transnordestina. ............................................23
3.5 CPTM / Metr So Paulo. .......................................24
3.5.3 Energy Supply, Transmission and Use ..............24
3.6 CBTU Companhia Brasileira de Trens Urbanos ......25
3.6.1 Ownership / Decision-makers ...........................26
3.6.2 Business focus / Market strategy ......................26
3.7 Serra Verde Express. ...............................................26
4. High-Speed Train Project. .......................................28
4.1 Project Description. ................................................28
4.2 Decision-Making Process........................................29
4.3 Interested Consortia. ...............................................30
5. Railway Construction Business. ..............................31
5.1 Engineering and Construction Companies. .............31
5.2 Electric Installation Suppliers. ................................35
5.3 Passenger Information / Ticket Vending Systems. ....37
5.4 Fleet Management. .................................................37
Table of Contents.

The Brazilian Market for Railway Technologies | 3
5.5 Signalling. .............................................................. 38
5.6 Telecommunications. .............................................. 40
5.7 Consulting. ............................................................. 40
6. Rolling Stock Manufacturers. ................................. 41
6.1 Overview of the sector. ........................................... 41
6.2 Manufacturers. ....................................................... 43
6.3 Maintenance / Workshops. ...................................... 48
7. Import of Railway Equipment. ............................... 49
7.1 Import Volume and Trends. ..................................... 49
7.2 Import Duties. ........................................................ 52
7.3 Taxes. ..................................................................... 53
7.4 Import Procedures. ................................................. 53
8. Selling Rail Products in Brazil. ............................... 55
8.1 Public Procurement. ............................................... 55
8.2 Procurement by Private Companies. ....................... 55
8.3 Technical Standards. .............................................. 56
8.4 Product Registration / Certification Requirements. . 58
8.5 Finding a Distributor. ............................................. 59
8.6 Approaching Potential Customers. ......................... 61

Annexes

Annex A Map of Brazils Railway Network
Annex B Railway Network Expansion
Annex C Scale of Brazils Biggest Cities
Annex D Table of Planned Investments
Annex E Table of Fleets of Electric Urban Trains
Annex F Table of Tourist Trains
Annex G Import of Rail Products by Tariff Code
Annex H Technical Standards
Annex I List of Abbreviations


Brazil is emerging as an attractive market for railway technologies.
Having neglected its railway systems during the second half of the
20th century, the country now suffers from infrastructure bottle-
necks (see Chapter 1). It has come to realize that railways offer
the best solution for both freight transport over large distances and
passenger transport in congested urban areas (see Chapter 2).
The Football World Cup 2014 sets an effective deadline for imple-
mentation of urban transport solutions. With shorter timelines and
lower costs than subways, light rail systems and monorail projects
are gaining ground.

The freight subsector was privatized in the late 1990s. The private
concessionaires have consolidated their operations and increased
their competitiveness. While the transport of commodities, espe-
cially iron ore, still plays a predominant role, the railway operators
business strategies are becoming more aggressive, with a focus
on containerization and developing intermodal transport solutions
(see Chapter 3).

Extensive new railway lines are under construction, like the North-
South axis and the Transnordestina, and more are being planned
by the government. The most spectacular project is the high-speed
train between Rio de Janeiro and So Paulo / Campinas. In the
latter case, the government has set tough conditions for a public-
private partnership, and insists on technology transfer. A decision
on this project is imminent (see Chapter 4).

The new projects have spurned a renaissance of the railway con-
struction business, with Brazils major construction companies
taking the lead (see Chapter 5). Most of the major rolling stock
manufacturers are by now established in Brazil; some are expand-
ing their production capacities in anticipation of rising demand (see
Chapter 6). The re-emergence of a national rail industry has not
affected the import of rail products in a negative way, and most
import duties remain at 14% (see Chapter 7). However, domestic
suppliers are privileged in public procurement and in projects
financed by the national development bank, and the introduction of
national technical standards may create some additional difficulties
for foreign suppliers (see Chapter 8). In order to successfully sell
rail products in Brazil, therefore, it is recommended to find a strong
local partner.

Executive Summary.

1.1 Brazils Transport System
Brazil is the fifth largest country in the world in terms of surface
area, with more than 8.5 million km2. It is also number 5 in terms
of population, with the majority of its 192 million people concen-
trated in a 200 km belt along the coast, as well as in the more
industrialized and urbanized South Eastern and Southern States
(from Minas Gerais in the center down to Rio Grande do Sul on
the border to Uruguay and Argentina).

From the early colonial days, land transportation has been a chal-
lenge, given the countrys size and topography. Its economy was
based and continues to rely on the export of mineral and agricul-
tural commodities, which need to be shipped from inland to the
industrial centres and ports. In recent years, it has been Asias
insatiable demand for commodities that sustained Brazils econ-
omy, putting the countrys transport infrastructure under severe
stress.

More than half of all freight movements in Brazil, an estimated
58%, occur on the roads. The railroads share in the modal split is
slowly increasing, but currently does not exceed 25% - experts
suggest it may lie substantially below this official number. Other
means of transport include waterways (13%), pipelines (3.6%) and
air freight (0.4%). Rail transport in Brazil therefore holds a low
market share by international standards, especially when com-
pared to other countries of continental dimensions (see Table 1).

Table 1: Freight transport, modal split compared
Rail Road Other
Russia 81% 8% 11%
India 48% 50% 2%
Canada 46% 43% 11%
USA 43% 32% 25%
Australia 43% 53% 4%
China 37% 50% 13%
Brazil 25% 58% 17%
Source: ANTT 2009

As the modal split demonstrates, Brazils transport system is far
from allocating cargo to the optimal means of transport. The road
is used for shipping mass cargo even over long distances, e.g. soy
from Mato Grosso to the ocean ports (2000km). In Brazils largest
seaport, Santos (near So Paulo), no less than 81% of cargo is
delivered by road and just 12.7% by rail. In harvest times, trucks
(and their drivers) queue for 36 hours or longer before they are
allowed into the port.

It has come to be widely recognized that Brazils dependence on
road transport threatens the countrys competitiveness and further
development. Bottlenecks and traffic congestion appear not just in
the big cities and in the vicinity of seaports, but also overland.
According to estimates, transport inefficiencies force Brazilian
companies to hold 21 days worth of extra stocks compared to their
US competitors.

Brazils railway network (see Map in Annex A) is Latin Americas
largest, but still considerably less dense than those of its global
peers, with just 3.4 km / 1000 km2 (compared to 130 km for Ger-
many, 21 km for India and the USA, 7 km for Canada and China).
The networks structure corresponds to the spatial distribution of
economic activities a century ago - indeed, roughly 80% of tracks
were laid more than 100 years ago, and the biggest part is narrow
gauge:

Table 2: Brazils railway network extension
Km
Narrow gauge (1m) 22.897
Broad gauge (1.6m) 5.069
Other 510
Total 28.476
Electrified 1.600
Source: ANTF

It should be noted, however, that of the 28.476 km of track officially
registered, 9000 km of narrow gauge lines are not actually utilized,
and 10.000 km receive no more than one train per day, according
to the National Land Transport Agency ANTT. On the other hand,
roughly 10.000 km of new railway lines are planned, of which half
are under construction and should be completed by 2015 (see
Annex B). This is the case of one stretch of the North-South axis
(1480 km), the East-West axis crossing the State of Bahia (1490
km), and the Trans-Northeast railway (1728 km).

Despite of its large hydropower resources and generally green
energy matrix, freight transport relies on diesel-electric traction.
Electric traction (usually 3000 V) is and will probably remain limited
to urban and suburban networks; the new high-speed line Rio de
Janeiro So Paulo / Campinas may add another 511 km.

1. Overview of the Railway Market.


Efficiency and safety of railroad transport have greatly improved
over the last decade, but are still hampered by the big number of
level crossings (12.289 countrywide) and by irregular housing next
to railway tracks. These problems contribute to slowing down the
average speed of trains to just 25 km/h one of the worlds lowest.

Rail transport in Brazil means predominantly freight transport of
mass cargo over long distances and urban passenger transport. In
the freight category, more than 70% of transport production is
concentrated on one type of cargo, iron ore, which is also by far
Brazils most important export commodity.

Table 3: Cargo transported by Brazilian Railways (2007)
RTK mio.
Iron ore 189.251
Other Iron and Steel industry inputs 10.356
Cement 2.399
Cement industry inputs 2.008
Coal 4.099
Minerals 5.222
Soy 18.052
Other agricultural products 11.734
Fertilizers 4.786
Pulp / timber 1.154
Fuel 5.595
Containers 1.993
Other cargo 467
Total 257.117
Source: ANTT

As shown in Diagram 1, the total volume of cargo transported has
steadily increased over the past decade:

Diagram 1: Cargo volume (mio. t), 1997-2009
0
50
100
150
200
250
300
350
400
450
500
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: ANTF. Iron ore and coal are shown in orange, other cargo in blue.
In the 1997-2007 period, cargo volume grew 4.9% annually on
average. ANTF expects that the 10% decline in 2009 was more
than made up by growth in 2010.

In the whole of Brazil, there are 34 companies licensed for rail
passenger transport. The big players are the public transport
providers in Brazils megacities So Paulo and Rio de Janeiro,
which account for 86% of trains and 90% of passengers trans-
ported nationally, as Table 4 shows:

Table 4: Urban passenger transport companies
Company Train fleet Passengers / day
CPTM (So Paulo) 377 1.554.000
Metr So Paulo 164 2.389.000
SuperVia (Rio) 180 457.000
Metr Rio 32 531.000
Others 116 543.000
Total 869 5.474.000
Source: Revista Ferroviria. Passenger average for August 2010.

See Annex E for a more detailed account of passenger transport
fleets in Brazil.

Public transport has a market share of approximately 36% in Bra-
zils bigger cities (above 1 million), ahead of pedestrian (33%) and
car traffic (31% of all trips). For Rio de Janeiro, it is estimated that
metropolitan trains and subways together account for just 7% of
public transport, while buses and vans bear 89%. Clearly, there is
a lot of room left for passenger transport on rails. Given the size of
the two megacities So Paulo has 11 million citizens, plus 8
million people in the conurbation, Rio has over 6 plus 5 million
and their frequent traffic jams, the extension of subway networks
remains utterly inadequate: Rios subway lines are 41 km long,
and So Paulos subway lines stretch 60 km. On the CPTM lines,
slow passenger trains are eating away capacity (these will be
eliminated upon completion of a rail beltway around the city).

The trouble is that subway line construction is costly (estimated at
BRL 250 million = CHF 147 million / km in So Paulo)
1
and ad-
vances too slowly to bring tangible benefits within an electoral
cycle. Other modes of public transport, including bus rapid transit
(BRT) corridors, tramway / light rail (called VLT in Brazil), elevated

1
The Real (BRL) is Brazils currency unit. An exchange rate of CHF
1.00 = BRL 1.7 is applied throughout this report.

train systems and monorails, or even ropeways (in Rio), are
quicker and cheaper to implement and inaugurate.

For long-range passenger transport, Brazilians rely on coach and
increasingly air travel. Intercity passenger trains once existed,
including the overnight silver train which ran between So Paulo
and Rio, but the service was scrapped in the late 1990s. A project
for a high-speed train between the cities (and airports) of Rio de
Janeiro, So Paulo, and Campinas has been discussed ever since
(the current state of this project is discussed in Chapter 4 below).

If realized, the high-speed train may herald a new era of rail pas-
senger transport in Brazil. Technical studies for new high-speed
lines (stretching from So Paulo / Campinas towards Curitiba and
Belo Horizonte) are under preparation, regional trains might be
reintroduced on the Santos So Paulo Campinas line, and the
feasibility of passenger traffic on some of the newly built railway
lines (e.g North-South axis) will also be evaluated.

1.2 Historical Development
Railroad construction in Brazil started in the mid 19
th
century and
was promoted by British companies. Their primary purpose was to
transport agricultural commodities, e.g. coffee beans, from the
plantations to the nearest ports. Urban tramways (called bondes)
were introduced at the beginning of the 20
th
century by a Canadian
company.

By 1928, Brazil already had a network of 30.000 km of railways. At
that stage, public investment was redirected at improving Brazils
road system. This was prompted by a fundamental shift in eco-
nomic policies: Instead of relying on the export of commodities (the
price of which had fallen dramatically during the global depression
of the 1930s), Brazilian governments now wanted to turn the coun-
try into a self-sufficient industrial power. After World War II, the
development of a national automobile industry was to play a cen-
tral role in this design, and transport policy was shaped accord-
ingly. The production of automobiles, coaches and lorries, and the
construction of highways even in the most remote areas as in
the case of the Transamaznica became associated with the
notion of progress.

Railway operators, on the other hand, became aware that their
concessions would not be extended for political reasons, and
consequently reduced investments. The process of nationalization
began in 1946, as the British-owned So Paulo Railways conces-
sion expired. In 1957, the federal government created the Rede
Ferroviria Federal (RFFSA), which was to run a total of 42 na-
tionalized railway lines. The government of So Paulo created a
similar state company, Fepasa, for 5 railway lines of its own. Public
ownership of railways was seen as an expression of economic
independence, but public investments in railway maintenance or
expansion remained far below necessities, while tariffs were kept
artificially low.

Picture 1: Construction of the Trans-Amazon highway (1972)

Source: Veja magazine

Throughout the 1960s and 1970s, Brazil recorded record growth
rates (close to those achieved by China nowadays), accompanied
by massive investments in infrastructure which were financed
externally. With the second oil crisis in 1983, Brazils current ac-
count deficit became unsustainable, and a debt crisis erupted. For
two decades, Brazil was struggling to control hyperinflation and to
bring public accounts back into balance, with very limited access
to international capital. The rate of investments into transport infra-
structure dropped from 2% of GDP (1975) to 0.3% of GDP (1993)
and has remained low ever since.

Brazils railway network was in an extremely bad shape when the
government decided, in 1997, to privatise the sector. The assets of
the two State companies RFFSA and Fepasa, all but bankrupt,
were split into several portions and offered in concession to private
companies, namely Amrica Latina Logstica S.A. (ALL), MRS
Logstica S.A., Vale (former Companhia Vale do Rio Doce),
Ferrovia Centro-Atlntica S.A. (FCA), Ferrovia Tereza Cristina


S.A.(FTC) and Transnordestina (former Companhia Ferroviria do
Nordeste). These are the major players in the Brazilian railway
market nowadays (see Chapter 3).

Between 1997 and 2009, the investments done by these conces-
sionaires amounted to a total of BRL 21 billion (CHF 12.3 billion).
These resources were intended for the recovery of the rail net-
work, the adoption of new technologies, the reduction of the num-
ber of accidents, professional training, and the acquisition and
reform of undercarriages.

Table 5: Investments by railway concessionaries 1997-2007
BRL million
Rolling stock 8.770
Infrastructure 1.680
Superstructure 4.360
Telecommunication 220
Signalisation 410
Workshops 330
Other 1.930
Total 17.770
Source: ANTF

The results are tangible: Since privatisation, the volume of goods
increased by 81%, container traffic has grown 75 times its original
size, and the accident rate has fallen by around 80%.

RFFSA had also operated urban transport systems in Brazils
major cities, through its erstwhile subsidiary, Companhia Brasileira
de Trens Urbanos (CBTU). In 1993, the federal Ministry of Cities
took over CBTU. While it continues (for the time being) to operate
passenger trains in the cities of Recife, Belo Horizonte, Joo Pes-
soa, Natal and Macei, the urban rail transport systems of the
biggest cities Fortaleza, Salvador, So Paulo, and Rio were trans-
ferred to the respective State governments since 1994. These
systems are now operated by State-owned companies (e.g. So
Paulos CPTM), mixed companies (e.g. Salvadors CTS) or by
private concessionaries (e.g. Rios Supervia). In Rio Grande do
Sul (with the city of Porto Alegre), the federal government owns
99% of the company Trensurb, which runs an urban passenger
line and plans to construct a subway.

It was only in the 1970s that the State governments began invest-
ing in metropolitan subways, but the pace of expansion remained
rather slow. With traffic congestion ranking high on the political
agenda, State and city politicians have recently raised budgets for
subway investments substantially, and entered into public-private
partnerships. The State of So Paulo, for instance, has an invest-
ment budget of BRL 4.6 billion for metropolitan transports in 2011,
and plans to prioritize train and subway expansion. Support from
development banks (like Brazils BNDES, the Inter-American De-
velopment Bank, and the World Bank) has also been forthcoming.

Picture 2: Subway construction in So Paulo

1.3 Future Growth
Brazil today has a stable economy with GDP growth rates pro-
jected at around 5% for 2011 and 2012. The country has ridden
the global financial crisis rather well, thanks to sustained domestic
demand and Asias hunger for raw materials (like iron ore and
soy), which Brazil supplies in ever-growing numbers.

Diagram 2: Brazils GDP growth rate (%)
-1
0
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 e 2012 e

Source: Credit Suisse


The rail sector is a beneficiary of the economys overall success,
and feels the need to expand its capacities. According to informa-
tion collected by the magazine Revista Ferroviria, railway pro-
jects worth more than BRL 106 billion (CHF 62.4 billion) are cur-
rently planned or under execution in Brazil, of which BRL 76 billion
(CHF 44.7 billion) in the passenger segment, and BRL 30 billion
(CHF 17.6 billion) in the freight segment (see detailed list of pro-
jects in Annex D).

The National Transport Confederation (CNT) estimates that a total
of 11.000 km of new tracks will be laid and nearly 5000 km will
need to be refurbished. Some lines will have to be duplicated and
bottlenecks eliminated. The introduction of dry ports and multi-
modal logistic centres will also require substantial investments.

Important new railway concessions stretching a total of 9740 km
were granted to Valec, a state-owned company controlled by the
Ministry of Transports. By the end of 2010, Valec had already
invested a total of BRL 3.4 billion for the construction of 909 km of
new lines. Valecs concessions, shown in Map 1, are meant to
integrate existing networks and provide new transport alternatives
for farmers on the new frontiers of agricultural devepment.

Map 1: New integration railways
Source: Valec
Red: North-South Railroad
Yellow: West-East Integration Railroad
Blue: Transcontinental Railroad

For urban passenger transport, the Ministry of Cities projects that
the existing metro networks will add 133.5 km to their existing
networks (215.7 km) by 2022. Furthermore, the concession for a
high-speed train linking the big metropolitan areas of Rio and So
Paulo, over a distance of 511 km, is due to be awarded in April
2011.

The demand for rolling stock is set to increase dramatically over
the decade, as Table 6 shows:

Table 6: Projected Rolling Stock demand, 2011-2020
units
Locomotives 2.100
Freight cars 40.000
Passenger coaches 4.000
Source: Ministry of Transports, November 2010

The Brazilian rail industry estimates that there will be 100.000
wagon units and 3000 locomotives effectively operating in 2012.
By setting up their own productive capacities in Brazil, big interna-
tional players (like GE, Siemens, and Bombardier) show confi-
dence in the mid- and long-term prospects of the Brazilian market.

1.4 Driving Forces in the Sectors
Future Development.
Apart from Brazils accumulated backlog of infrastructure projects,
there are a few factors that will drive the development of railway
transport in Brazil:
1.4.1 Network interconnection
The planned integration railways notably the North-South, Cen-
ter-West, West-East and Transnordestina axes will lend a new
quality to Brazils railway network as a whole. Instead of just linking
mines to their nearest seaports, railways will become useful for
distribution of goods within Brazils domestic market. To get access
to this network will become ever more attractive for industrial pro-
duction centres. Furthermore, the creation of dry ports and multi-
modal logistic platforms will help to overcome the shortages asso-
ciated with the low density of the network.


