Brazil: Growth on Track
Mitsui has joined forces with a leading private-sector company to operate passenger railways in three Brazilian cities.
Mitsui’s involvement with Brazilian railways stretches back nearly six decades. In the 1960s, we exported Japanese-built railways system like passenger cars and signal equipment to Brazilian customers. As the yen strengthened in the 1980s, however, the cost-competitiveness of Japanese-built equipment declined; come the 2000s and Mitsui was exporting Korean and Chinese railcars instead. When the manufacturers started to export directly, Mitsui needed to find a wholly new business model. That is why—in a first for a Japanese company—Mitsui took a stake in a concession to build and operate São Paulo Metro Line 4 in 2007.
Powerful partners with expertise
As Brazil’s economy expands and car ownership rises, urban mobility is becoming increasingly problematic. Many cities suffer from chronic traffic congestion that makes bus-based public transport almost unviable. Providing high-capacity, low-pollution mass transit solutions is a way for Mitsui to both build the Brazilian economy and contribute to the general quality of life. After the selection of Rio de Janeiro as host city for the 2016 Olympic and Paralympic Games, improving mobility in Brazil’s second most populous city became a national priority.
In November 2014, Mitsui established a joint-venture company with Brazilian partner to operate four passenger railway assets in three Brazilian cities.
In March 2016 West Japan Railway Company, one of the world’s largest passenger railway companies and JOIN, the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development have come in as shareholders. Each of these partners possesses valuable expertise Mitsui lacks. West Japan Railway Company, which handles 5 million rail passengers every day, has unrivaled know-how in passenger train operation and maintenance. Meanwhile, JOIN, which is supported by Japan’s Ministry of Land, Infrastructure, Transport and Tourism, brings G2G (government-to-government) expertise to the table.
Getting ready for the Rio Olympics
Assets #1 and #2: SuperVia and Rio LRT
Our first two assets to become operational are both in Rio de Janeiro.
SuperVia is a pre-existing network of multiple lines connecting central Rio to the suburbs. It has 270 kilometers of track and in, its 1980s heyday, carried as many as one million passengers daily—a number that declined to just 150,000 by the mid-1990s due to lack of investment. The line was privatized in 1998 and taken over by a concessionaire in 2011. The concession period runs until 2048.
The challenge is to upgrade to achieve higher safety, punctuality and capacity levels. Antiquated infrastructure and equipment is being replaced and maintenance and operations procedures improved. As a result of these improvements, SuperVia passenger numbers are climbing steadily and it currently carries around 700,000 passengers per day.
Mitsui’s second project in Rio is the Rio LRT (Light Rail Transit), the first phase of which became commercial operations in July 2016, in time for Rio Olympics. When fully complete, the system will be 28 kilometers long and its capacity is around 285,000 passengers daily. It is part of the Porto Maravilha (Marvelous Port) project, which is designed to transform and revive Rio’s port and downtown areas. The new light rail system will link up all the different forms of transport that serve the downtown area: SuperVia trains, subway, buses, ferries and the Santo Dumont Airport. Significantly, Rio LRT and SuperVia together provide access to many key Olympic venues such as the legendary Maracana Stadium and Deodoro.
SuperVia and Rio LRT Access Map for Rio 2016 Games venues
Projects outside Rio
Assets #3 and #4: São Paulo Metro Line 6 and Goiana LRT
Our third project is a public-private partnership to build and operate a second new line in São Paulo: Metro Line 6. Construction is expected to be completed in 2021. Line 6, which will run from the northwest suburbs to the city center, will be 15.3 kilometers long with a capacity of around one million passengers per day.
Our fourth and final project is a 13.6 km light rail system in Goiania. A planned city dating from the 1930s, Goiania is the capital of Goias, a wealthy agricultural state in Brazil’s Central-Western Region. The city’s current mass transit system, which is based on buses that travel in dedicated bus lanes, is not performing well. The new light rail system will replace buses in the east-west route, offering higher capacity and fewer greenhouse gas emissions. This project, which is also a public-private partnership, is currently at the planning stage.
Down the line
What long-term benefits does Mitsui stand to reap from its involvement in Brazilian urban passenger rail? Mitsui is acquiring valuable know-how in the building and operating of passenger rail infrastructure. With Asian cities like Jakarta, Ho Chi Minh City and Bangkok suffering from chronic traffic congestion and the resulting air pollution, there is an urgent need for clean and efficient mass transit solutions in the region. The opportunities for Mitsui to put its know-how to use could be significant.
Since the turn of the new century, Mitsui has been developing a new business model. On top of traditional trading activities, it has started to directly own and operate assets, from farmland to freight trains. Passenger rail transport is one field where we can apply our wide range of capabilities to contribute to the wellbeing of people around the world.
Posted in July 2016