Brazil’s Record Crops Prompt Vale-Backed Rail Company to Expand Fertilizer Business

Mariana Durao, Bloomberg News

Fertilizer stored in a warehouse at a farm near Brasilia, Brazil, on Friday, March 4, 2022. Brazilian farmers are having trouble getting fertilizer for the next soybean crop after top-supplier Russia's invasion of Ukraine, a blow to producers already dealing with surging costs. , Bloomberg

(Bloomberg) -- Record crops in Brazil are prompting a Vale SA-backed rail company to expand its fertilizer business with a new terminal connecting producing regions to the country’s biggest port.

VLI, which also counts Brookfield Corp. as a main shareholder, is opening the new facility in Minas Gerais state next month, said Chief Commercial Officer Carolina Hernandez. The terminal has capacity to store up to 1 million metric tons and will haul fertilizers imported at the port of Santos to corn and soybean regions.

The added business will help VLI boost utilization of its assets as rail cars that used to travel with idled capacity after unloading crops in Santos will now carry nutrients upcountry. It will also help the company attract new customers, with a similar strategy in the north of the country having already lured fertilizer company Mosaic Co.

“Fertilizers are a relevant bet for VLI as we transport 20 to 25 million tons of grains per year, but we only have 10 million tons of fertilizer in return freights,” Hernandez, who joined the company in January after 10 years at Cofco Corp., said in an interview. “It’s a chance of quickly capturing an additional market.”

Brazil has been expanding agriculture production, having already overtaken the US as the world’s largest soybean and corn exporter. VLI’s new fertilizer terminal will be located in the city of Uberaba and be jointly operated with logistics group Onno.