1.4.2 Containerization of transport
Container transport is the fastest-growing segment of the freight
transport market, and thus a focus for many railways operators.
Container traffic in the port of Santos (Latin Americas biggest) is
expected to grow from approximately 3 to 10 mio. TEU by 2024,
and a substantial part of this cargo will have to be transported on
rails.
1.4.3 Domestic railway suppliers
Brazilian transport policy has already been subordinated to indus-
trial policy objectives (like the establishment of a national car in-
dustry) in the past. The same mechanism will work in the favour of
railroads in the future. The production of rail equipment offers an
opportunity to add value to Brazils heavy industries, and the coun-
try has also attracted significant foreign investments of rolling stock
manufacturers. As they gain political influence, these industries will
weigh in favour of a continuous expansion of railway networks and
services. Brazil may adopt measures (like the lifting of tariff ex-
emptions and local content requirements) to protect domestic
railway suppliers, but niche players will always find interesting
opportunities in a growing market.
1.4.4 Major sports events
Brazil will host the 2014 FIFA World Cup and the 2016 Olympic
Games. FIFA World Cup matches will be played in 12 cities: Belo
Horizonte, Braslia, Cuiab, Curitiba, Fortaleza, Manaus, Natal,
Porto Alegre, Recife, Rio de Janeiro, Salvador and So Paulo. Rio
de Janeiro will host the Olympics in 2016.

The 12 host cities are committed to upgrade their public transport
system (e.g. by connecting airports, city centres and stadia). Even
though these events last no longer than a month, they serve as
catalysts for lasting improvements in urban passenger transport.
By setting a deadline which cannot be postponed, FIFA and the
Olympic Committee are putting pressure on a number of invest-
ment projects which might otherwise slip down in the order of
political priorities. Brazilian politicians will have lots of reasons to
deliver on schedule, since 2014 will be another election year.

2.1 Legal and Regulatory
Framework.
Brazils Constitution of 1988 allows for both direct operation of rail
transport services by the State and for concessions to private
companies.

Concessions have been granted since the 1990s for (renewable)
periods of 30 years; they are administered by the National Land
Transport Agency (ANTT). Maximum tariffs as well as production
and safety targets are included in the concession. Concessionaries
are responsible for both track maintenance and train operation.

The legal framework for concessions is currently under review by
the Ministry of Transports and the ANTT. The declared objective is
to maximize the use of infrastructure, by encouraging interopera-
bility and regulating access to previously exclusive lines. Railway
companies, on the other hand, advocate a simplification of their
reporting obligations and of procedures to obtain environmental
licenses.

A legal framework for public-private partnerships was established
by federal law in 2004. It has been successfully tested in the case
of So Paulos subway line 4 (ViaQuatro).

Some labour-related and environmental liabilities stemming from
the extinct RFFSA still hang over the sector, leaving doubts on the
eventual responsibility of private concessionaries and their Board
of Directors.

2.2 Visions and Plans.
As the 1990s were characterized by austerity and privatisation, the
Brazilian federal government entered the 21
st
century with little
capacity to plan the development of the national transport system.
It lacked experts, data and administrative capacity to deal with the
manifold challenges posed by vigorous economic growth of the
last decade. It was only in 2007 that the Ministry of Transports
finally presented a long-term vision in the form of the National Plan
of Logistics and Transport (PNLT), which had been elaborated
jointly with other Ministries and the States of the Federation, based
on regional macroeconomic projections for the period 2007-2025.
It aims at guiding the investments made by the Ministry of Trans-
ports, but also at helping the public and private sectors to plan
their investments properly.

The PNLT calls for a fundamental shift in the modal split, with a
stronger role for rail and water transport, taking into account their
energy efficiency and productivity. By 2025, freight transport
should be concentrated on the railways (35%), with road transport
down to 30%. To achieve this, the plan projects the construction of
at least 11.800 km of new railway lines.

The PNLT contains a (non-exhaustive) list of recommended in-
vestments for all modes of land transport in Brazil, for both public
and private agents. Table 7 shows the total of investments into the
railway sector and their share in the total transport investments
recommended for the respective period:

Table 7: Railway-related Investments in the PNLT
Period BRL billion Share of total
2008-11 33.7 30.9%
2012-15 53.1 62.9%
Post 2015 63.3 65.1%
Total 150.1 51.6%
Source: PNLT, 2007

These numbers express the governments in-principle preference
for rail transport in the long run. In political reality, however, the
government finds it hard to shift the focus of investments away
from highways maintenance and expansion. In the second version
of its Growth Acceleration Programme (PAC 2) a showcase for
all public and private investments in the period 2011-2014 the
government forecasted BRL 48.4 billion (CHF 28.5 billion) of in-
vestments into road infrastructure and BRL 43.9 billion into rail-
ways. The railways are thus expected to receive just 42% of total
transport infrastructure investments in the near future. If realized,
this would still represent a big leap forward.

The governments vision, as enshrined in PAC 2, is twofold: first,
to expand the rail network in order to achieve the development of
a modern and integrated railway system with high capacity and
linking areas of agricultural and mineral production to ports, indus-
tries and consumer markets. Second, to implement projects and
studies of the high-speed trains in order to connect the principal
urban centres of the country, improving mobility, comfort, time and
safety.

2. Railway Transport Policy in Brazil.


2.3 Financing Investments
When the Brazilian government decided to hand over the opera-
tion of railways to private concessionaries, it did so primarily for
financial reasons: the state-owned RFFSA, which managed the rail
networks before the concession, had accumulated losses of BRL
2.2 billion between 1994 and 1997.

With privatization, freight railways turned into a source of govern-
ment income: Since 1997, the Federal Government has collected
from the private sector BRL 11.7 billion in fees for concessions,
leases, and taxes. This amount of money ought to be reinvested in
infrastructure improvements, but so far, the government spent just
BRL 850 million on that purpose. The private concessionaries
(members of ANTF) argue that they invested BRL 22.5 billion in
the meantime, and BRL 2.86 billion in 2010.

Most railway operators do not generate enough profit to finance
more than small-scale investments by themselves. They rely on
resources from their parent companies, joint ventures with impor-
tant customers (e.g. mining companies) and on credits from the
National Development Bank (BNDES). With inflation running high
and a low savings rate, real interest rates are expected to remain
among the worlds highest in the years to come.

Urban passenger transport continues to be heavily subsidized,
while fares are kept artificially low. In the case of CBTU, which
runs rail transport systems in several Brazilian cities, operational
income covers just 37% of operational expenses. Under these
circumstances, investments are financed by the federal, state or
municipal treasuries. The Ministry of Cities set up a special pro-
gramme (Pr-Transporte) to co-fund projects for the host cities of
the FIFA World Cup, while big cities successfully created PPP
arrangements. Credits from the World Bank and from the Inter-
American Development Bank (IADB) are also available. When
financed by these lenders, projects need to be tendered interna-
tionally.

2.3.1 BNDES
Few infrastructure investments happen in Brazil without the sup-
port of the National Economic and Social Development Bank
(BNDES). Due to its privileged access to capital markets (with a
government guarantee) and to substantial direct transfers from the
Treasury, the BNDES is able to lend at preferential rates, and
plays a crucial role in long-term funding of all Brazilian companies.
It may also acquire shares through its subsidiary BNDES Partici-
paes.

ALL, Brazils only publicly listed railway operator (where BNDES
holds 10.6% of shares), depends to a large degree (73% of its
BRL 3 billion investment plan for 2009-12) on BNDES credits.

In 2009 alone, BNDES disbursements amounted to a total of BRL
137 billion, of which BRL 27.2 billion went into transport infrastruc-
ture projects. The rail transport mode accounted for disbursements
of approximately BRL 8 billion.

Furthermore, the BNDES has been instrumental in structuring
concessions and public-private partnerships (PPPs) for large in-
vestment projects like the high-speed train or new metropolitan
subway lines.

2.4 Key Institutions and Industry
Associations
2.4.1 Ministry of Transports
The Ministry of Transports oversees rail, road and water transport
in Brazil. Minister Alfredo Nascimento, a former mayor of the city of
Manaus and Senator for the State of Amazonas, has been in
charge since 2007. He belongs to the small Partido da Repblica
(centre-right).

Picture 3: Transport Minister Alfredo Nascimento


Ministry of Transports
www.transportes.gov.br
Language: port.

Concessions for railroads are granted by the National Land Trans-
port Agency ANTT (Agncia Nacional de Transportes Terrestres), a
subordinate body of the Ministry of Transports. ANTT acts in the
regulation and supervision regarding transportation by means of
road, rail and pipeline in Brazil.

ANTT also acts as an appellate body to which highly dependant
customers (e.g. mining companies) may complain about cargo
transport tariffs.

ANTT - National Land Transport Agency
www.antt.gov.br
Language: port.

The planning, construction, and maintenance of the federal gov-
ernments transport infrastructure, including roads, railways and
waterways, is assigned to the National Department of Transport
Infrastructure within the Ministry of Transports. DNIT has 2700
staff and an annual budget of BRL 10 billion. In the railway sector,
DNIT is mainly concerned with the planning of new railway lines
(implemented by Valec), while concessionaries are responsible for
maintenance of existing lines. It is also concerned with the elimina-
tion of bottlenecks and with safety improvements (e.g. eliminating
irregular level crossings). It is also involved in the establishment of
technical standards and promotes research and training of railway
engineers.

DNIT
https://gestao.dnit.gov.br
Language: port.

VALEC is a public-owned company under the supervision of the
Ministry of Transports. Its activities involve not only the execution,
administration and coordination of the infrastructure programmes
that is has been entrusted with (especially the North-South Rail-
road), but also the development of studies of infrastructure, the
coordination of the high speed train project and also other activi-
ties in the field of rail integration, storage and connection with
other transports.

As a public company, VALEC hires engineering services, supplies,
equipment and services through public tenders.

VALEC Engenharia, Construes e Ferrovias S.A.
Executive president : Jos Francisco das Neves

Quadra 03 lote A
Ed. Ncleo dos Transportes Salas 1208 a 1248
70040-902 Braslia DF
Tel.: +55 61 2029-6460

VALEC Engineering & Construction of Railways
www.valec.gov.br
Language: port.

2.4.2 Ministry of Cities
The Ministry regulates and oversees the administration of public
passenger transport services (including tariff policies) in Brazil. It
should be noted, however, that Brazil as a federative republic
leaves many regulatory and financial competencies to the State
governments and City Halls.

The Minister, Mr. Mrio Negroponte from the centre-right Partido
Progressista (PP), takes office on January 1, 2011. He formerly
served as Secretary of Transports in the city of Salvador.

2.4.3 ANTF - National Association of Rail Transporters
ANTF, the National Association of Rail Transporters, is the repre-
sentative body for the six companies that own 11 of the countrys
12 railway freight concessions: ALL, MRS Logstica, Vale, FCA,
FTC and Transnordestina. On its strategic agenda, ANTF has
issues like regulation, taxation, safety, inter-modality, and elimina-
tion of bottlenecks. It is also setting up a common databank of
suppliers.


Associao National dos Transportadores Ferrovirios
President: Marcello Spinelli
Executive Director: Rodrigo Vilaa
SAUS Q.01 Bl. J - Ed. CNT, 6 andar, Torre "A", sala 605
70.070-944 Braslia-DF
Phone: +55 61 3226-5434
Fax: +55 61 3321-0135

National Association of Rail Transporters
www.antf.org.br
Language: port.

2.4.4 ANTP -National Public Transport Association
With more than 300 private and public companies and institutions,
ANTP brings together the major stakeholders regarding ground
passenger transport in the country. It calls for a better integration
of mobility into urban planning, giving priority to collective transport
in terms of public investments and use of public space.

In 2001, ANTP created the Permanent Metro-rail Maintenance Self
Help Group (Grupo Permanente de Auto-Ajuda na rea de
Manuteno Metroferroviria, GPAA) to discuss technical issues
and standards of the industry.

Associao Nacional de Transportes Pblicos
President: Ailton Brasiliense Pires
Superintendent: Marcos Pimentel Bicalho
Alameda Santos n 1000 - 7 andar - conj. 71
01418-100 So Paulo SP
Tel: 11 3371 2299

National Public Transport Association
http://portal1.antp.net
Language: port.

2.4.5 ABOTTC - Tourist Train Operators Association
The sub-segment of tourist trains is organized in ABOTTC
(Associao Brasileira das Operadoras de Trens Tursticos
Culturais). 31 companies are operating this kind of trains in differ-
ent Brazilian states. Many of these companies have a great social
importance for the region or specific tourist places they attend.
ABOTTC currently lobbies in Congress for its members right to
use railroads maintained by freight operators, without assuming
greater co-responsibility for maintenance.

Associao Brasileira das Operadoras de Trens Tursticos
Culturais
Rua Cosme Velho, 513
22241-090 Rio de Janeiro RJ
Tel.: +55 21 2558-1329 (ext. 202)
Fax: +55 21 2558-1329 (ext.200)
E-mail: secretaria@abottc.com.br

Brazilian Association of Tourist Train Operators
www.abottc.com.br
Language: port.

2.4.6 Abifer - Railroad Industry Association
Abifer gathers 45 national and foreign-owned manufacturers of
locomotives, cars and other rolling stock and components, signal-
ing and telecommunication systems, material for tracks, in addition
to companies specializing in services of engineering, maintenance,
refurbishing, adaptation and modernization of railway vehicles.
Since 1977, the Association acts as a lobby to defend the interests
of the Brazilian industry of railroad equipment, components and
materials, e.g. by encouraging railway network expansion and the
inclusion of railroad equipment acquisitions and maintenance in
BNDES programmes. Abifer also stimulates the improvement of
national railway technology by means of agreements or exchange
programs with universities and research institutions.

Associao Brasileira da Indstria Ferroviria
President: Vicente Abate (AmstedMaxion)
Avenida Paulista, 1313 - 8 andar - conjunto 801 - 01311-923 -
So Paulo - SP
Tel. +55 11 3289.1667

Fax +55 11 3171.2286
E-mail: abifer@abifer.org.br

Brazilian Association of the Railroad Industry
www.abifer.org.br
Languages: port., engl.

2.4.7 Simefre - Rail and Road Materials and Equipment
Representing manufacturers of materials and equipments for rail
and road traffic (especially rolling stock, trailers and coach bodies,
motorcycles) established in Brazil, Simefre gathers 64 members in
its railway and subway chapter. The industry association is in-
volved in the creation of technical standards and advocates pro-
tective measures like raising Brazils import tariffs for rail equip-
ment from currently 14% to 35%.

Sindicato Interestadual da Indstria de Materiais e Equipamentos
Ferrovirios e Rodovirios
President: Jos Antonio Fernandes Martins
Av. Paulista, 1313 - 8 andar, cj. 801
Tel: (11) 3289-9166
Fax: (11) 3289-5823
E-mail: simefre@simefre.org.br

Interstate Industrial Association for Railway and Road
Materials and Equipments
www.simefre.org.br
Language: port.


This Chapter presents the main characteristics of Brazils major
railway operators, both private freight forwarders and public urban
transport service operators. A few minor players have also been
included to complete the picture.

Maps of the railway lines operated by the concessionaires can be
found on the website www.transportes.gov.br/bit/inferro.htm

3.1 ALL Amrica Latina Logstica.
3.1.1 General Information
ALL Amrica Latina Logstica S.A. is a private company listed on
the Brazilian stock exchange. It emerged in 1997 from privatized
parts of the former state-owned company RFFSA.

Mr. Paulo Baslio was appointed CEO in September 2010.

ALL Amrica Latina Logstica S.A.
Rua Emilio Bertolini, 100
Vila Oficinas
82920-030 Curitiba PR
Brazil
Tel.: +55 41 2141 7555
www.all-logistica.com

Table 8: ALL Key Figures
Network extension 21.300 km
Network in Brazil 16.000 km
Fleet: Locomotives 1070
Fleet: Freight cars 31.000
Employees 6000
Turnover (2009) BRL 2.6 billion
Investments (2010) BRL 1 billion
Transport production (2009) 39 billion RTK
Average train speed 33.1 km/h
Source: Valor econmico

3.1.2 Business Focus and Market Strategy
ALL is Latin Americas largest rail logistics operator with a network
stretching from the main ports on Brazils Southern coastline (San-
tos, Paranagu, So Francisco do Sul and Rio Grande) well into
the interior (states of Mato Grosso / Mato Grosso do Sul) and into
Argentina.

Map 2: ALL Network

Source: ALL

Freight is heavily concentrated on agricultural commodities (like
soy, sugar, pulp etc.), fertilizer and other chemicals, and fuel.
Thanks to sustained demand for grain transport, ALL was less
affected by the global crisis and managed to maintain growth in
2009.

ALLs strategy is to grow in transport capacity and cargo volume
between 10% - 12% p.a. The company has also fixed a strategic
objective to raise the percentage of industrial (as opposed to agri-
cultural) customers from currently 36% to 50% of its turnover.
Indeed, container traffic has recorded the strongest growth rates
over the past few years. To further develop this business, ALL
acquired the Standard transport company (BRL 130 million turn-
over in 2010) and created a new business unit for this segment,
Brado Logstica, in December 2010. Brado will operate container
terminals and a dry port and plans to introduce Brazils first double-
stack cars.

The logistics operations of ALL also include the management of
stocks and warehouses, urban distribution and services in port
terminals. In some cases, ALL operates trains owned by its cus-
tomers.
3. Railway Operators.

3.1.3 Business Development Capacities
The company has its own area specialized in logistics projects,
responsible for the development and implementation of new busi-
nesses in the industrial and agricultural commodities segments.

New projects are developed based on operational and commercial
feasibility analyses, followed by a logistics design customized to
suit the clients needs. The final steps are implementation and
follow-up of the indicators suggested. Cases include pulp and
paper, cement and refrigerated cargo. The company is open for
the cooperation with specialized third companies.

3.1.4 Traction
ALL runs diesel locomotives on the whole of its network. It has
managed to reduce diesel consumption from 6.8 l / 1000 GTK (in
2000) down to 5.17 l in 2008.

The handling of refrigerated goods (meat and poultry) posed a
special challenge. Instead of running diesel generators on trains,
ALL now dispenses of such units and relies on cooling at terminals
and special feeders located at strategic locations along the route.

3.1.5 Safety and IT Systems
ALL runs a web-based railway operations system (Translogic),
first introduced in 2002 and upgraded in 2007. It supports the
companys planning processes, from the building of a train to the
unloading of cargo, and gathers all the operational information..

The company has developed its own operational systems for use
in its fleet. All locomotives are equipped with onboard computers
including GPS and satellite data transmission. In 2009, the first 90
remote controls for traction distribution (called locotrol) were put
into service.

Rail traffic is controlled from ALLs Operation Control Center at
Curitiba. Train circulation control and network track management is
supported by the ATW (ALL Track Warranty System), another in-
house development.

For network maintenance, ALL collects and processes data from
different sources, including fixed wheel and rail temperature detec-
tors located at critical points of the network, in its Permanent Way
Information System (SIV).

The company sells some of its safety and IT systems to Africa
through its ALL Tecnologia unit.
ALL has a corporate university that trains workers such as techni-
cians, drivers and engineers.

3.1.6 Investment and Procurement
Since privatization, the company has invested BRL 6.7 billion. Its
investment plans total BRL 3 billion from 2009 2012.

ALL has obtained government licenses to construct network ex-
tensions. It is investing BRL 760 million to lay tracks from Alto
Araguaia to Rondonpolis (260 km). For this project, ALL imple-
mented a factory for sleepers, a factory for tracks and a stone-
cracking unit in the region, generating 30.000 jobs. The construc-
tion initiated in May 2009 and will be finished by 2012.

It also partnered with important customers to increase the capacity
on critical sections of its network. One customer, Rumo Logstica
(part of a sugar and alcohol business group), has committed to
invest BRL 535 million to upgrade the railway line from Bauru
(inland from So Paulo) to the port of Santos and so create a
sugar corridor for the transport of 9 million tons per year. Rumo
Logstica will also acquire up to 79 locomotives (BRL 255 million)
and 1108 freight cars (BRL 140 million) for operation between its
terminals.

According to CEO Paulo Baslio, all projects implemented by ALL
focus on at least one of three aspects:
improve productivity on the existing network;
adapt the process to be able to receive different types of cargo
with a high potential that is currently not transported by rail;
increase the existing market where they are already active (e.g.
agribusiness).

