China proposes to fund Brazil-Peru 3,300 mile new freight rail route

China’s $10 billion railway across South America is either bold or insane

Original journalist for the report was Barbara Tasch  — on 10 June 2015

China has j”agreed” on financing feasibility studies and possible construction costs with Brazil and Peru for a 3,300-mile rail link connecting the Atlantic and Pacific coasts – This is according to Reuters and other sources.

The planned railway would connect Brazil’s Atlantic coast and Peru’s Pacific coast. The strategic assumption is that the rail line would “reduce the cost of shipping grain and minerals to Asia.”  NOTE: that is a commercial hypothesis and not yet proven.

Today, much of South America’s exports to China and imports from China pass through the Panama Canal. This would provide competition for some of that traffic even after the expanded Panama locks enter service maybe in 2016..

One of the proposed routes for the railway, known as the southern route would pass though the Isconahua Reserve and Vale do Rio Juruá. A 2nd optional route would pass through northern Peru and cross into Brazil

“The final choice of route for this railway will be in part based upon the calculated environmental impact and the operating plus capital cost of the commercial rail project.

The timeline for the feasibility studies is likely to take two years or more to complete. Then the investors will have to decide on how to fund the project and the risks of capital payback as a long loan project loan.

If the railroad is built, we can expect that the Panama Canal Authority and the various ocean carriers will adjust their services and prices to try and remain competitive. That would be part of a due diligence review by all investor parties. Including China which will want to get its capital paid back.

SEE MAPS of routes by clicking on the MORE bar

Read more:

MAP -2 rail options Brazil to Peru in June 2015Map -2015 proposed China - Brazil Trans South Am Rail route

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