Projects for 2011 include:
Implementation of discharging areas in the ports of So Fran-
cisco do Sul (SC) and Rio Grande (RS). Those intermodal ter-
minals will have capacity of 120 wagons per day each;
Access tracks to several agribusiness industries in Passo Fundo
(RS), Camb (PR) and Ponta Grossa (PR);
Construction of new terminals for liquid cargo (especially bio-
diesel and ethanol) mainly in So Paulos countryside to in-
crease capacity and make better use of the existing network;


adaptations and investment to be able to transport Usiminas
steel rolls (usually transported by road). Similar operations are
being executed for Gerdau and ArcelorMittal.

The company also wants to purchase 30 to 50 locomotives and
enhance its fleet by about 1000 wagons, both new and refur-
bished.

3.2 MRS.
MRS Logstica is controlled by its main customers, with the big
mining companies CSN, MBR, and Usiminas holding 19-20%
each, and Vale holding 41.5%. The Board of Directors is controlled
by these shareholders jointly. Mr. Eduardo Parente Menezes is the
companys president.

MRS LOGISTICA S.A.
Praia de Botafogo, 228 sala 1201E, ala B, Botafogo
Tel.: +55 21 2559-4601
www.mrs.com.br

Table 9: MRS Key Figures
Fleet: freight cars 17.681
Employees 5.358
Investments 1997-2007 BRL 3.0 billion
Transport production (2007) 52.6 billion RTK
Average train speed 29.2km/h

The company has been operating in the rail transport market since
its creation in 1996. It operates a network connecting the states of
Rio de Janeiro, Minas Gerais and So Paulo - a region that con-
centrates approximately 54% of Brazils gross domestic product
and where most of the largest industrial complexes are located. It
has access to the ports of Rio de Janeiro, Itagua, and Santos.

The main focus of MRSs activities is on the rail transportation of
general cargo, such as ores, finished steel products, cement,
bauxite, agricultural products, green coke and containers, and in
integrated logistics, which involves planning, multimodality and
defined transit time.

Like ALL, MRS aims at gaining market share in container business
to and from the port of Santos, at the expense of road transport.
One move in this direction was a commercial partnership with
Contrail, announced in 2010. Within five years, investments of
over BRL 600 million will be used in the construction of terminals
for capture and distribution of containers, in fleets of trucks and
other assorted equipment. MRS will have the responsibility of
investing in the increase of the fleet of locomotives and also in the
production of rolling stock which allows up to two containers to be
stacked.
The company offers a complete logistics operation. As one of the
leading companies of the sector, MRS has highly qualified staff for
all necessary activities and is open to any cooperation with other
business partners.
3.2.4 Traction
Except for a 9 km electrified rack railroad between the port of
Santos and So Paulo, for which it has acquired seven Stadler
locomotives (HE 4/4, 5000 kW, see Picture 4), MRS uses Diesel
locomotives for its network.

Picture 4: Stadler Locomotive Sold To MRS

Source: Stadler


MRS uses modern equipment with GPS for locating the trains in
real time and defensive signaling, as well as detection of tracks
with x-ray and ultrasound. Track geometry is continuously moni-
tored with the most modern equipment in Brazil: MRS pioneered
the purchase of 2 units of the Track Star rail grinders and track
evaluation vehicles in 2002. It is capable to test and measure track
parameters with full non-contact technology, in speeds up to 40 km
/ h. Track geometry and rail strength data combined with post
processing software, to control the risks and introduce an inte-
grated computer based planning for all key components of the
permanent way.

The company is currently working at the monitoring of cargos the
proposed new system supports the growth of volumes in need of
advanced services. MRS is looking for a systemic solution that
facilitates the tracking of various points of the process, from origin
to destination.

3.2.6 Investment and Procurement
MRS is investing BRL 130 million in new rack and pinion locomo-
tives, in order to increase the moving capacity in the Santos moun-
tains from 8 to 24 million tons per year.

MRS and metropolitan passenger transport company CPTM are
currently working on the freight / passenger segregation of a 12
km stretch in So Paulo. The works are due to end in mid 2012, for
a total cost of BRL 900 million. This project will greatly enhance
MRSs capacity, especially for container transport.

MRS shall also have the responsibility of investing in the increase
of the fleet of locomotives, as well as in the production of special
locomotives, of the double-stack variety, which allows up to two
containers to be stacked. MRS will be investing some BRL 330
million in business involving TIPS, i.e. Intermodal Transport Termi-
nal of the Port of Santos (Terminal Intermodal do Porto de Santos
TIPS in Portuguese) and cargo transport in the So Paulo met-
ropolitan area.

3.3 Vale.
Vale, the largest mining company in the world, operates a diversi-
fied portfolio of logistics services, with more than 10.000 km of
railroads in Brazil. The company (formerly known as CVRD) was
privatized in the 1990s, but the State (through BNDES) remains a
minority shareholder.

Mr. Roger Agnelli is Vales President; Mr. Eduardo Bartolomeo is
Director for Logistics, Project Management and Sustainability.

Vale (Headquarters)
Av. Graa Aranha 26
20.030-000 Rio de Janeiro - RJ
Tel.: + 55 21 3814-4477
www.vale.com

Vales rail network covers 9 Brazilian states and passes through
400 cities. It serves not only Vales own operations but a whole
range of clients in varied segments such as sugar, fertilizers, coal,
steel, fuels, iron ore, cement, granite, cellulose as well as general
cargo in containers.

As shown in Map 3, the company has four railroad concessions:
Centro-Atlntica Railroad (FCA), Vitria-Minas Railroad (EFVM),
Carajs Railroad (EFC) and the North-South Railroad (FNS). In
addition, Vale has a 41.5% stake in MRS Logstica.

Although Vales core business is mining, the company has in-
vested a considerable sum in their logistics business over the last
few years: from 2004 to 2008 Vales investments amounted to US$
5.15 billion and in 2010 the forecast is US$ 2.6 billion.

Vale also owns eight seaport terminals: a multi-modal terminal, five
general cargo ports and two iron ore export terminals Ilha
Guaba Terminal (TIG) and Sepetiba Port (CPBS), both in the state
of Rio de Janeiro.

In addition to their cargo business, Vale also operates two passen-
ger trains: in Vitria-Minas Railroad (EFVM) and in Carajs Rail-
road (EFC).


Map 3: Vales Network

Orange: EFC / Dark Green: FNS / Purple: FCA / Green: EFVM / Blue: MRS /
Yellow: ALL stretch with Vale right-of-way

While all Vale companies activities are coordinated from Rio de
Janeiro, the different railroads have their own departments in
charge of operations planning, engineering and development. The
company is nevertheless open for the cooperation with specialized
companies.

New logistics projects are developed based on operational and
commercial feasibility analyses, followed by a logistics design
customized according to the clients needs. The final steps are
implementation and follow-up of the indicators suggested. Cases
include pulp and paper, cement and refrigerated cargo.

3.3.4 Traction
Vales railroads run diesel locomotives on the whole of its network.
Hundreds of wagons are drawn simultaneously by four or five
locomotives on its routes.

In 2009, Vale launched their Biofuel project, and the company is
currently testing the use of a mixture of natural gas and diesel in
their locomotives, with gas concentrations varying from 50% to
70%. The company estimates that in the near future the use of
natural gas in the locomotives of EFVM and EFC Railroads will
avoid emissions of 73 thousand tons of CO2 in the atmosphere
annually.

The logistics system of Vales railroads uses state-of-the-art tech-
nology to ensure safe and productive operations, which are moni-
tored by satellite (GPS).

In 2010, at the Center of Excellence in Logistics (CEL) in Vitria
(State of Esprito Santo), Vale began trials on one of the worlds
most advanced train simulator. Developed in partnership with the
Polytechnic School of the University of So Paulo (USP), the tool
was developed at a cost of BRL 2,5 million and realistically simu-
lates Vales railroad lines in 3D technology. The simulator shall be
used for driver training using technology developed in Brazil, in
order to improve operational safety, make fuel savings and reduce
wear and tear in locomotives and wagons.

The virtual reality simulator reproduces the rail lines of the Vitria-
Minas (EFVM), Carajs (EFC), North-South (FNS) and Centro-
Atlntica (FCA) railroads. The 3D image is able to show the trains
behavior throughout a rail lines trajectory, in different weather
conditions, such as sunny, foggy and rainy.

The simulator incorporates innovative features, including a reader
of geo-referenced data (latitude and longitude) that identifies all
topographical features along a rail line, such as sharp bends and
surface irregularities. The simulator also takes into account, within
a virtual reality environment, all of the trains characteristics, in-
cluding braking efficiency and dynamic braking, train/wheel trac-
tion, travel time, fuel consumption and safety procedures.

3.3.6 Investments / Procurement
In order to ensure maximum operational safety and high productiv-
ity for its customers, Vale invests in the maintenance and en-
hancement of its assets and also in the acquisition of specialized
locomotives and wagons for the transport of various products.

With the upturn of the iron ore market after the financial crisis of
2008, Vale began to duplicate 605 km of the Carajs Railroad with
the construction of the rail outlet connecting the future mine of
Serra Sul (PA) to the port of Ponta da Madeira (MA). The works
are part of the plan of the company to enhance the logistic capac-

ity of its Northern network, in order to enable that system to in-
crease its transportation capacity to 230 million tons per year,
starting in 2014. Today EFC has a capacity of moving 130 million
tons a year. The duplication of EFC corresponds to 85% of the
extension of the railway, which has 892 km today and connects all
56 rail crossing yards. The new railway connecting Serra Sul to the
port of Ponta da Madeira will be double track and about 104 km
long. The total of investments in permanent track and the acquisi-
tion of 5540 new wagons and 70 locomotives amount to BRL 6
billion.

For the FCA Railroad, Vale is currently working on the duplication
and straightening of an 8.3 km stretch from the eastern part of
Belo Horizonte until General Carneiro in Sabar, which will im-
prove the safety of neighborhoods and turn rail traffic more effi-
cient.

With the renovation of the railway signalling system of the Vitria
Minas Railroad, totalling BRL 3,4 million, Vale expects to enhance
the capacity from 100 to 120 million tons of iron ore per year.

Other ongoing projects include:
the construction of a warehouse for grains in the North region
(So Lus) with capacity of 45.000 tons;
customization in tracks and wagons to allow transport of differ-
ent types of cargo for new and existing clients, such as ethanol
producers, steel rolls and sugar;
the construction of a Centralized Grain Terminal and Corridor for
Fertilizers and Grains in Araguari, Iguatama and Pirapora. The
investment on this project includes the construction of terminals
for grains and fertilizers, duplication of 16 discharge areas in the
corridor, maintenance of 150 km of tracks, replacement of ma-
chinery and rolling stock.
improvements of the Port of Tubaro and the palletising plant
that Vale is operating in Esprito Santo.

The variant Litornea Sul is a Vale project together with the State
of Esprito Santo, connecting the Vitria Minas Railway to the
Port of Ubu and reaching the town of Cachoeira de Itapemirim. It
will be 165 km of railway to transport steel products, cellulose and
limestone, among other products. The variant will total some BRL
770 million of investments, to be borne by Vale and the State Gov-
ernment. The railway does not yet have a date for start of con-
struction as it depends on the granting of the preliminary permit for
the construction of the Ubu Steel Company (Companhia Siderr-
gica de Ubu) that will guarantee the feasibility of the railway.
We now take a closer look at the four railway companies under the
roof of Vale

3.3.7 EFC Estrada de Ferro Carajs

Table 10: EFC Key Figures
Network extension 892 km (broad gauge)
Employees 4.601

EFC is considered to be one of the main Brazilian railroads, not
only because of the volume of cargo transported, but also because
it uses state-of-the-art technology in its operations, which makes it
highly productive, efficient and safe. EFC connects the countryside
of Par to the main port in the northeast region, the Terminal Por-
turio de Ponta da Madeira (the Port Terminal of Ponta da Madeira
- MA). Besides transporting Vales ore production in Carajs (PA),
the railroad transports general cargo for third parties, such as: fuel,
cast iron and grains (soybeans, bran, corn and rice).

EFC also is one of the most important means of passenger trans-
portation in the North of Brazil. The EFC train operates in the same
route as the cargo trains and transports 1300 people everyday
connecting 23 cities in the states of Maranho and Par.

3.3.8 FNS Ferrovia Norte Sul

Table 11: FNS Key Figures
Network extension 215 km (broad gauge)
520 km under construction
Fleet: Locomotives n.a.
Fleet: Freight cars n.a.
Employees n.a.
Turnover n.a.


Construction work on the North-South Railroad (FNS) was initiated
in the 1987 by Valec, a public company reporting to the Ministry of
Transport (see Chapter 2.4.1), and a first stretch was inaugurated
in 1996.

FNS, a subsidiary of Vale, has a sub-concession to operate the
215 km line between Aailndia and Porto Franco in Maranho.
FNSs freight volumes are still small, but rising steadily at a growth
rate growth of around 20% per year is forecast. As the railroad
extends further south and reaches more developed regions, it is
expected that volumes will reach 12.6 billion RTK in 2015.

Picture 5: North-South Railroad Under Construction

Under President Lulas Growth Acceleration Programme (PAC),
the further extension of the North-South Railroad has become a
priority for Brazils transport infrastructure development. Construc-
tion is on-going under the responsibility of Valec. According to
Valec, when finished, it will stretch 3.100 km. The North-South axis
will constitute the backbone of Brazils railway system, and create
an important export corridor for commodities (grains, sugar, meat,
fertilizers and fuel) and general freight.

3.3.9 EFVM Estrada de Ferro Vitria-Minas

Table 12: EFVM Key Figures
Network extension 905 km
Employees 5.189

An important asset to Vale, EFVM is strategic because it links the
Southeast and Midwest, connecting railroads and ports. For years,
millions of tons of various products have been passing through
EFVMs 905 km and the destination of part of this cargo is the Port
of Tubaro (ES).

EFVMs passenger train is the only long distance passenger train
of Brazil. The journey is 664 km long and takes 13 hours from the
city of Belo Horizonte, MG to Vitria, ES. In 2009, it transported
925.000 people in two trains that operate the route daily.

3.3.10 FCA Ferrovia Centro Atlntica

Table 13: FCA Key Figures
Employees 5.358
Turnover (2008) BRL 908 million

The Ferrovia Centro-Atlntica (FCA) is the main railway network
connecting the Northeast, Southeast and Midwest regions of the
country. More than 8000 km of railway network under FCAs re-
sponsibility go through about 300 municipalities in seven Brazilian
states (Minas Gerais, Esprito Santo, Rio de Janeiro, Sergipe,
Gois, Bahia and So Paulo) and the Federal District. The main
products transported are soy and soy flour, limestone steel, iron
ore, phosphate, sugar, corn, mineral and chemical fertilizers.


3.4 TLSA Transnordestina.
Transnordestina Logstica (TLSA) is controlled by the steel com-
pany Companhia Siderrgica Nacional (CSN), which in turn is
controlled by the Steinbruch family. The National Development
Bank BNDES is also a major shareholder.

The companys President is Mr. Tufi Daher Filho.

Transnordestina Logstica S/A (TLSA)
Av. Francisco S, 4829
Carlito Pamplona
60.310-002 Fortaleza - CE
Tel.: 55 85 4008-2500 / 4008-2507
www.csn.com.br

Table 14: Transnordestina Key Figures
Network extension 4207 km
Fleet: freight cars 2237
Employees 1724
Turnover 93 million
Investments 1997-2007 BRL 470 million
Transport production (2007) 963 million RTK

Transnordestina Logstica operates in the Northeast region of the
country and integrates the states of Cear, Piau, Maranho, Rio
Grande do Norte, Paraba, Pernambuco and Alagoas. This is
traditionally Brazils poorest region, but it has recently shown the
strongest growth.

On its age-old narrow-gauge routes, the Transnordestina carries
an extensive range of products such as limestone, ores, cement,
fuel, ethanol, sugar, soy oil and iron ore, among others.

A New Transnordestina Railway (broad gauge) is currently under
construction. The new railway connects the deep water ports of
Pecm (near Fortaleza) and Suape (near Recife) to the interior.
The goal is to raise the regions competitiveness in agricultural and
mineral production with modern logistics.

Map 4: Transnordestina Railways

Red: New Transnordestina Railway (under construction)

The New Transnordestina project has already received invest-
ments of BRL 2.3 billion; the total cost is now estimated at BRL
5.42 billion (exceeding the original forercast by BRL 1 billion). It is
financed by the BNDES and by regional development funds and
banks.

The project includes the construction of 605 km of new railroad
between Eliseu Martins (PI) and Salgueiro (PE), and the remodel-
ing of 1123 km of existing tracks in the Misso Velha Pecm, and
Salgueiro-Recife stretches.

The concessionaire expects that the East-West stretch Eliseu
Martins Recife will be ready for use by October 2012, and the
Northern stretch by 2013. Delays occurred when environmental
licenses, expropriations, government funds, and cement supplies
failed to come forward.

Transnordestina has outsourced parts of the planning, engineering
and development activities.


With more than 11.300 workers and 1700 machines (some equip-
ment was rented in China), the New Transnordestina Railway
project is one of the largest construction projects of the country. In
public tenders, lots have been awarded to the big Brazilian con-
struction companies: Odebrecht (13 lots), Andrade Gutierrez (4),
and Queiroz Galvo (3). Odebrecht, the construction company that
is executing this project.

For the production of 3 million sleepers, a factory was set up at the
city of Salgueiro.

3.5 CPTM / Metr So Paulo.
Both suburban train operator CPTM and the subway of So Paulo,
are owned by the State of So Paulo, and report to its Secretariat
of Transports.

CPTM - Companhia Paulista de Trens Metropolitanos
President: Srgio Avelleda
Rua Boa Vista 185
Centro
Brazil
Tel.: 55 11 0800 055 0121
www.cptm.sp.gov.br

Companhia do Metropolitano de So Paulo - Metr
President: Jos Jorge Fagali
Rua Boa Vista 175
Braz
Brazil
Tel.: 55 11 3291-7800
www.metro.sp.gov.br

Table 15: CPTM / Metr SP Key Figures
CPTM Metr SP
Network extension 260,8 km 69 km
Number of stations 89 58
Fleet: Locomotives 119 -
Fleet: Passenger cars 869 828
Employees (2009) 6.720 8.278
Turnover BRL 1.22 billion BRL 2.84 billion
Investments 2007 - 2010 BRL 4.74 billion BRL 9,9 billion
Passengers/ day 2.2 million 3.7 million
Source: CPTM / Metr So Paulo

The CPTM metropolitan train network and Metr So Paulo serve
a total of 39 municipalities that make up the metropolitan area of
So Paulo, with a total population of 19 million. CPTM is in charge
of transporting passengers to the heart of the metropolitan area of
So Paulo, while the subway (Metr) distributes the passengers in
the central area of the city.

Their strategy and business development plans comprise the
investment of more than BRL 7 billion, for the expansion of lines,
signalling and communications, safety systems, construction and
renovation of stations, as well as for enhancing and refurbishing
the fleet.

3.5.3 Energy Supply, Transmission and Use
Electric energy is supplied by the public utilities, according to the
needs up to 38,5 kV of AC to substations, where it is transformed.
CPTM uses 3 KV DC for the overhead contact line and except for
the newest trains of CPTM all of them use DC motors.

The same principle applies to the Metr, where the rectifier substa-
tions transform the current to 380/220 V, to feed the equipment,
and also make kneeling/rectification to power the trains pull in 750
V. Only the newest trains (line 5 and partly line 2) have AC mo-
tors, all the others use DC. To move the trains, the electric cur-
rent is sent to the third rail and is collected by shoes located on the
sides of trains.

Any movement of trains on the lines and yards, signalling systems
and auxiliary energy distribution function under the command of
the Operational Control Center (OCC). It has a Signalling and
Traffic Control and Automatic Protection System for Trains, which
governs the regularity of the interval between trips, speed control
and maintenance of the distance between the trains. Electrical
systems, communication and signalling work in a redundant way,
i.e. if there are flaws in the main, the second is immediately fired.

The whole system needs daily corrective and preventive mainte-
nance.

Both public CPTM and Metr SP are modernizing their systems
intensively, thereby relying heavily on private suppliers. An exam-
ple is the yellow subway line (line 4), inaugurated in May 2010,
where all train functions are controlled directly from the Opera-
tional Control Center.

CCR ViaQuatro the private concessionaire (majority stakeholder,
first PPP in Brazil) that will operate and maintain the Yellow Line
for the next 30 years commissioned a consortium of Siemens
and Rotem to supply the metro cars, the signalling system, and the
complete automation of Line 4. The same companies were also
involved in equipping the Operational Control Center (OCC). At the
OCC, controllers set up the route plans for each train and monitor
the operations with a first class video wall. This is crucial to help
track the movement in stations, on trains, across the line exten-
sion, the maintenance yard, etc.

Both operators strive to improve the services offered and are ac-
tive in the revitalization of their entire infrastructure. Since they are
public companies, CPTM and Metr So Paulo will publicly tender
all products and services they require.

The State of So Paulo has an investment budget of BRL 4.6
billion for metropolitan transports in 2011, and wants to prioritize
train and subway expansion. The FIFA World Cup 2014 should
ensure that the pace of investments remains high.

CPTM is expected to increase its capacity to 3.2 million passen-
gers / day, and improve substantially the quality of its services.

Metr So Paulo is constantly expanding its network and fleet.
Projects already under execution will bring So Paulos subway to
an extension of 84.8 km.

Furthermore, a consortium formed by the construction companies
Queiroz Galvo and OAS, plus Bombardier, has been awarded a
tender worth BRL 2.5 billion for a project comprising production,
supply and implementation of a monorail system. The Tiradentes
Express will have an extension of 23.8 km and 54 electric traction
trains. For the construction of 17 stations, another contract worth
BRL 1.5 billion will have to be tendered. The project shall be con-
cluded in 2013 and should reduce travel time from 2 hours to 50
minutes.

Another project is the MBoi Mirim Monorail of 34 km of suspended
stretches connecting the poor neighborhoods of Jardim ngela
and Vila Snia. The project totals BRL 3.4 billion, BRL 1.7 billion
of which will be rolling stock. The tender is expected in the begin-
ning of 2011, the first part will be borne by the City of So Paulo
and the second by a PPP. The project is due to be completed
before the FIFA World Cup of 2014.

Picture 6: Future Tiradentes Express in So Paulo

The construction of an Airport Express (linking Guarulhos Interna-
tional Airport to the city centre non-stop), partly on existing tracks,
was estimated by CPTM at USD 492 million, but the concession
has not been successfully tendered yet.

3.6 CBTU Companhia Brasileira
de Trens Urbanos
Companhia Brasileira de Trens Urbanos
Estrada Velha da Tijuca, n 77
Usina
Tel.: +55 21 2575 3399
www.cbtu.gov.br
dir.p@cbtu.gov.br


Table 16: Key figures: CBTU
Belo Horizonte Recife Others
Total network (km) 28.2 68.8 118.3
Electrified (km) 28.2 37.8
Electric trains 25 25
Diesel trains 4 11
Stations 19 35 49
Employees 717 1371 315
Passengers / day 151.600 194.000 24.800
Source: CBTU 2009 others comprise Macei, Joo Pessoa, Natal

3.6.1 Ownership / Decision-makers
CBTU is a semi-public company, with 99.9% of shares owned by
the Union, under the supervision of the Ministry of the Cities.

The company has a central administrative office in Rio de Janeiro,
five regional superintendences (Recife, Belo Horizonte, Natal,
Joo Pessoa and Macei) and three regional offices (So Paulo,
Salvador and Fortaleza).

Mr. Elionaldo Maurcio Magalhes Moraes is CBTUs CEO since
September 2007. A lawyer, he has held several positions in the
public sector, including 3 mandates as a state deputy for Alagoas.

3.6.2 Business focus / Market strategy

CBTU is focused on urban passenger transport. It used to operate
urban and suburban train networks in all of Brazils major cities.
The networks of So Paulo, Rio, Salvador and Fortaleza were
subsequently transferred to the respective States, but CBTU con-
tinues to run the subways in Recife and Belo Horizonte and urban
trains in Macei, Natal and Joo Pessoa.

Given its experience in urban passenger transport, CBTU has
been mandated by the Federal Government and other public insti-
tutions to elaborate viability studies and engineering projects. It
acts as the federal governments representative for accompanying
subway construction works in Salvador and Fortaleza, and pio-
neers the introduction of light rail systems (veculos leves sobre
trilhos VLT) in Brazil.

Of CBTUs 215.3 km of track, just 66 km are electrified. One of
Recifes two lines, and all urban trains in Macei, Joo Pessoa and
Natal still use diesel-electric traction. CBTU plans to modernize
public transport in these cities. In Macei and Recife, the imple-
mentation of light rail systems has already begun; Joo Pessoa
and Natal will follow. In 2010, CBTU purchased a group of VLTs
from CAF.

Apart from line extensions, CBTUs project pipeline includes the
modernization and purchase of new trains in the urban train sys-
tem of Recife, the renovation of the signalling in urban train system
of Belo Horizonte, and repairs in the urban train systems of Natal
and Joo Pessoa. CBTU has recently substituted the entire ticket
vending system.

Mr. Oswaldo Moss, General Manager of CBTU, said that the com-
pany is always seeking new system segments, such as: rolling
stock new technologies, information systems, electrification sys-
tems, etc. The priority for new acquisitions is replacing old locomo-
tives from the 1950s and 1960s that are still operating in CBTUs
diesel powered units.

Companies interested in supplying CBTU need to be registered in
CBTUs procurement system. On their website (home > licitaes)
a complete list of documents for registration can be found. It di-
vides interested companies in 5 categories: Miscellaneous service
providers, installing companies, construction companies, consul-
tancies and material suppliers.

3.7 Serra Verde Express.
Serra Verde Express is controlled by Higi Serv, a family company.
Adonai Arruda Filho is the responsible of the firm.

Serra Verde Express
Avenida Presidente Affonso Camargo 330
Estao Ferroviria
80060-090 Curitiba - PR
Brazil
Tel.: 55 41 3888 3468
www.serraverdeexpress.com.br


Table 17: Serra Verde Express Key Figures
Locomotives 1 own, rest rented
Passenger wagons rented
Employees 41
Turnover BRL 6.5 million
Passengers / year 150.000
Source: Serra Verde Express

Serra Verde Express is acting as a tourism train operator in three
Federal States. Headquartered in Curitiba, Paran, Esprito Santo
and Mato Grosso do Sul are the other two states of business
activity. The company banks on the development of tourism and is
convinced of the Brazilian potential. It has an alliance with tour
operator Transnico International of Belgium.

Serra Verde Express runs Diesel-electric locomotives rented from
ALL in Paran and Mato Grosso do Sul, from FCA in Esprito
Santo. It owns one Litorina, a self-powered railcar, operating as
luxury train in Paran.

Since most equipment is rented from freight companies (conces-
sionaries of the tracks on which Serra Verde operates), the com-
pany has only limited technical capacities. Safety and IT systems,
for instance, are under the responsibility of the freight companies.

The sub-segment of tourist trains, most of which operate outside
the big cities, may nevertheless be a niche market for Swiss com-
panies. Please refer to Annex F for a comprehensive list of Brazils
tourist trains.

Picture 7: Serra Verde Express Train in Paran, Southern Brazil

.


Map 5: Projected TAV Line Campinas So Paulo Rio de Janeiro

The Brazilian government plans a high-speed train in Brazil
called trem de alta velocidade (TAV) to link the cities of
Campinas, So Paulo and Rio de Janeiro. With a projected total
track length of 510.8 km, the investment volume is estimated at
BRL 33.1 billion (CHF 19.5 billion).

For this project, the Brazilian government aims at attracting
international capital and technical expertise, as well as man-
agement capacity and innovation from the private sector. It has
therefore adopted the model of a public service concession.

The concession will be granted to the successful bidder for 40
years, and the consortium responsible for designing, construct-
ing, operating and maintaining the HST will have to transfer the
necessary technology to Brazil.

The governments expects, perhaps somewhat optimistically, a
construction time of no more than 6 years. According to ANTT, it
should be ready in time for the 2016 Olympic Games in Rio de
Janeiro.

4.1 Project Description.
The economic and geographical situation in Rio de Janeiro and
So Paulo two mega cities just 400 km apart is considered
a classic case for high-speed trains, comparable to one of most
successful railways in the world, which connects Tokyo to
Osaka, in Japan.

Apart from the two cities, the TAV would also link three of the
countrys main airports and several smaller cities (see Map 5).

The construction of the TAV will contribute to solving bottle-
necks in passenger transport between Rio de Janeiro and So
Paulo. Currently, the big number of shuttle flights connecting the
two megacities (71 connections per day) are a major factor of
airport traffic congestion, and the Presidente Dutra highway,
which connects the two cities, operates at maximum capacity.
There is currently no passenger train service between Rio and
So Paulo.

The total cost of the project has been estimated at BRL 33.1
billion. The high-speed train is initially estimated to transport 32
million passengers per year and generate a total revenue of
over BRL 2 billion (CHF 1.18 billion) per year.

4. High-Speed Train Project.

Taking into consideration an exchange rate of BRL 1.70 per US
dollar, the costs total USD 35.36 million per kilometre, which is
within the margin of average global costs practiced in this type
of venture. ( According to reference studies conducted by the
government, the average cost of high-speed train projects
worldwide is USD 32.7 million per km.) The rugged and partly
mountainous terrain of the region requires more investments
than those in lowland areas, justifying the higher estimate.

Table 18: High-speed train technical parameters
Parameter Value
Gauge 1.435 mm
Maximum train speed 350 km/h
Maximum inclination (gradient) 3.5%
Minimum horizontal radius 7.228 m
Minimum vertical radius 42.875 m
Cargo per train loading axis 17 t
Minimum station platform 500 m
Track length 510.8 km
Tunnels 90.9 km
Bridges 107
Source: Ministry of Transports

The entire technical studies concerning demand, alignment,
geology, operation and economic-financial modeling are avail-
able at:

HST technical studies
www.tavbrasil.gov.br /
www.tavbrasil.gov.br/DocumentacaoIngles.asp
Languages: port., engl.

4.2 Decision-Making Process.
The idea of a TAV has been pondered and studied for decades.
In 2008, the Inter-American Development Bank (IDB) commis-
sioned Halcrow Group Ltd and Sinergia Estudos e Projetos
Ltda. to prepare a new feasibility study, which was completed in
June 2009.

The project is planned to be executed under the public private
partnership model. The public tender of the concession had to
be postponed in November 2010 as several interested consortia
expressed that they were not able to comply with the conditions
established by the Brazilian government. While the bargaining
continues, the tender is now scheduled for April 2011.

The TAV is part of the Growth Acceleration Programme (PAC).
Brazils new President, Dilma Rousseff, was responsible for the
PAC before she ran for President and seems to be committed to
implement the project.

The Brazilian government shall participate with about 30% of
the equity capital of a new firm to be set up to build and admin-
istrate the TAV in Brazil. Of a total of BRL 10.4 billion, about
BRL 7 billion shall be funded by private investors and BRL 3.4
billion by the National Treasury.

A credit of more than BRL 20 billion from the national develop-
ment bank BNDES will be available. Funding of the BNDES
credit will be granted in full with the cost of long-term interest
rate (TJLP - currently at 6% per year) plus a credit risk fee of
1% per year, for whichever consortium wins the bid. The pay-
ment term will be 30 years, with a six-month grace period after
the date scheduled to begin commercial operations. Interest will
be capitalized during the grace period. Interest payments will be
subsidized by the government in case the demand remains
below the expected levels in the first 10 years of operation.

The credit granted by BNDES may be less than the sum men-
tioned above, since the main criterion for choosing a successful
bidder shall be the least public financing possible, the second
most important criterion shall be the lowest ticket price charged
from the final consumer. The maximum fare established in the
bidding documents is BRL 0.49 per kilometres, in the economic
class, with or without stopovers between the cities of Rio de
Janeiro and So Paulo.

Technology transfer is expected from any of the consortia that
are participating in the bidding process. Before elected, the new
president of the Republic, Dilma Rousseff said that the ex-
change between companies with high-speed train technology
and Brazil is essential for the success of the project. We are
not getting this high speed train just to keep on importing tech-
nology and equipment from the producing countries for ever.


We are doing this within an integrated vision of transfer of tech-
nology.

If Brazil effectively succeeds to build its own technological ca-
pacity for high-speed trains, chances are that the government
will promote more TAV projects (i.e. extending the network from
Campinas to the cities of Belo Horizonte, Brasilia and Curitiba).

4.3 Interested Consortia.
The implementation and operation of the TAV are capital-
intensive, in addition to relying on technology and specific
know-how held by a limited number of manufacturers and for-
eign operators. Seven consortia expressed an interest to par-
ticipate in the bid for tender so far:
1) Chinese consortium, led by the state companies
China Rail Construction Company (CRCC), China
North Railway (CNR) and China Investment Corpora-
tion;
2) Korean consortium, led by state operator Korail and
manufacturer Rotem / Hyundai;
3) Japanese consortium, led by Mitsui, Mitsubishi, Ka-
wasaki and Toshiba;
4) Spanish consortium, led by CAF;
5) French consortium, led by Alstom;
6) German consortium, led by Siemens; and
7) Italian consortium, led by the public Ferrovie dello
Stato and Ansaldo Breda.

Most of the consortia have not disclosed the names of their
Brazilian partners (e.g. construction companies) yet. Some if
not all consortia count on financial support from public institu-
tions in their home countries.

As stated above, in the bidding process, some consortia have
publicly raised questions regarding the projects feasibility. Even
the Chinese consortium said that the tender conditions were
difficult to accept, because the investment would probably ex-
ceed BRL 33.1 billion and the volume of traffic was not predict-
able. It also requested additional geological data, and argued
that the clauses for the solution of situations of litigation were
outside Brazil.

As discussed in Chapter 1.3 and shown in Annex X, Brazilian
rail operators are planning and executing important investments
to expand their capacities. This Chapter deals with the railway
construction business and the major players involved.

5.1 Engineering and
Construction Companies.
Among the engineering and construction companies, the most
important players are Camargo Corra, Odebrecht, Andrade
Gutierrez and Mendes Jnior. These companies are partnering
with large rail companies like Alstom and Bombardier for go-
vernmental projects.

The companies listed below regularly participate in consortia
and are thus potential clients for Swiss suppliers.

ANDRADE GUTIERREZ
Rua Dr. Geraldo Campos Moreira, 375
04571-020 So Paulo, SP
Tel.: +55 11 5502-2000
www.andradegutierrez.com.br

Andrade Gutierrez Group was founded in 1948 in Belo Hori-
zonte (MG), and is one of the largest private groups in Latin
America, with operations in Engineering and Construction,
Telecommunications, Power and Public Bids.

In November 2010, the Andrade Gutierrez / Barbosa Mello /
Serveng consortia won the bidding to execute Lot 4 from Ria-
cho da Barroca to Rio de Contas. The lot is 178.3 km from the
first stretch of Ferrovia de Integrao Oeste-Leste (FIOL), to
Ilhus and Barreiras, Bahia. This deployment is coordinated by
Valec. The value of the contract is BRL 739 million (CHF 434.8
million) and is valid for 24 months.

CAMARGO CORRA
Rua Funchal, 160 Vila Olmpia
Tel.: +55 11 3841-5511
www.camargocorrea.com.br

Camargo Corra is one of the largest parent companies in
Brazil, originally founded as a small company in 1939. Today,
the company employs over 30.000 workers and operates in the
areas of engineering and construction, cement, footwear, steel,
environmental engineering, textiles, energy, and highway bids.
In 2009, according to Brazilian Chamber of Construction Indus-
try (Cmara Brasileira da Indstria da Construo - CBIC),
Camargo Corra was the second largest construction company
in Brazil.

Camargo Corra is one of the companies working in Norte-Sul
Railway construction, in So Paulo. The company also con-
structed a new railway, EF JURITI, in the state of Par and has
operations in Metr SP (Lines 2 and 4), Metrfor and Metr
Salvador.

CARIOCA CHRISTIANI-NIELSEN ENGENHARIA
Rua do Parque, 31 So Cristvo
20940-050 Rio de Janeiro, RJ
Tel.: +55 21 3891-2200
www.cariocaengenharia.com.br

The company was founded in 1947 and its main areas of opera-
tion cover ports and maritime terminals, dams, highways,
bridges and viaducts, subways transportation, pipelines, sub-
marine outfalls, buildings, sanitation and urbanization projects.
Carioca also operates in the areas of real estate and public
service bids. The company has worked in Metr Rio projects.

CETENCO ENGENHARIA S.A.
Rua Maria Paula 36 - 8 Andar Bela Vista
Tel.: +55 11 3320-7000
www.cetenco.com.br

Providing services in the construction area since the 1930s in
both Brazil and abroad, Cetenco Engenharia S.A. has expe-
rience in several engineering areas. The company constructs
dams, locks and hydroelectric power plants, bridges and via-
ducts, tunnels, highways, railroads, airports, ports, transmission
lines, substations and other complex projects. The company
5. Railway Construction Business.


has also operated in the So Paulo and Rio de Janeiro sub-
ways.

CONSTRAN
Av. Juscelino Kubitscheck, 1830 Itaim Bibi
Tel.: +55 11 5545-2620
www.constran.com.br

Founded in 1957, Constran operates in several civil construc-
tion areas. The company is present in the construction of the
most important public and private projects, such as: power
plants and dams, subways and railways, ports, canals, river
rectification and deepening of river chutes, airports, roads,
bridges and viaducts, urban road systems, construction, sanita-
tion, piping and transmission lines. The company has worked
for Metr SP and Ferronorte.

CR ALMEIDA
Av. Vicente Machado, 1789 Batel
80440-020 Curitiba, PR
Tel.: +55 41 3312-9200
www.cralmeida.com.br
The company was founded in 1952 and is one of the largest
heavy construction companies in the country. Its portfolio in-
cludes projects such as Paran Central Railroad and the North-
South Railroad among many others. The company worked for
the Central do Panar Railway, Ponta da Madeira (Carajs
Railway), Metr Braslia and Metr Rio, Porto Alegre Metropoli-
tan train and Norte-Sul Railway.

ENGEVIX
Alameda Araguaia, 3571 Centro Empresarial Tambor
06455-000 Barueri, SP
Tel.: +55 11 2106-0100
www.engevix.com.br
Engevix has more than 40 years of experience in engineering
consultation in Brazil and around 2630 employees in addition to
permanent offices in five Brazilian states and three different
countries (Mexico, Peru and Angola). The companys activities
include the preparation of projects and integration
and management of enterprises in the fields of energy, industry
and infrastructure. It renders services in the elaboration of engi-
neering studies, projects, project management and EPC (Engi-
neering Procurement Construction). Engevix operates in the
public and private sectors, such as: power (generation, trans-
mission and distribution), oil & gas, petrochemical, pulp & pa-
per, steel, mining, as well as infrastructure for railways, road-
ways, subways, ports, airports and basic sanitation.

Engevix Group has a department that is specialized in railroad
project elaboration and railroad work supervision.

Regarding the new projects ahead, Engevix is working in coop-
eration with Valec on a project concerning the continuation of
the North-South Railroad. They are still waiting for the results of
4 of 7 projects for metropolitan metros

Engevixs executive Mr. Wilson Vieira stressed that Engevix
does not represent a potential client for the Swiss companies,
but indicated other potential contractors in charge of rail equip-
ment services: Camargo Corra, Odebrecht, Andrade Gutierrez
and Mendes Jnior. According to Mr. Viera, these companies
are partnering with large rail companies like Alstom for govern-
mental projects. These types of partnerships may involve many
companies and a lot of auxiliary supplier partners.

FERREIRA GUEDES
Alameda Santos, 2441 - 6andar, conj. 62
Tel.: +55 11 3087-8787
www.ferreiraguedes.com.br

Ferreira Guedes is an engineering services company that was
founded in 1936 and has projects in railroads, highways, infra-
structure, urbanization and sanitation, irrigation and building
sectors. The company participates in projects such as Ferrovia
do Ao and Projeto Carajs. The first project passes through
the states of Minas Gerais and Rio de Janeiro. The second
project is operated by Vale and connects Serra dos Carajs, in
the state of Par, to Porto de Itaqui, in the state of Maranho.

The company helped construct 2666 km of railroads, remodel
265 km of railroad, maintain 1277 km of railroad, open 20 m of
tunnels and build 2632 km of bridges and viaducts for the rail-
way segment. Some of Ferreira Guedes clients are CPTM,
CBTU So Paulo and CBTU Rio de Janeiro.


GALVO ENGENHARIA
Rua Gomes de Carvalho, 1510, 19 andar Vila Olmpia
Tel.: +55 11 2199-0222
www.galvao.com

Galvo Engenharia was established in 1996 in the city of So
Paulo. The company provides engineering and construction
services such as oil and gas pipelines, industrial assembly,
buildings, road, airport, railway and urban infrastructure, hydro-
power and dams, basic sanitation and industrial construction. It
has participated in CPTM and Metr SP projects.

The company is in the process of starting a construction project
for the Ministry of Transport (Ministrio dos Transportes)/ Valec
to construct 117,9 km of the Railway Ferrovia de Integrao
Oeste-Leste (FIOL), passing through the city of Jequi.

GRUPO MPE
Rua So Francisco Xavier, 603 Maracan
Tel.: +55 21 3526-3541
www.grupompe.com.br

MPE was created to combine different engineering companies.
These companies are MPE Participao em Engenharia e
Servios S/A and MPE Participao em Agronegcios
S/A.The groups main activities are the management of inte-
grated enterprises, EPCs projects, civil construction and elec-
tromechanical projects, the provision of maintenance services,
commissioning projects and the operation of industrial plants
belonging to the company itself or third parties.

MPE Montagens e Projetos Especiais S/A is part of the engi-
neering division and has obtained agreements with operating
companies in the railway segment with Metr SP, CPTM SP,
Metr Rio, Riotrilhos, Metr Salvador, CBTU, RFFSA and Tren-
surb/RS, among others.

The Transport Group, which is a division of MPE Montagens e
Projetos Especiais S/A, works with Brazilian operators develop-
ing projects, deployment and modernization of rolling stock
(rails, locomotives, cars and maintenance vehicles), signalling
systems, energy systems, telecommunication systems, ventila-
tion systems, ticket-selling systems, management systems,
command and database control.

The company is in a consortia with two Spanish companies,
Dimetronic and Infoglobal, and has signed a contract to mod-
ernize rails and systems of CPTM in So Paulo. The contracts
will eventually provide modern control systems and railway
signalling. The consortia has 30 months to provide the supply
and installation of the equipment in the Line 8 (Diamante Line)
and 48 months to complete Line 10 (Turquesa Line) and Line 11
(Coral Line).

MENDES JNIOR
Av. Joo Pinheiro, 146 6 andar Centro
30130-927 Belo Horizonte, MG
Tel.: +55 31 2121-9442
www.mendesjunior.com.br

MENDES JNIOR is a company that has been in business
since 1953 in the heavy construction market in Brazil and
abroad, developing projects in the segments of road and high-
way construction, railway, subway, port, hydroelectric, thermo
electrical, petroleum and gas, ducts, urban sanitation, irrigation
channels and industrial maintenance both onshore and off-
shore.

In the railway sector, Mendes Jnior worked for Metr SP, Metr
Rio, CBTU BH and Queiroz Galvo/TTrans consortia (VLT
Paulisto). The consortia Mendes Jnior /Sanches Tripoloni
/Fidens will be responsible for Lot 5, from the end of the bridge
over the So Francisco River to Riacho da Barroca, a stretch of
162,04 km.

OAS
Av. Anglica, 2.346 Consolao
Tel.: +55 11 2124-1122
www.oas.com.br

OAS started its activities in 1976 in civil construction. Since then
the company has moved into other areas such as heavy con-


struction, environment, public bids, and oil and gas. Since 2003,
the company has more actively moved into government invest-
ment programs, especially in the petroleum and gas and energy
areas, in major private companies, and in infrastructure pro-
grams of the Brazilian Federal Government.

In the railway sector, OAS has worked for the extension of
Metr SP (line 2 and 4) and Metr Recife.

ODEBRECHT
Praia de Botafogo, 300 - 10 andar Botafogo
Tel.: +55 21 2559-3000
www.odebrecht.com.br

Picture 8: Odebrecht Engineer at Construction Site

Source: Luis Ushirobira/Valor

Odebrecht is a Brazilian business conglomerate that was
founded in 1944. The group is present in South America, Cen-
tral America, the Caribbean, North America, Africa, Europe and
the Middle East. Odebrecht is a major company in the engineer-
ing, construction, chemical and petrochemical sectors. The
company also has a stake in the infrastructure and public ser-
vice sectors in Brazil and Portugal and mining and oil ventures
in Africa. According to CBIC, it is the largest construction com-
pany in Brazil.

Odebrecht is a transport, infrastructure and logistics company
from Odebrecht Group. The company has purchased 61% of
SuperVias shares and will have its concession contract ex-
tended by 25 years. SuperVia is an urban train operator in the
State of Rio de Janeiro and has 13 years of its concession
contract remaining. Odebrecht will invest in SuperVia in order to
improve the quality of the operation which has registered acci-
dents and other setbacks. SuperVia plans to invest BRL 2,3
billion between 2010 and 2020. BRL 1.1 billion will be spent on
90 rails that will be bought by the government of the state of Rio
de Janeiro.

PELICANO CONSTRUES
Av. Joo Palcio, 166 Eurico Salles
29160-161 Serra, ES
Tel.: +55 27 3298-5200
www.pelicano.eng.br

The company was founded in 1980 and works in the railway,
industrial and urban construction, maintenance and reshuffle
segments. Pelicano is part of Oeste-Leste Barreiras consortia,
which won Lot 7 of Ferrovia de Integrao Oeste-Leste (FIOL)
in the stretch between Rio das Fmeas and Estrada Vicinal de
Acesso BR 135.

QUEIROZ GALVO
Av. Rio Branco, 156 - 30 andar
Tel.: +55 21 2131-7100
www.queirozgalvao.com

Queiroz Galvo was founded in 1953 and currently develops
projects in several engineering areas. For 57 years, the parent
company has seen outstanding results in diverse projects in all
of the Brazilian states, covering: buildings, railroads, hydroelec-
tric power plants, urban infrastructure, transmission lines, indus-
trial assembly, bridges, tunnels and viaducts, ports and airports,
subway system and highways, among others.

Queiroz Galvo, OAS, Bombardier Brasil and Bombardier
Transport will be responsible for the manufacture, supply and
deployment of the monorail system for the extension of Line 2
Verde of Metr SP, the Expresso Tiradentes. The consortia,
lead by Queiroz Galvo, won a BRL 2.46 billion bid. The mono-
rail will have 23.8 km of extension and will connect Vila Pru-

dente to Cidade Tiradentes. Around 500.000 users are served
per day. The project is part of the Expansion Plan of the Gov-
ernment of the State of So Paulo.

5.2 Electric Installation Suppliers.
ADELCO SISTEMAS DE ENERGIA LTDA.
Av. da Cachoeira, 660 - Conj. 706
Tel.: +55 11 4199-7500
www.adelco.com.br

The company provides batteries, AC power conditioning, rectifi-
ers/ battery charges.

ARTECHE EDC
Rua Juscelino K. de Oliveira, 11400 CIC
Tel.: +55 41 2106-1899
www.arteche.com

The Spanish Group Arteche is present in Brazil with an own
subsidiary in Curitiba, PR, plus two commercial offices in the
cities of So Paulo and Fortaleza. The company provides solu-
tions in electrification and signaling (generation, transmission,
distribution and industry), including auxiliary and protection
relays for rolling stock, electrification, blockage and signaling.

BALFOUR BEATTY RAIL POWER SYSTEMS BRAZIL
Av. Maria Coelho Aguiar, 215 - Bloco B - 3 andar
Tel.: +55 11 4161-3235
www.bbrail.com

The company provides electrification systems, signalling and
overhead network maintenance.

Currently, they are part of the consortia operating Line 5 of
Metr So Paulo, along with Alstom, Siemens, TTrans, Bom-
bardier and Faon.

CONCEITO TECNOLOGIA LTDA.
Rua Itatiaia, 291
Tel.: +55 11 5585-1242
www.conceitotecnologia.com.br

Conceito Tecnologia Ltda. provides driverless railroad systems.

EFACEC DO BRASIL
Av. Miguel Estfno, 203
Tel.: +55 11 5078-8900
www.efacec.com.br

Efacec works in the area of substation automation, control,
protection and supervision, command centres for energy net-
works, DC and AC feeds as well as telecommunications.

FAON ELETROMECNICA
Rua Amamba, 852
Tel.: +55 11 2634-5959
www.facon.com.br

The company provides electric and electronic systems, com-
mand panels, power controls for substations and EUTs, and
revenue control. It also works with rolling stock and railroad
signalling.

Currently, they are part of the consortia operating Line 5 of
Metr So Paulo, along with Alstom, Siemens, Balfour Beatty,
TTrans and Bombardier.

FONSECA ALMEIDA COMRCIO E INDSTRIA
Rua da Ajuda, 35 - 14 andar
Tel.: +55 21 2544-8000
www.fonsecaalmeida.com.br

The company provides electrification and signalling equipment:
signalling systems, ATC and ATS systems, distribution and
rectification of energy systems, impedance bonds, switch ma-


chine systems, vital relay systems, highway crossing equip-
ment, track isolation systems and infra-structure monitoring
systems.

HARTING LTDA.
Av. Dr. Lino de Moraes Leme, 255
Tel.: +55 11 5035-0075
www.harting.com.br

Harting provides industrial connectors (electric and electronic),
jumper cables, industrial ethernet (switches, connectors and
cables), special cables, railway relays, plastic and metallic
conduits and cable glands.

NEXANS FICAP
Rua Tenente Negro 140 7 Andar
Tel.: +55 11 3048-0803
www.nexans.com.br

Nexans Ficap provides cables for rolling stock, cables and wire
for right-of-way. The global Nexans Group incorporated the
Brazilian company Ficap.

REIPLAS INDSTRIA E COMRCIO DE MATERIAL
ELTRICO
Rua Francisco do Pilar, 1
Tel.: +55 11 3839-4000
www.reiplas.com.br

The company provides wire and cables for overhead network
and grounding purposes.

RTA - REDE DE TECNOLOGIA AVANADA
Rua Dom Aguirre, 515
Tel.: +55 11 2171-3244
www.rta.com.br

RTA provides equipment to protect overhead network dis-
charges.

SATURNIA SISTEMAS DE ENERGIA
Rua Aurlia Luiza M. Zanon, 600
18087-100 Sorocaba, SP
Tel.: +55 15 3235-8000
www.saturnia.com.br

The company provides stationary and tractioned batteries and
outdoor cabinets in addition to metro-rail emergency systems.

SIEMENS
Av. Mutinga, 3.800
Tel.: +55 11 3908-2021
www.siemens.com.br/transporte

Siemens develops systems, traction, EUTs and turn-key sys-
tems.

STEMMANN INDSTRIA E COMRCIO
Rodovia Marechal Rondon, Km 133 - C.P. 76
18540-000 Porto Feliz, SP
Tel.: +55 15 3261-9190
www.stemmann.com.br

The company makes catchment shoes, pantographs and landfill
contacts.

WIREX
Av. Casa Grande, 1.960 Piraporinha
09961-350 Diadema, SP
Tel.: +55 11 2191-9455
www.wirex.com.br

Wirex makes halogen-free low voltage and medium voltage
cables, for use in locomotives and other railroad vehicles.

5.3 Passenger Information /
Ticket Vending Systems.
AES AUTOMAO E SISTEMAS
Rua Domingos Barbieri, 294
Tel.: +55 11 3721-5333
www.aes.com.br

The company is responsible for railroad and subway access
control systems.

DIGICON
Rua Nissin Castiel, 640
94000-970 Gravata, RS
Tel.: +55 51 3489-8700
www.digicon.com.br

The company provides electronic ticketing systems.

EMPRESA 1 - SISTEMAS DE AUTOMAO E COMRCIO
Rua dos Inconfidentes, 1190 - 12 andar
Tel.: +55 31 3262-3261
www.empresa1.com.br

Empresa 1 makes data collectors and validators for electronic
ticketing systems.

TTRANS
Rua Natingui, 1487
Tel.: +55 11 3039-1000
www.ttrans.com.br

Ttrans is responsible for concessions, turn key and BOTs for
entire subway and train systems and electronic ticketing sys-
tems.

WOLPAC SISTEMAS DE CONTROLE
Rua Iijima, 554
08533-200 Ferraz de Vasconcelos, SP
Tel.: +55 11 4674-1777
www.wolpac.com.br

The company makes turnstiles, electronic turnstiles and revolv-
ing doors for train platforms.

Picture 9: Slim High Flow System by Wolpac

5.4 Fleet Management.
ADVANTECH BRASIL
Rua Caramuru, 374
Tel.: +55 11 5592-5352
www.advantech.com.br

The global Advantech Group has open commercial branch
offices in Brazil.

They are specialized in ITS - Intelligent Transport Systems:
railway signal monitoring system, train safety monitoring and
diagnosis system as well as metro station fire alarm systems.

ALFATEST
Av. Presidente Wilson, 3009
Tel.: +55 11 2065-4700
www.alfatest.com.br

Alfatest specializes in GPS location of locomotives.


AUTOTRAC COMRCIO E TELECOMUNICAES
UnB, Campus Universitrio Darcy Ribeiro - Gleba A - Edifcio
Autotrac
70909-901 Braslia, DF
Tel.: +55 61 3307-7000
www.autotrac.com.br

The company makes locomotive satellite tracking systems.

CIM SANEAMENTO INSTRUMENTAL
Rua Prefeito Olmpio de Mello, 1525
Tel.: +55 21 3890-3645
www.cimsaneamento.com.br

CIM makes traffic control equipment.

ENGESIS ENGENHARIA E SISTEMAS
Praa Asdrubal Soares, 31 Ed. Schneider
29040-720 Vitria, ES
Tel.: +55 27 3204-7555
www.engesis.com.br

Engesis provides railroad automation systems.

SYSFER CONSULTORIA E SISTEMAS
Rua da Assemblia, 10 - Sala 2820
Tel.: +55 21 2531-2303
www.sysfer.com.br

The company develops railroad management systems, perfor-
mance indicator panels, railroad occurrence systems, patio and
terminals systems.

WYMA TECNOLOGIA
Rua Climaco Barbosa, 179 - Cambuci
Tel.: +55 11 3274-7011
www.wyma.com

WYMA develops electronic LED Displays.

5.5 Signalling.
AGIRE Implantao de Sistemas Ltda
Rua Santa Eufmia, 20 - Tatuap
03420040 So Paulo, SP
Tel.: +55 11 6192-4563
www.agiresistemas.com.br

The company makes industrial connectors (electric and elec-
tronic), jumper cables, industrial ethernet (switches, connectors
and cables), special cables, railway relays, plastic and metallic
conduits and cable glands.

ALSTOM BRASIL
Av. Raimundo Pereira de Magalhes, 230
Tel.: +55 11 3643-2430
www.alstom.com.br

Alstom Brasil is responsible for traffic signalling and control
systems, traction engines and EUTs.

BOMBARDIER TRANSPORTATION BRASIL
Av. Maria Coelho Aguiar, 215 - Bl. C - 1 andar
Tel.: +55 11 3748-9700
www.bombardier.com

The company develops EUTs and systems.

COBRASIN BRASILEIRA DE SINALIZAO E
CONSTRUO
Rua Manoel Oliveira Pessoa Jr., 46
Tel.: +55 11 3981-1563
www.cobrasin.com.br

The company makes railroad LED-based signals.

DATAPROM - EQUIPAMENTOS E SERVIOS DE
INFORMTICA INDUSTRIAL
Av. Repblica Argentina, 2403 Cj. 82
Tel.: +55 41 3014-1200
www.dataprom.com

Dataprom makes and services electronic ticketing systems,
data collectors, fleet management, railroad traffic control sys-
tems, access control and dynamic weighing.

EMBRASIN - EMPRESA BRASILEIRA DE SINALIZAO
Rua Boaventura, 46
Tel.: +55 31 3491-1095
www.embrasin.com.br

The company makes railroad signalling signs, railroad signal
lights, highway-railroad signalling and automatic grade-crossing
gates, midget signals and electronic traffic controllers.

ERICO DO BRASIL
Rua Dom Pedro Henrique de Orleans e Bragana, 276
Tel.: +55 11 3621-4111
www.erico.com

The global Erico Group is present in Brazil, offering its rail and
industrial products.

ICR INDSTRIA E COMRCIO DE RELS
Av. General Ataliba Leonel, 3381
Tel.: +55 11 6951-9476
www.icr-reles.com.br

The company makes relays for railroad applications.

INDSTRIA E COMRCIO DE TRANSFORMADORES
COSMO
Rua Francisco Luiz Garcia, 82
13602-052 Araras, SP
Tel.: +55 19 3541-6166
www.transformadorescosmo.com.br

The company produces impedance bonds; antennas; transfor-
mers and reactors.

MEG ELETROMECNICA INDSTRIA E COMRCIO
Rua Brigadeiro Galvo, 855
Tel.: +55 11 3825-6406
www.meg-eletromec.com.br

The company makes components for signalling and grade
crossings, special milled parts, moulded parts and injected parts
to design specifications.

SINAF - SINALIZAO DE FERROVIAS
Rua Corblia, 1200
83321-070 Pinhais, PR
Tel.: +55 41 3668-9999
www.sinaf.biz

SINAF offers grade crossing signalling.

TRENDS ENGENHARIA E TECNOLOGIA
Rua Lencio de Carvalho, 234 - 3 andar
Tel.: +55 11 3178-3600
www.trendseng.com.br

The company makes automatic vehicle locators, radio commu-
nication systems, sound systems, grade crossing signalling and
video survey of tracks.


5.6 Telecommunications.
ALBATROS DO BRASIL LTDA
Rua Colnia da Glria, 414
Tel.: +55 11 5084-3155
www.albatrosbrasil.com.br

Albatros produces static inverters, CFTV, multimidia, train-land
transmission system, train diagnostic system and maintenance
of air-conditioning equipment.

Albatros do Brasil was founded in 1997 as a Spanish holding
Corporacin Albatros branch.

HUBER+SUHNER AMRICA LATINA
Rodovia Presidente Dutra Km 154,7 Prdio 4
12240-420 So Jos dos Campos, SP
Tel.: +55 12 3946-9511
www.hubersuhner.com.br

Huber+Suhner America Latina is part of the Swiss Hu-
ber+Suhner group.

The company makes electric and optical components and sys-
tems for connectivity in subway and metropolitan trains, radio
frequency technologies, fibre optics, cables and polymers.

5.7 Consulting.
ENGESIS ENGENHARIA E SISTEMAS
Praa Asdrbal Soares, 31 - Ed. Schneider
29040-720 Vitria, ES
Tel.: +55 27 3204-7555
www.engesis.com.br

SYSFER
Rua da Assemblia, 10 Cj. 2820
Tel.: +55 21 2531-2303
www.sysfer.com.br

6.1 Overview of the sector.
Brazil has been a manufacturer of rolling stock since the 1940s,
when the government started its drive to develop heavy indus-
tries. The industry was hard hit by the general decline of rail
transport in the 1980s and early 1990s (see Diagrams 3, 4 and
5). Its renaissance through private concessions has provided an
incentive to upgrade the national railway industry in the seg-
ment of railroad cars and their components.

In December 2007, Brazilian railway operators owned a total of
2593 locomotives and 88.133 cars. Data showed that rolling
stock has more than doubled in a decade. In 1997, there were
1144 locomotives and 43.796 cars with several scrapped units.

A considerable part of the rolling stock is imported; national
production is below national demand. In recent years, however,
the railway equipment industry has shown signs of growth.
According to the industry association Abifer, it now has a capac-
ity to manufacture 12.000 cars, 400 passenger cars and light-
weight locomotives per year. In 2008, the revenue in the sector
was estimated at BRL 2.6 billion, representing an increase of
30%.

Table 19 presents the Brazilian rolling stock manufacture
volumes in the last ten years:

Table 19: Rolling Stock Manufactured in Brazil
Freight
cars
Passenger
coaches
Locomo-
tives
2000 1.283 62 1
2001 748 71 4
2002 294 217 5
2003 2.028 79 0
2004 4.321 45 0
2005 6.986 179 6
2006 3.589 113 14
2007 1.165 283 30
2008 4.571 442 30
2009 1.020 434 22
2010 e 3.000 500 60-70
2011 e 5.000
Source: Simefre

Diagram 3: Freight Car Production in Brazil, 1950-2010

0
1000
2000
3000
4000
5000
6000
7000
1
9
5
0
1
9
5
2
1
9
5
4
1
9
5
6
1
9
5
8
1
9
6
0
1
9
6
2
1
9
6
4
1
9
6
6
1
9
6
8
1
9
7
0
1
9
7
2
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0

Source: Simefre

The most common cars are:
BOX CAR: For dry bulks, bagged, boxes, unitized freight and
transport of products that can not be exposed to the environ-
ment;
GONDOLA CAR: For dry bulk and diverse products that may
be in open places;
HOPPER: Closed or open for dry and corrosive bulk;
ISOTHERMAL: For frozen products in general;
FLAT CAR: Containers, steel products, large volumes, woods
and large pieces;
TANK CAR: For transport of fuels and bulk cement;
SPECIALS: For products with specific features.

Diagram 4: Passenger Coach Production, 1950-2010
0
50
100
150
200
250
300
350
400
450
500
1
9
5
0
1
9
5
2
1
9
5
4
1
9
5
6
1
9
5
8
1
9
6
0
1
9
6
2
1
9
6
4
1
9
6
6
1
9
6
8
1
9
7
0
1
9
7
2
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0

Source: Simefre
6. Rolling Stock Manufacturers.


The production of locomotives only started in 1967. According
to ANTF, most locomotives used in the Brazilian railways are
those with diesel-electric engines. Some companies (like GE)
are now developing flex fuel engines which could run on bio-
diesel, which is produced in large quantities in remote areas of
Brazil.

Diagram 5: Locomotive Production in Brazil, 1950-2010
0
20
40
60
80
100
120
1
9
5
0
1
9
5
2
1
9
5
4
1
9
5
6
1
9
5
8
1
9
6
0
1
9
6
2
1
9
6
4
1
9
6
6
1
9
6
8
1
9
7
0
1
9
7
2
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0

Source: Simefre

Table 20 shows the Brazilian exports of rolling stock, again
distributed into wagons, passenger coaches and locomotives. A
significant amount of national production, particularly concern-
ing passenger coaches and locomotives manufacture, is ex-
ported every year.

Table 20: Brazilian Exports of Rolling Stock
Freight
cars
Passenger
coaches
Locomo-
tives
2000 47 22 1
2001 0 47 4
2002 0 169 5
2003 53 79 0
2004 2 45 0
2005 348 179 6
2006 75 113 14
2007 51 279 30
2008 125 392 30
2009 32 374 22
Source: Simefre

In fact, when locomotive production is taken separately, one
notes that all Brazil-made units were exported in the last ten
years. The same does not happen when we look at the wagon
export.

With regard to business perspectives for the next couple of
years, CBTU operates both EMUs and diesel train rail systems.
Regarding the Belo Horizonte and the Recife transport systems,
which are operated by means of EMUs, a larger demand is
forecasted. In Belo Horizonte, 25 EMU systems were recently
purchased and another 10 are expected to be purchased soon.
In Recife, the company also recently acquired 25 EMUs, in
addition to 15 trains made up of four cars.

Regarding CBTU units in Natal, Joo Pessoa and Macei,
trains are still working on a diesel powered locomotive basis
in Recife there are also some working on the same basis. In
both cases, auxiliary rail vehicles are often demanded, aimed at
railroad maintenance.

For CBTU Rio de Janeiro, the priority for new acquisitions is
replacing old locomotives from the fiftys and sixtys that are still
operating in CBTUs diesel powered units. This year, CBTU
purchased a group of LRVs from CAF, a Spanish-Brazilian
company.

SuperVia recently acquired 23 EMUs, four car compositions,
and also some trains from foreign manufacturers. Apparently
there are no restrictions on acquiring spare parts from a com-
pany of a different nationality than the original supplier.

In addition to the 30 EMUs recently purchased, they have just
opened a bidding process for 60 new railtrain compositions. The
numbers correspond to the demand created by the railroad
extension projects, and in order to go through fleet renovation
they expect another 120 EMUs in the near future.

6.2 Manufacturers.
In Brazil, the main locomotive and car manufactures are:

ALSTOM BRASIL
Av. Raimundo Pereira de Magalhes, 230
Tel.: +55 11 3643-2430
www.alstom.com.br

In Brazil, Alstom has been present in the market for over 55
years and has more than 5000 employees. Alstom offers rolling
stock products for metropolis metros, citadis tramways, tram-
trains citadis dualis and Regio Citadis, Coradia regional trains,
suburban trains, Prima II locomotives, Pendolino high-speed
trains, Duplex very high-speed trains and AGV very high-speed
trains.

Alstom offers a very wide range of rolling stock, covering the
entire rail transport market from very high speed to light urban
transport, including metros, tramways, suburban and regional
trains and locomotives.

Its services also cover maintenance, renovation and logistics
chain management for supplying spare parts, leading turnkey
projects, client training and technical advice.

Alstom Metropolis trains have their engineering and manufac-
turing performed by the Lapa industrial unit, in So Paulo for the
manufacturing of stainless steel cars.

CPTM recently awarded Alstom Transport a EUR 80 million
contract to supply nine electric multiple-units. Part of Alstom's
Metropolis range, the eight-car 1 600 mm gauge 3 kV DC units
will be produced at Alstom's Lapa plant for delivery by mid-
2012. They will be designed for easy access with gangways
between cars and will be equipped with dynamic travel informa-
tion and air-conditioning, and safety measures will include
CCTV, smoke detectors and a fire extinguishing system.

AMSTED MAXION
Rua Dr. Othon Barcellos, 77
12700-000 Cruzeiro, SP
Tel.: +55 12 3184-1551 / 3184-1155
www.amsted-maxion.com.br

Amsted Maxion is involved in the development and manufactur-
ing of steel and aluminum cargo freight cars, cast steel wheels,
bogies, wheel and axle sets and shock absorption and traction
systems, in addition to providing the following services: repair,
adaptation and modernization of freight cars and their compo-
nents.

Amsted Maxion was created from the association between the
US company Amsted Industries Inc. and the Brazilian company
Iochpe-Maxion, a successor to FNV - Fbrica Nacional de
Vages, founded in 1943. It claims to be responsible for almost
50% of the fleet, with more than 91.000 cars on the Brazilian
railroads, and to hold an average share of 70% in that segment.

The company has also created (in partnership with Voith) the
first DH10 Diesel-Hydraulic Locomotive manufactured in Brazil,
which has been especially developed for maneuvering services.
It may be used either in cargo or passenger lines, on non-
electrified systems.

In the largest steel casting plant of South America, parts of up to
6 tons are manufactured for application in machinery and indus-
tries of civil construction, mining, siderurgy, automobile and
railway. Some of Amsted Maxion clients are ALL, ArcelorMittal,
Bunge, Cargill, CSN, Ferroeste, FTC, MRS, Transnordestina,
Usiminas and Vale.

Amsted-Maxion sold 2140 wagons in 2010 and expects a 50%
increase in 2010, based on orders already received. According
to the companys President, Mr. Ricardo Chuahy, special incen-
tives (loans with almost no real interest) provided by the
BNDES helped the company greatly to overcome the slump in
demand it had experienced in 2009.


BOMBARDIER TRANSPORTATION
Av. Maria Coelho Aguiar, 215 - Bl. C - 1 andar
Tel.: +55 11 3748-9700
www.bombardier.com

With operations in 35 countries, Bombardier Transportation
leads the worlds rail equipment manufacturing and servicing
industry. The companys 33.800 employees provide rail trans-
portation solutions, including:
Rail vehicles - automated people movers, monorails, light rail
vehicles, advanced rapid transit, metros, commuter/regional
trains, intercity/high-speed trains and locomotives;
Propulsion and controls - complete product portfolio for appli-
cations ranging from trolley buses to freight locomotives;
Bogies - product portfolio for the entire range of rail vehicles;
Services - fleet maintenance, operations and maintenance
(O&M), vehicle refurbishment and modernization, and mate-
rial management;
Transportation systems - customized design-build-operate-
maintain transportation system solutions;
Rail control solutions - advanced signaling solutions for mass
transit and mainline systems.

To install the technology center to build monorails and meet
future demand, Bombardier Brazilian plans to double the size of
its manufacturing plant in Hortolndia (SP). Currently, the unit
has two sheds and will build another two sheds and five booths
of train painting, totaling 20.000 m2 of industrial area in 2011.

Bombardier is a member of the Consrcio Expresso Monotrilho
Leste, also called by Expresso Tiradentes. The company has a
contract with CPTM and will design, supply and install a 24 km
INNOVIA Monorail 300 system.

The new line will serve as an extension of the So Paulo sub-
way Line 2 and will have the capacity of transporting 40.000
passengers per hour in either direction. The company will de-
sign and supply system-wide elements for the 24 km, 17 station
INNOVIA Monorail system, including 54 seven-car trains (358
cars).

The manufacturing of the initial cars will be carried out by Bom-
bardier in Pittsburgh, USA, and subsequent cars will be built at
the Brazilian plant in Hortolndia (SP).

Currently, Bombardiers most important contracts are the refor-
mulation of 156 cars for Metr SP and maintenance for CPTM.

BOM SINAL Indstria e Comrcio Ltda
Av. Jos Bernardino, km 2,5
Rodovia CE 096
63180-000 Barbalha CE
Tel.: +55 88 3532-0704
www.bomsinal.com

Bom Sinal is a Brazilian manufacturer of LRVs which has been
operating in this market for over 5 years. They are based in
Barbalha (Cear State), in the northeastern region of Brazil and
have other units in Fortaleza (Cear) and in So Manuel (State
of So Paulo).

The company has a partnership with Voith to transfer technolo-
gy from Germany to Brazil.

Picture 10: Light Rail Vehicle made by Bom Sinal

With approximately 1000 employees, Bom Sinal has a portfolio
of 3 types of LRV: Mobile 2 (2 cars/ capacity of 358 passen-
gers), Mobile 3 (3 cars/ 562 passengers) and Mobile 4 (4 cars/
766 passengers). These models run on diesel or biodiesel, not
on electricity as other LRVs.

Its commercial activity is concentrated in the northeastern re-
gion of the country and customers include CBTU (Companhia
Brasileira de Trens Urbanos), State Government of Cear,
Metr Fortaleza and the cities of Arapiraca and Maca.

The company has recently delivered the second LRV to Forta-
leza and 6 more are to be delivered in the next 6 months. Ac-
cording to commercial director Mrcio Florenzano, 8 vehicles
are to be delivered to Macei between August 2010 and Janu-
ary 2011; 5 vehicles are to be delivered to the city of Sobral until
August 2011.

Bom Sinal also operates in the segment of plastic furniture for
stadiums, hospitals and schools.

CAF BRASIL INDSTRIA E COMRCIO
Rua Tabapu, 81 - 10 Andar Itaim Bibi
Tel.: +55 11 3167-1720
www.cafbrasil.com.br

CAF is one of the international market leaders in the design,
manufacture, maintenance and supply of equipment and com-
ponents for railway systems. The Spanish company has a prod-
uct range from complete transportation systems (high-
speed, locomotives, regional trains, commuter trains / electric
motorcars, metro unit trains and streetcars and light rail trains)
and turnkey solutions for custom-made parts and components.
CAF also offers maintenance, upgrade and overhaul of vehicles
and components, after sales technical assistance, operation
of administrative concessions and financing.

Picture 11: New CAF plant in Hortolndia (So Paulo State)

CAF Brazil produces regional rails in its factory located in Hor-
tolndia (SP). This BRL 150 million plant was opened in Janu-
ary 2010. CAF already had orders from CPTM for 48 suburban
trainsets. It has secured another contract for supplying 36 trains
for CPTMs Line 8, through a PPP (public private partnership),
including the maintenance of the fleet during 20 years. The
delivery of the first EMU of this new contract is foreseen for
March of 2011.

There is a project to reactivate regional trains in Sorocaba and
Santos. The company is interested in this project because they
manufacture regional trains. According to the commercial man-
ager, the company is presenting itself to the State Government
as a potential partner of rolling stock for the regional rails
project.

CAF intends to provide Brazil with the rail model S 121 through
technology transfer from its headquarters in Spain. For dis-
tances of 150 km, the train can reach a speed of 200 km/h. The
train can hold 300 passengers and has reclining seats in differ-
ent positions.

EIF LOCOMOTIVAS
Rua Mato, 104 Vila Santana
13030-300 Campinas, SP
Tel.: +55 19 3384-2700
www.eiflocomotivas.com.br

Formed in 2001 by professionals with vast experience from
design and manufacture to maintenance services and repair of
locomotives, EIF operates in the railway market offering the
following services: rental/leasing of locomotives, new locomo-
tives marketing (shunt and mainline units), sale of used locomo-
tives from the North American market, gauge adaptation, refur-
bishment, retrofit and start-up services in Brazil, logistics opera-
tions (railroad in North-America and ocean freight to ship to
Brazil), parts sales, overhaul and maintenance of permanent
way maintenance equipment and repair of wagons/ freight cars

EIF has a manufacturing plant that comprises an area of 4000
m2 located in Trs Rios, having received tax incentives from the
Rio de Janeiro state government; investments amount to BRL
6.1 million. The railroad access plant receives both gauge for
locomotive building and restoration.

The company operates with all railroad equipment; manufactur-
ing new locomotives, refurbishing, maintaining, adapting and


leasing locomotives, refurbishing railroad cars, passenger car
trucks, maintaining and adapting large equipment for mainten-
ance of railroads.

EIF provided products and services for CSN, Vale, MRS
Logstica, ALL, Usiminas, CTS, SuperVia, CBTU-STU/REC,
Consrcio Nova Via, GMF/COMSA, CPTM, Cenibra and Ger-
dau Aominas.

GEVISA S.A (GE TRANSPORTATION)
Av. General David Sarnoff, 4.600
32210-100 Contagem, MG
Tel.: +55 31 2103-5333
www.getransportation.com.br

GE Transportation is a global technology leader and supplier to
the railroad, marine, drilling, wind and mining industries. GE
provides freight and passenger locomotives, railway signalling
and communications systems, information technology solutions,
marine engines, motorized drive systems for mining trucks and
drills, high-quality replacement parts and value added services.

GE Transportation has been present in Brazil since 1962 and
sold more than 1000 engines to 15 countries since then. For
some time, Gevisa (GE) was inactive due to a lack of demand.
However, in 2005, the company started to manufacture locomo-
tives (up to 4500 HP) again.

The president of GE Transportation, Mr. Lorenzo Simonelli,
announced the signing of the largest locomotive purchase
agreement in Brazil. The agreement was signed with MRS
Logstica in September 2010. It covers an initial 115 AC44i
locomotives to be delivered between 2011 and 2015 for use on
1600 mm gauge heavy haul iron ore trains, with an option to
purchase 100 additional units. The size of the order means GE
will be able to increase the local content to more than 50%.

KNORR BREMSE BRAZIL
Av. Engenheiro Euzbio Stevaux, 1.071
Tel.: +55 11 5681-1117
www.knorr-bremse.com.br

Knorr-Bremse is one of the leading manufacturers of brake and
on-board systems for rail vehicles. The company product portfo-
lio includes, apart from complete braking systems for all types
of rail vehicles, door systems, air conditioning installations,
control components and windscreen wipers. With design, mar-
keting and servicing centres, the company is present in 25
countries around the world.

Knorr-Bremse started its activities in Brazil initially offering rail
products in 1977 as an independent department inside of the
MWM plant named Indstria de Freios Knorr Ltda.

MWL BRASIL (GERMAN GMH GROUP)
Rodovia Vito Ardito, S/N Km 1
12282-535 Caapava, SP
Tel.: +55 12 3221-2400
www.mwlbrasil.com.br

As of June 2010, MWL Brasil became part of the German GMH
Group. The company's specialties in railway and industrial
product manufacturing are: railroad wheelset, forged railroad
wheel, forged railroad axle, forged crane wheel, forged steel
sheaves, forged steel gear rough pieces, vacuum degassed,
microalloy and carbon steel ingot.

PIFER PROJETOS DE INTERIORES FERROVIRIOS
Rodovia BR-040, km 18,5 - Galpo D
25812-470 Trs Rios, RJ
Tel.: +55 24 2252-5429
www.pifer.com.br

PIFER is a Brazilian company specialized in railway interiors
and is located in Rio de Janeiro. The company helps with all
project stages, manufacturing and assembly of parts and com-
ponents for commuter, urban and regional trains.

The company does project and production of benches, panels
and fiber glass components for public transportation vehicles.

PROGRESS RAIL
Rua Georg Rexroth, 609
09951-000 Diadema, SP
Tel.: +55 11 4071-1234
www.progressrail.com

Progress Rail Services, a subsidiary of Caterpillar Inc., was
established in Brazil in June of 2008, acquiring the total share-
holding control of MGE Transportation, one of the larger suppli-
ers of railroad services in Brazil.

The company is focused on two main areas: Locomotive &
Railcar Services and Engineering & Track Services.

In the track area, the company provides rail, track work, signals,
maintenance-of-way equipment and rail welding. In addition to
tracks, the company provides locomotive and railcar services,
reconditioned parts, wheels, axles and bearings.
The recycling and brokerage group oversees the reclamation of
used rail, wrecked and retired railcars and locomotive, and
other scrap metal.

Progress Rail Services provide services to some of the main
railroad companies, such as ALL, CFN, FCA, FTC, Ferroeste,
Ferroviaria Oriental, MRS, Vale and for some of the main opera-
tors of transit passenger transportation, such as CPTM So
Paulo, CBTU, Metr Braslia, Metr SP and SuperVia.

RANDON S.A IMPLEMENTOS E PARTICIPAES
Av. Abramo Randon, 770
95055-010 Caxias do Sul, RS
Tel.: +55 54 3209-2000 / 3209-2194
www.randon.com.br

Randon claims to be the largest manufacturer of rail and road
trailers and semi-trailers in Latin America and since 1998 has
been operating in the freight railway sector.

The company produces the following kinds of wagons:
Gondola: Transport of iron ore;
Hopper: Transport of various types of grain, limestone and
others;
Tank: Transport of fuels and bulk cement;
General Cargo: Transport of grains and general cargo; and
Platform: Transport of containers and general cargo.

In the Brazilian freight car market, Randon aims at a market
share of 30%. Like its competitors, the company has recovered
from the recession, selling almost 1000 wagons in 2010. For
2011, it projects to sell 1200 units.

Picture 12: Freight car made by Randon

SANTA F VAGOES
Av. Osvaldo Cruz, 498
97095-470 Santa Maria, RS
Tel.: +55 55 2101-8121
www.santafevagoes.com.br

Santa F Vages produces rail cars for different uses, custo-
mized according to each clients requirements. Some of the
available models are: closed rail car for vehicles; closed rail car
with telescopic doors, closed rail car with side doors, container
rail car, flat rail car, gondola rail car, grain rail car, multiuse rail
car, piggy back rail car and sider rail car and tank rail car.

The company also remanufactures and makes transformations
of wagons, including resizing and new project boxes, cut and
removal of old boxes and structures, manufacturing and
assembling of new boxes and structures while always respect-
ing the specifications of each customer.

SIEMENS MOBILITY
Av. Mutinga, 3.800
Tel.: +55 11 3908-2021


www.mobility.siemens.com

Siemens had its first project in Brazil in the year 1867, with the
installation of the first telegraph line between Rio de Janeiro
and Rio Grande do Sul. In 1905 the company set up a unit in
the country. Since 2009, Siemens has had an industrial plant in
Cabreva (SP) for retroffiting, maintenance and production of
urban trains and components for the railway segment.

The Mobility Division won several contracts in 2009 such as
refurbishment of 25 trains for So Paulos subway Line 1 and
will supply a complete electrification system that includes 14
rectifier substations for Brasilias new Light Rail Train.

Siemens is a supplier and system integrator for the rail trans-
portation sector. The company offers products for mass transit,
regional and main line services for passengers and cargo.

Siemens provides maintenance, spare parts, modernization and
accident repair in addition to testing and validating rail systems.

6.3 Maintenance / Workshops.
AJAPREST
Rua 18, 47 - Santa Mnica
29100-000 Vila Velha, ES
Tel.: +55 27 3035-0870
www.ajaprest.com.br

Ajaprest works in varying segments within the rail sector, such
as: railroad and AMVs construction and maintenance, metallic
structures and railroad maintenance services in general.

CHAR POINTER TECNOLOGIA
Calada das Tulipas, 35 - Centro Comercial de Alphaville
Tel.: +55 11 4191-3163
www.charpointer.com.br

Char Pointer Tecnologia was founded in 1998 and specializes in
engineering, cartography and software solutions development.
Last year, Char Pointer built an international office in Madrid so
that they could start operating in the European market.
This year, the company started working as a distributor for the
Swiss company Amberg Technologies, which provides tunnel
and railroad survey solutions.

HASTLEV MANUTENO MECNICA E HIDRULICA
Rua Doze de Maio, 465 Vila Galvo
070056-1220 Guarulhos, SP
Tel.: +55 11 2452-7654
www.hastlev.com.br

The company makes rail mechanical power jacks, hydraulic
cylinders, angle gearboxes and cable stretchers.

PLASSER DO BRASIL
Rua Campo Grande 3050 - Campo Grande
Tel. +55 21 2415 0232
www.plassertheurer.com

Plasser do Brasil is a partner firm of the global Plasser&Theurer
Group.

THERMIT
Rua Sargento Silvio Hollenbach, 601
Tel.: +55 21 2472-4912
www.goldschmidt-thermit.com/pt

Thermit is part of the global Goldschmdit Thermit Group.

HOLEMAKER
Rua Guiomar da Rocha, 97 Casa Verde
Tel.: 0800 77 25 842
www.holemaker.com.br

Holemaker is specialized in renting railroad tools, like impact
wrenches, rail drills, weld debarring and rail skipjacks.

7.1 Import Volume and Trends.
The Brazilian import and export statistics presented in this
Chapter are based on Chapter 86 of the HS Nomenclature,
which concerns railway and tramway locomotives, rolling-stock
and parts thereof; railway or tramway, track fixtures and fittings
and parts thereof; mechanical (including electro-mechanical)
and traffic signalling equipment of all kinds.

It is important to note that the tariff code used in Brazil is the
Mercosur Common Tariff Code (Nomeclatura Comum do Mer-
cosul - NCM), which is used in all of the countries that comprise
the Mercosur economic block (Brazil, Argentina, Uruguay and
Paraguay).

Diagram 6 and Table 21 show the evolution of Brazilian imports,
related to Chapter 86, within the last decade:

Diagram 6: Brazilian Imports of Rail Equipment (US$ mio.)
2000-2010
0
200
400
600
800
1000
1200
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0

Source: Brazil Trade Net

Table 21: Brazilian Imports under NCM Chapter 86
Year Import US$
2000 123.527.419
2001 95.084.249
2002 94.400.088
2003 39.236.142
2004 148.831.856
2005 221.198.018
2006 280.157.100
2007 220.407.295
2008 523.985.206
2009 260.029.363
2010* 979.883.911
Source: Brazil Trade Net.
Value for 2010 is for January thru October.

There has been a significant increase in Brazilian demand for
this sort of equipment, especially during 2010. This corresponds
(but exceeds) trends in other sectors and can be explained by
(1) the backlog of orders suspended in 2009 and (2) the Brazili-
an currencys valuation in 2010.

Table 22 (see next page) presents a closer look at Brazils rail
product imports in the recession year 2009. The right column
shows the total amount Brazil imported in 2009 of every distinct
NCM code covered by Chapter 86. There are some products
that Brazil did not purchase, indicated with a dash, but that does
not mean that during the current year it has not continued to
import.

The codes from 8601 to 8606 correspond to products that can
be counted in terms of units, which also represent the biggest
amount traded. The rest of chapter 86 refer to parts used by the
rail industry, as well as assembling other components to be
used as spare parts or for any other purpose.

7. Import of Railway Equipment.


Table 22: Suggested NCM Codes for Rail Products

NCM NCM Description Imports 2009 (US$)
86
Railway and tramway locomotives, rolling-stock and parts thereof; railway or
tramway, track fixtures and fittings and parts thereof; mechanical (including
electro-mechanical) traffic signalling equipment of all kinds
260.029.363
8601
Rail locomotives powered from an external source of electricity or by electric
accumulators:
811
8601.10.00 Powered from an external source of electricity 811
8601.20.00 Powered by electric accumulators -
8602 Other rail locomotives 106.316.184
8602.10.00 Diesel-electric locomotives 103.702.456
8602.90.00 Other 2.613.728
8603
Self-propelled railway or tramway coaches, vans and trucks, other than those of
heading 8604:
13.259.381
8603.10.00 Powered from an external source of electricity 13.251.659
8603.90.00 Other 7.722
8604
Railway or tramway maintenance or service vehicles, whether or not self-
propelled (for example, workshops, cranes, ballast tampers, trackliners, testing
coaches and track inspection vehicles):
77.655.990
8604.00.10 Self-propelled, ballast tampers and track inspection vehicles 30.831.626
8604.00.90 Other 46.842.364
8605
Railway or tramway passenger coaches, not self-propelled; luggage vans, post
office coaches and other special purpose railway or tramway coaches, not self-
propelled (excluding those of heading 8604):
0
8605.00.10 Passenger coaches -
8605.00.90 Other -
8606 Railway or tramway goods vans and wagons, not self-propelled: 0
8606.10.00 Tank wagons and the like -
8606.20.00 Insulated or refrigerated vans and wagons, other than those of subheading -
8606.30.00
Self-discharging vans and wagons, other than those of subheading 8606.10 or
8606.20
-
8606.9 Other:
8606.91.00 Covered and closed -
8606.92.00 Open, with non-removable sides of a height exceeding 60 cm -
8606.99.00 Other -
8607 Parts of railway or tramway locomotives or rolling-stock: 43.774.562
8607.1 Bogies, bissel-bogies, axles and wheels, and parts thereof:
8607.11 Driving bogies and bissel-bogies:
8607.11.10 Bogies 238.829
8607.11.20 Bissel-bogies -
8607.12.00 Other bogies and bissel-bogies 2.934.985
8607.19 Other, including parts:
8607.19.1 Bearing boxes:
8607.19.11 Incorporating bearings, of a diameter exceeding 190 mm, of a kind used in railway 6.840.195

carriage wheel axles
8607.19.19 Other 1.223.680
8607.19.90 Other 5.592.487
8607.2 Brakes and parts thereof:
8607.21.00 Air brakes and parts thereof 6.374.998
8607.29.00 Other 4.549.689
8607.30.00 Hooks and other coupling devices, buffers, and parts thereof 3.169.007
8607.9 Other:
8607.91.00 Of locomotives 1.309.398
8607.99.00 Other 11.541.294
8608
Railway or tramway track fixtures and fittings; mechanical (including electro-
mechanical) signalling, safety or traffic control equipment for railways, tram-
ways, roads, inland waterways, parking facilities, port installations or airfields;
parts of the foregoing:
7.309.402
8608.00.1
Mechanical (including electro-mechanical) signaling, safety or traffic control equipment
for railways, tramways, roads, inland waterways, parking facilities, port installations or
airfields:

8608.00.11 Mechanical 975.654
8608.00.12 Electro-mechanical 2.196.297
8608.00.90 Other 4.137.451
8609.0000
Containers (including containers for the transport of fluids) specially designed
and equipped for carriage by one or more modes of transport
11.695.033
Source: Ministry of External Relations (Brazil Trade Net)


Please refer to Annex G for more detailed data regarding the dis-
tinct categories of railway products, including information on import
trends and the main countries of origin.

7.2 Import Duties.

As a member of Mercosur (together with Argentina, Uruguay and
Paraguay, with Venezuela to join soon), Brazil has free trade
relations with most Latin American countries. Mercosur has been
reluctant to conclude free trade agreements outside the region, but
currently negotiates such an agreement with the European Union.
If the EU and Mercosur strike a deal, EFTA would probably want to
follow suit. For the time being, however, there is no discrimination
between Swiss suppliers and their major competitors.

The import costs include several expenses which may vary
depending on the assumptions agreed on in the purchasing
agreement. Key costs are: FOB value, material FCA, international
freight (aerial or maritime), insurance, import duty (II), IPI, ICMS,
storage, customs fees and bank charges.

There are various taxes that apply to products exported to Brazil at
both the federal and State levels. At the federal level, Brazil
imposes the Import Tax (Imposto de Importao - II), which varies
according to the applicable NCM code. This tax is placed on
products being imported from abroad in order to give an advantage
to Brazilian-made goods. The percentage per product depends on
various factors including country of origin and type of product and
is calculated using the customs value.

The customs value includes cost, insurance, freight and other fees
that the legislation specifies. The duty rates vary according to the
classification of the product in the External Tariff Code (Tarifa
Externa Comum - TEC).

It is important to note that the only certain way of knowing which
NCM code and applicable tariffs to use is contacting the customs
authorities of each country, either directly or through a consultant.
The Brazilian organization responsible for this type of coding is
Receita Federal (www.receita.fazenda.gov.br). To start the consul-
tation process, technical brochures and other documents which
may help Receita Federal identify the appropriate code should be
sent in. It may take 30 days or more to receive an answer.
The import duty (II) rates for the railway products applicable NCM
codes are shown in Table 23.

Table 23: Brazilian Tariff for Railway Products
NCM Import
Duty %
8601.10.00
14,00
8601.20.00 14,00
8602.10.00 14,00
8602.90.00 14,00
8603.10.00 14,00
8603.90.00 14,00
8604.00.10
0,00
8604.00.90
14,00
8605.00.10 14,00
8605.00.90 14,00
8606.10.00 14,00
8606.20.00 14,00
8606.30.00 14,00
8606.91.00 14,00
8606.92.00 14,00
8606.99.00 14,00
8607.11.10 14,00
8607.11.20 14,00
8607.19.11
0,00
8607.19.19
14,00
8607.21.00 14,00
8607.29.00 14,00
8607.30.00 14,00
8607.91.00 14,00
8607.99.00 14,00
8608.00.11 14,00
8608.00.90 14,00
8607.21.00 14,00
Source: Brazilian Customs (Receita federal)

The Brazilian Law allows for the reduction of import taxes (ex-
tarifrio) every time a similar product / technology is not identified
in the domestic market. There are lots of Brazilian companies
offering rail tracks, sleepers and the like, but more advanced tech-
nology is sometimes not available.


The ex-tarifrio regime, when approved, reduces the import duty of
capital goods down to 2%. This reduction is only valid for the im-
port duty, but as the other taxes are applied on a cascade effect,
this benefit ends up reducing the whole importation significantly.

In order to eliminate the import tax of components that Brazil does
not manufacture, Resolution 40 of CAMEX, passed 27/09/2010,
includes seven rail part exceptions from the TEC List. CAMEXs
Resolution 40 includes:
Connecting rods;
Cylinder, cylinder head and crankcases;
Injectors (motor);
Pistons;
Cylinder heads for diesel motors;
Crankshaft;
Ball bearings for diesel motors.

More import duty breaks may be granted for other products. To
apply for an ex-tarifrio, the company has to prove that there is no
similar product locally produced. This will be proven by submitting
technical information, catalogues and details on the product to the
trade association related. If approved, the import duty is reduced
for a period of 2 years, renewable (part of the process has to be
done again, as the company will need to prove after 2 years that
the domestic production is still inexistent for such item).

7.3 Taxes.
In addition to the II, there is a federal VAT (Imposto sobre Produtos
Industrializados - IPI) and state VAT (Imposto sobre Operaes
relativas Circulao de Mercadorias e sobre Servios de
Transporte Interestadual e Intermunicipal e de Comunicaes
ICMS) on imported goods.

IPI is applied at varying levels to manufactured goods and is
calculated regardless of the manufacturing location, whether inside
or outside of the country. It is calculated based on how essential
the product is, with non-essential products receiving the highest
tax burden and those considered essential receiving, in some
cases, a tax of 0%.

All products listed under NCM Chapter 86 are considered essential
and thus taxed at 0% IPI.

ICMS is levied on the sum of the customs value, the II and IPI
values, the import duty, the IPI tax and other customs charges.
The duty ranges from 3.5% to 30%. If the imported goods are
destined for manufacture or for sale in Brazil, the importer may
recover the value of the IPI and ICMS taxes.

For imports coming into Rio de Janeiro, ICMS is 15% and in So
Paulo, the tax is 18%. In the southern state of Rio Grande do Sul,
a tax of 17% is levied. However, it is important to note that these
taxes are issued by state governments and may fluctuate.

7.4 Import Procedures.
Despite of some governments efforts to reduce the bureaucracy
connected with importing and exporting, foreign companies may
still find the procedures somewhat cumbersome. Brazilian customs
agents also tend to be extremely formalistic. The use of a local
customs agent remains essential when dealing with the peculiari-
ties of the Brazilian customs authorities.

The Secretariat of Foreign Trade (Secretaria de Comrcio Exterior
- SECEX), that is part of the Ministry of Development, Industry and
Foreign Trade (Ministrio do Desenvolvimento, Indstria e
Comrcio Exterior MDIC) controls imports and exports in Brazil.
Companies engaged in foreign trade must register with the SE-
CEX as importers or exporters.

Importers must obtain Import Licenses (Licena de Importao -
LIs) from SECEX. Import Licenses may be obtained electronically
by means of the Integrated Foreign Trade System (Sistema Inte-
grado de Comrcio Exterior - SISCOMEX), which is an on-line
computer register that processes all import licenses. Licenses
normally are issued within five days of application. Goods must be
loaded for shipment within 90 days of the issuance of the import
licenses.

Importers must submit the following documents to the customs
authorities:

The original trade invoice (Pro forma Invoice);
Import Declaration - SISCOMEX issues an electronic receipt of
collection of federal VAT;
Document of collection of state VAT;


A document showing knowledge of the original freight or an
equivalent document proving the property or the possession of
the goods (bill of landing or airway of landing);
Other documents that may be required in conformity with the
regulations of international trade or other specific legislation
such as a certificate of origin, quality and health certificates.

The possibility of duty reductions exist and depend on the charac-
ter of the imported products, their destination, origin and value.
The Brazilian government has also created tax-incentive pro-
grams, which may benefit the importation of certain types of prod-
ucts. To find out whether or not the possibility apllies to rail relate
equipment the Federal Revenue (Receita Federal) should be
consulted.

Two gross revenue taxes, the Social Integration Program Tax
(Programa de Integraco Social - PIS) and the Social Security
Financing Tax (Contribuio Social para Financiamento da Seguri-
dade Social - COFINS) are levied at a combined rate of 3.65% on
the sale of imported goods in the local market.

SECEX uses information from international commodities ex-
changes, specialized publications, price lists of foreign producers,
prices declared by importers and other means to evaluate prices of
imports and exports. The Brazilian authorities exercise control over
import and export prices and investigate cases in which they sus-
pect dumping may have occurred.

Importers should document their declared prices either via interna-
tional commodities exchanges, specialized publications or price
lists of foreign producers. Other alternatives are pro forma invoic-
es, letters, facsimiles, telexes, orders or contracts.

8.1 Public Procurement.
All federal, state, and municipal agencies and foundations, as well
as all public companies, including those with private participation,
are subject to the Tendering Law (Law No. 8666 of 12 June 1993).
Companies with non-controlling state participation do not have to
follow general procurement rules.

The Tendering Law mandates that all procurement of goods,
works, and services must be tendered, with procurement based on
best-price criteria. In practice, roughly 40% of procurement con-
tracts take place under some kind of waiver from tendering re-
quirements. There are frequent allegations of corruption.

Brazil is not a party to the WTO Plurilateral Agreement on Gov-
ernment Procurement (GPA), nor does it intend to join anytime
soon. Although in general national treatment is afforded to foreign
suppliers legally established or represented in Brazil, preference
may be given to goods and services produced in Brazil even when
they are up to 25% more expensive. This is meant to spur national
industrial development.

Suppliers must be legally established or represented in Brazil to
qualify for government contracts; foreign firms not established in
Brazil may only participate in international tenders designated as
such. Projects wholly or partly financed by international financial
institutions or cooperation agencies are tendered internationally,
and may be governed by rules established by such institutions or
agencies.

In the case of international tenders, the bidding object may be
executed in a foreign country and the price proposals established
in foreign currency, but the foreign company still needs legal re-
presentation in the country (with express powers to receive notifi-
cations and respond administratively and judicially) or a joint-
venture with a Brazilian firm (at least 51% Brazilian capital partici-
pation and operational control by Brazilian nationals).

Apart from their legal status, companies usually need to demon-
strate their financial and technical capacity in order to qualify as
bidders. In international bids, a foreign companys offer must in-
clude taxes that would normally only be charged of national con-
tractors. This provision is meant to ensure equal conditions among
bidders.

For engineering works and services, in particular, foreign firms
must comply with legal requirements related to the engineering
profession. These requirements comprise the registration, in the
Regional Council of Engineers and Architects (CREA), of: (a) the
company; (b) the professional engineer; and (c) the collection of
technical works. Foreign companies may have their qualification
recognized by Brazilian competent authorities. In order to acquire
such qualification they must present technical justifications such as
certificates, titles, published works, among others, authenticated
by the respective consulate and translated by a certified translator.

All public tenders are made public through the Official Gazette
(Dirio Oficial da Unio) and different internet sites.

Bids for line extensions are generally submitted by partnerships
(consortia) of construction companies, engineering firms, and
rolling stock manufacturers. This kind of partnership may involve
many companies and a lot of auxiliary supplier partners. The win-
ning consortium may sub-contract other suppliers and service
providers.

Large projects are usually divided into several lots and awarded to
different consortia.

8.2 Procurement by Private
Companies.
While state-owned transport companies (e.g. most subway and
passenger service operators) use the public tender system to
award contracts for line extensions, new equipment and mainten-
ance, private railway operators have their own systems and inter-
nal regulations for qualifying suppliers and service providers.
These are governed by civil law.

MRS Logstica, for instance, buys directly from suppliers. They
maintain direct contact with suppliers handling import processes.
MRS requires a complete registration with a procurement analyst
from the company before guaranteeing the suppliers inclusion into
the database.

FTC requires company registration documents (national and state
registration), and technical / commercial information, such as if the
supplier has ISO certification or other quality certificates and
commercial references and experience in the sector. Other evalua-
8. Selling Rail Products in Brazil.


tions are performed during the material supplying process, such as
the payment method, delivery deadline, type of freight, etc.

Metr Rios new supplier registration procedures may vary de-
pending on the transaction characteristics. A presentation to the
technical and supplies department of the company is essential.
During the process, technical assistance is an important subject,
and prototypes and samples are always welcome.

In the case of line extensions, equipment is usually selected and
acquired indirectly, through a general contractor, while replace-
ments of equipment are usually acquired directly from the manu-
facturer.

When Metr Rio has to choose between different proposals, it will
consider the acquisition volume, the value, and the existence of a
similar national product. Metr Rio is concerned about the conti-
nuity of the supplying contract, specially with regard to imported
units. If this is the case, a national manufacturer will be chosen
over an international manufacturer.

SuperVia has no restrictions regarding imported equipment (its
infrastructure, however, belongs to the state). In fact, this conces-
sionaire recently purchased 23 South-Korean EMUs, 4 car com-
positions, and also some Chinese trains. Apparently there are no
restrictions on purchasing spare parts from a company of a differ-
ent nationality than the original supplier.

Generally speaking, Brazilian railway operators do not have local
content requirements. Every national company contacted to clarify
this mentioned that the sector does not require any share of local
content when purchasing. However, when the project is financed
by the BNDES, 60% of local content is usually required to release
the funds. The BNDES is expected to finance almost half of the
total investments in the sector in the near future.

8.3 Technical Standards.
Brazilian railway operators may choose whichever standard they
would like to require from their suppliers. Most of them follow pre-
established international standards, predominantly AAR (American
Association of Railroads) and less frequently European UIC (Union
International des Chemins de Fer) standards.

The fact that each operator company opens a bid in accordance
with its own technical specifications is considered to be a problem
for the metro-rail sector in Brazil, especially for the development of
a national rail suppliers industry. An integrated effort to correct this
situation is therefore under way.

The effort is led by the Brazilian Association of Technical Stan-
dards (Associao Brasileira de Normas Tcnicas ABNT), which
has created a Study Committee (Metro-Rail Transport Standards
Committee CB-06) to regulate rail related products and compo-
nents. The Interstate Industrial Association for Railway and Road
Materials and Equipments (Simefre, cf. Chapter 2.4.7.) runs the
Committee. In association with related companies, railroad opera-
tors and technicians involved in the sector, it studies and reviews
all previous technical standards.

The following Normative Study Sub-Committees are currently in
operation:

SCB-06:100 Permanent Way (Via Permanente)

CE-06:100.01 Sleepers and Ballast Study Committee (Com-
isso de Estudo de Dormentes e Lastros)
The committee works in the scope of standardization in the
fields of concrete, steel and wood sleepers and ballasts re-
garding terminology, classification, requirements and test me-
thods.

CE-22:00 CE-06:100.02 - Rails and Fittings Study Committee
(Comisso de Estudo de Trilhos e Fixaes)
field of bearing plates, rails and fishplates regarding the clas-
sification, requirements and test methods.

CE-06:100.03 Turnout Systems and Crossing Study Com-
mittee (Comisso de Estudo de AMV e Cruzamentos)
field of turnout systems apparatus and crossings used in
subways and railways regarding terminology, classification,
requirements and test methods.

CE-06:100.04 Track and Infrastructure Study Commmittee
(Comisso de Estudo de Traado e Infra-Estrutura)
field of crossings, level crossing, crossing over and under the

railroad, fixtures, equipment, project design and interference
regarding terminology, classification, requirements and test
methods.

SCB-06:300 Rolling Stock (Material Rodante)

CE-06:300.01 Wagons, Bogies, Couplers and Accessories
Study Committee (Comisso de Estudo de Vages, Truques,
Engates e Acessrios)
field of wagons and other rail cars, their structures and com-
ponents, bogies, couplers and accessories directly connected
to the freight transport operation by railroad for terminology,
requirements, test methods and generalities.

CE-06:300.04 - Wheels, Axles, Bearings and Wheel Sets
Study Committee (Comisso de Estudo de Rodas, Eixos,
Rolamentos e Rodeiros)
field of wheels, axles, bearings and wheel set assembly for
freight cars, passenger cars and locomotives when it comes
to terminology, requirements, test methods and generalities.

SCB-06:400 Signaling, Telecommunications and Energy
Power Supply Study Committee (Sinalizao, Telecomunicao
e Energia)

CE-06:400.01 Signaling (Sinalizao)
field of signaling regarding the electrical, electronics, tele-
communications and embedded systems for terminology,
classification, requirements, test methods and generalities.

The Study Committees that are already operating are those listed
above, but due to the growing amount of investment in the sector,
many other committees are planning to gauge technical standards.
Listed below are other commissions about to be created, accord-
ing to Simefre.

SCB-06:200 Brakes (Freios)

CE-06.200.01 Brake Shoe Study Committee (Comisso de
Estudo de Sapatas e Sapatilhas)

CE-06:200.02 Brake Equipment Study Committee
(Comisso de Estudo de Equipamentos de Freios)

CE-06.200.03 Braking Study Committee (Comisso de
Estudo de Frenagem)

SCB-06:300 Rolling Stock (Material Rodante)

CE-06:300.02 Locomotives, Bogies, Couplers and
Accessories Study Committee (Comisso de Estudo de
Locomotivas, Truques, Engates e Acessrios)

CE-06:300.03 Passenger Coaches, Bogies, Couplers and
Accessories Study Committee (Comisso de Estudo de
Carros de Passageiros, Truques, Engates e Acessrios)

SCB-06:400 Signaling, Telecommunications and Energy
Power Supply Study Committee (Sinalizao, Telecomunicao
e Energia)

CE-06:400.02 Works in the scope of telecommunication
(Telecomunicao)

SCB-06:500 General Studies (Estudos Gerais)

CE-06:500.01 Security Study Committee (Comisso de
Estudo de Segurana)

CE-06:500.02 Ticketing Study Committee (Comisso de
Estudo de Bilhetagem)

CE-06:500.03 Terminology Study Committee (Comisso de
Estudo de Terminologia)

Many technical standards have been published since 1981. The
entire list of technical standards and the corresponding titles are
attached in Annex H.

Although these standards do not yet cover all the possible items
involved, they are seen by the industry professionals as quite
satisfactory. This goes especially for state-owned subway and train
operators, as a small survey showed:


Metr Rio follows primarily ABNT standards and considers these
specifications those that best fit their needs, although, in some
cases, ABNT does not have the appropriate standards regarding
specific components. In these cases, Metr Rio may require the
products to fit UIC or AREMA standards.

CBTU mentioned UIC, AAR and ABNT, as some of the entities
whose standards should be met. In some specific cases, CBTUs
Rolling Stock Technical Manager, Mr. Srgio Lopes, said that
ABNTs standards can be more rigorous than the other standards.

Mr. Luciano Gama de Lira from CBTU Macei said that the com-
pany follows ABNT technical standards. The registration of suppli-
ers is made through bids. All of these bids are made public through
the Official Gazette (Dirio Oficial da Unio). Small local enterpris-
es have governmental incentives and usually win these types of
bids. Therefore, foreign companies have difficulties in winning
those bids.

Mr. Oliveira from CBTU Joo Pessoa said that they work with
several technical standards and federal regulations. They also
work with ABNT, German and, American standards. The company
is public, so it follows Law 8666/93 (Bidding Law).

Trensurb is also a federal government-owned company like CBTU.
Their fleet was purchased two decades ago from a Japanese
company, therefore, Trensurb prefers to use Japanese technical
standards (JIS), whenever possible. Whenever Trensurb feels that
JIS specifications are insufficient, they look to equivalent stardards
issued by ABNT, Standard American Equivalent (SAE) and
Deutsches Institut fur Normung (DIN).

According to SuperVias supplies specialist, Mr. Marcio Rodrigues,
their requirements vary depending on the nature of the product or
service. For the rolling stock they require the products to fit AAR
standards, whereas in the case of permanent way components the
products should meet AREMA standards.

The private company MRS has a clear distinction regarding the
technical standards required. When it comes to permanent way,
MRS follows AREMA standards and UIC standards, but on a
smaller scale; when it comes to rolling stock, AAR is the most used
standard. MRS believes that ABNT standards do not fully satisfy
the sectors requirements due to their lack of a focus on the rail
market.

8.4 Product Registration /
Certification Requirements.
There is no standard procedure for product registration and certifi-
cation. The following information was also gathered from the con-
tacts made.

Mr. Rodrigues from SuperVia said that every time the company is
looking for components that the Brazilian market cannot provide,
they come in contact with trading companies. He recommended
sending catalogues and certificates, so that they can schedule a
presentation.

Metr Rio has a specific department that evaluates the potential
suppliers. As a private company, Metr Rio directly consults poten-
tial suppliers. New supplier registration procedures may vary de-
pending on the transition characteristics. A presentation should be
held for the technical and supply departments of the company.
During the process, technical assistance is an important subject,
and prototypes and samples are always welcomed.

FTC referenced the ISO 9001 standard to ensure the products
quality matches technical specifications. Among the technical
criteria that the FTCs Planning Department Manager Mr. Celso
Schurhoff mentioned was the purchase order, the products fact-
sheet, the manufacturers handbook, and visual inspections when-
ever necessary. Meeting deadlines is a fundamental aspect.

In order to proceed with the certification, Trensurb has an Equip-
ment Nationalization Department that makes adjustments to the
maintenance procedures and is responsible for the replacement of
parts from industries other than the Japanese. According to their
Coordinator Mr. Luis Eduardo Gonalves, their engineering team
needs to verify that all suppliers understand the specifications
required for each component needed. They need to comply with
Law 8666 and their open bids can be found on the following web-
site: www.licitacoes-e.com.br.

Engevixs executive Mr. Wilson Vieira emphasized that the local
industry presents the necessary expertise to meet their require-
ments. Therefore, they establish restrictions to foreign companies
by not allowing them to participate in their purchasing processes,
unless the domestic market cannot meet their demands.


For the vendors registration, a standard form can be found on
CBTUs website (www.cbtu.gov.br). The company requires the
compliance with Law 8666. The General Manager of CBTUs head
office in Rio de Janeiro, Mr. Oswaldo Barroso Moss, mentioned
that the company holds a bidding department that maintains a
vendor list. However, Mr. Moss stressed that there is no distinction
between registered companies and those that are not.

The Federal Government mandated that all purchases of goods
and services common to the Federal Public Administration are to
be made through bidding processes, especially in electronic form.
Banco do Brasil runs the electronic bids. Vendors wishing to par-
ticipate in electronic bids should register at any branch of their
branches.

8.5 Finding a Distributor.
All the traditional importing channels exist in the Brazilian market:
distributors, import houses, trading companies, subsidiaries and
branches of foreign firms among others.

Although some companies import directly from foreign manufac-
turers without local representation, in most cases the presence of
a local representative or distributor will prove to be very helpful. If
after sales service is needed, a presence in Brazil becomes pre-re-
quisite, as it gives the end-user confidence that technical assis-
tance will be provided in time.

The companies interviewed for this report mentioned that a strong
technical and commercial presence in the country, along with
product quality, is one of their most important purchasing criteria.

A partnership with a local company is highly recommended when
local and international competitors are already active in Brazil; in
cases when there is a need for stock of spare parts or other inputs
(as importing those last minute will be costly) and for products that
require expertise in installation and technical support. In addition to
this, it is likely that some of the local customers do not have Eng-
lish or other foreign languages skills (particularly technicians), so
having a local partner who can communicate and present your
products in Portuguese can be an important asset.

As reported above, in the case of public tenders, suppliers must be
legally established or represented in Brazil to qualify for govern-
ment contracts. For this reason and others, foreign suppliers
should look for a distributor or partner in Brazil.

As in any country, the recruiting of a local representation requires
careful consideration. In general, larger companies will have sales
offices throughout Brazil, which is a key element for companies
seeking a countrywide presence. Smaller agents may have geo-
graphical limitations. Ideally, the local partner will be close to the
clients, usually in larger cities such as So Paulo, Rio de Janeiro,
Curitiba, amongst others.

When selecting a local partner, it is also important to consider their
existing contacts and connections to the industry as an important
factor. Quite commonly, a potential partner might have limited
English skills but excellent contacts and existing clients. Depend-
ing on the negotiation and sales volume, the partner might even
hire a new employee, fluent in English, to deal with the exporter.

Brazilian importers generally do not keep an inventory of capital
equipment or raw materials. This is partly due to high imports and
storage costs. Distributors keep inventories of components and
spare parts in stock, which allows them to offer immediate technic-
al assistance. This is highly appreciated by the customers to re-
duce maintenance & replacement time.

Lawyers recommend that the exporter and representative have a
written agreement / contract stating clearly the responsibilities of
both parties. By having a written agreement, the exporter can limit
his liability in case of any problems, the type of warranty can be
established and trademarks can be protected. Usually a first re-
presentation contract is signed for a period of 1 year (as a proba-
tion period) and extended according to the interest of both parties.

It is up to the foreign company and the local partner to negotiate
the type of partnership, whether it is exclusive or based on perfor-
mance targets. Contracts are freely negotiable between parties as
long as local laws are respected. If the exporter has already a
standard contract used worldwide for their international repre-
sentatives, it is highly recommended that a local lawyer in Brazil
analyses and reviews it in view of the Brazilian legislation to avoid
future problems or clauses that can not be applied in Brazil.

With Brazil on the spotlight, distributors and representatives are
currently receiving many requests from international companies to


represent new brands, so it is important to approach the potential
partners focusing on the USP (unique selling proposition) of the
product and good persuasion arguments to motivate them to work
with your product / solution.

Osec, with the support of the Swiss Business Hub Brazil, offers
detailed consulting (Business Contact Checks) for Swiss compa-
nies looking for a distributor in Brazil. The service extends from the
compilation of a list of company addresses and their analysis to
personal verification of the contacts according to the clients
specific needs.

OSEC
Mr. Thomas Foerst, Consultant South America
Stampfenbachstrasse, 85 / Postfach 2407
8021 Zrich
Tel. (direct): 044 365 54 71
E-mail: tfoerst@osec.ch
www.osec.ch

SWISS BUSINESS HUB BRAZIL
Mr. Martin Matter, Director
Av. Paulista, 1754, 4 andar
Tel. +55 11 3372 8200
Fax: +55 11 3253 5716
E-mail: sbhbrazil@sao.rep.admin.ch
www.osec.ch/sbhbrazil

The following is a list of distributors and commercial representa-
tives of foreign companies in the railway segment.

BR RAIL PARTS
Rua Professor Joo Soares Barcelos, 2230 sala 04
Tel.: +55 41 3053-5049
www.brrailparts.com.br

BR Rail Parts manufactures parts for railway construction compa-
nies. The company supplies steel rails, tie plates, fasteners,
screws, spikes, washers, turn outs and a variety of specific prod-
ucts.

BSSOLA COMRCIO E SERVIOS LTDA
Av. Governador Carlos de Lima Cavalcante, 4632 Conj. 08
53040-000 Olinda, PE
Tel.: +55 81 3431-6628
www.bussolape.com.br

Bssola Comrcio e Servios, located in the north-eastern part of
Brazil, provides both products and services, proposing new solu-
tions to the rail sector.

The company offers radiators for locomotive Alco-Bombardier,
luminaries for electric multiple units (EMU), traction motors, quite a
few parts for locomotives, rail dampers and several other imported
pieces.

The companys main clients are the north-eastern Brazilian con-
cessionaires CBTU Macei and Metr Recife.

CM EQUIPAMENTOS FERROVIRIOS
Rua Bernardino de Campos, 588 Alto
13419-100 Piracicaba, SP
Tel.: +55 19 3375-0403
www.equipamentosferroviarios.com.br

CM Equipamentos Ferrovirios main commercial representations
are: Windhoff, Rosenbauer, Stahlberg Roensch and STRAIL.

Concerning permanent way, they offer:
Vehicles for maintenance way (Windhoff)
Rail Tools (Aldon)
Monkeys and Tensor Rails (Simplex)
Meter and Detector Trails (IEM)
Hydraulic Encarriladores (Lukas)
Plastic sleepers (ITS)
Portable Machines (Melvelle)
Level crossing floors (STRAIL)

Concerning rolling stock, they offer:
Equipment Breakdown (Windhoff)
Hydraulic Presses Rode (CMES)
Vices Safop Underground (Wheels)
Railcar Jacks (Simplex)
Lifting Columns (Space)
Border Platform Shipping (STRAIL)


COMERCIAL FORTE
Av. Nelson Palma Travassos, 893 City Empresarial Jaragu
Tel.: +55 11 3944-1430
www.comercialforte.com.br

Comercial Forte offers track parts and accessories for distinct
technical standards: DIN-536, AREA/1996, ASTM-A1, UIC-1986,
ASTM-A759/85, DECAUVILLE and RI-NP4AM-PH37.

COMEXPORT
Av. Das Naes Unidas, 10989 12andar
Tel.: +55 11 2162-1888
www.comexport.com.br

The company has been operating for twenty years in the areas of
exploration and development of products adapted to the demands
of the Brazilian railway industry. Concerning the rail segment, they
offer products mainly from China.

MJL COMRCIO E REPRESENTAO DE EQUIPAMENTOS
FERROVIRIOS
Rua Rolndia, 142 - Jaguar
Tel.: +55 11 3714-6026
Fax: +55 11 3763-3456
E-mail: mjl.service@uol.com.br

Under the direction of Mr. Albert Blum, MJL represents several
Swiss companies in the Brazilian market, including Stadler,
HaslerRail and Scheron.

PANFER DISTRIBUIDOR
Av. Brasil, 28088 - Realengo
Tel.: +55 21 2401-8060
www.panfer.com.br

Panfer is specialized in steel related products, and for the rail
market, the company offers distinct kinds of tracks. The rail tracks
Panfer commercializes are mainly TR tracks, Din standards and
Decauville as well as TJ joints, base plates and several screws for
fishplates and tirefonds.

STEMMANN INDSTRIA E COMRCIO LTDA
Rodovia Marechal Rondon, km 133 - Tanque Seco
18540-000 Porto Feliz, SP
Tel.: +55 15 3261 9190
www.stemmann.com.br

In the railway industry, the company represents Stemmann-
Technik GmbH, offering the following products:
Pantograph Ceiling for Electric locomotives and VLT
Pantograph for 3rd rail subway
Contact grounding
Stinger system

8.6 Approaching Potential
Customers.
Suppliers should approach the decision-makers in the companies
with a commercial and a technical solution. They will need some
perseverance, too. At least two or three presentations are neces-
sary before the negotiation moves forward. Ideally, equipment
should be presented live on the spot. Personal contact and rela-
tionships are key factors to consider when negotiating with Brazili-
an businesspeople.

The technical personnel usually take part in purchasing decision-
making processes, as they are concerned with the price and quali-
ty of products. A failure to comply with pre-established technical
specifications is said to be the most common reason for disqualifi-
cation of foreign suppliers. It is therefore essential to communicate
with engineers from the very start of a project.

The issue of price is crucial, too. When the purchase is made
through tendering, in most cases the chosen proposal is the one
that offers the lowest price.

The issue of deadlines is also of some concern. Because of the
shipping distance and Brazils lengthy customs procedures, it is
doubtful that a foreign company not established in the country can


respond to an order with the same speed as a company located in
Brazil.

Deadlines and price are not the only issues in question, issues that
could be copied by any well-structured foreign company. Addition-
ally, the concessionaries that we contacted also mentioned the
need for good post-sale technical support as well as engineering
services. Concessionaries tend to prefer to buy from national
manufacturers as long as they are not convinced that foreign
companies will provide these services.

Apart from issues concerning price, time and technical support, it
is essential to bear in mind that the railway sector in Brazil is
known for its preference of experienced companies over new
players. A great deal of importance is given to dealing with well
known companies that have a good reputation. Trust and confi-
dence in the supplier is fundamentally important when purchasing
railway equipment.

The main cargo operators interviewed for this research mentioned
that they are looking for long term partnerships with companies
that are willing to cooperate in developing solutions for their prob-
lems and bottlenecks and provide a reliable product / service fitting
their specific needs.

Osec
Stampfenbachstrasse 85
Postfach 2407
CH-8021 Zrich
Telefon +41 44 365 51 51
Fax +41 44 365 52 21
info.zurich@osec.ch

Osec
Corso Elvezia 16
Casella postale 5399
CH-6901 Lugano
Telefono +41 91 911 51 35
Fax +41 91 911 51 39
info.lugano@osec.ch

Osec
Avenue dOuchy 47
Case postale 315
CH-1001 Lausanne
Tlphone +41 21 613 35 70
Fax +41 21 613 35 02
info.lausanne@osec.ch

Copyright Osec Dezember 2010. Alle Rechte vorbehalten.
Unsere Hotline: 0844 811 812
www.osec.ch

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The Brazilian Market

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