BNDES approves R$3.7 billion for LHG Logística to invest in waterway transportation of ore

The National Bank for Economic and Social Development (BNDES) reported having approved financing of R$3.7 billion for LHG Logística, which will be used to build 400 barges and 15 pushers for the waterway transportation of iron and manganese ores along the Paraná and Paraguay rivers.

According to a note published by the bank’s news agency, the resource comes from the Merchant Navy Fund (FMM) and the vessels will be built and delivered over the next four years in six national shipyards, located in the North, Northeast, South and Southeast regions, “boosting the Brazilian naval sector and generating jobs and development in these regions”.

BNDES highlights that the supported project will contribute to improving the flow of ore production, boosting the Paraguay-Paraná waterway and fostering national shipbuilding, in addition to representing a strategic investment for the decarbonization of the Brazilian logistics matrix. “Waterway transport represents a 95% reduction in emissions compared to road transport and a 70% reduction compared to rail transport,” the note states.

LHG Logística is the logistics arm of the mining company LHG Mining, which is part of the J&F Group. “The Merchant Marine Fund and BNDES were fundamental in ensuring the competitiveness of Brazilian shipyards against foreign competitors that presented an initial cost up to 20% lower,” says the president of LHG Mining, Aguinaldo Filho, according to the published note.

“The investment represents a 16% increase in the national cargo transportation fleet for inland navigation (on rivers, lakes and canals) and the generation of approximately 5,500 direct and indirect jobs, most of them in the North and Northeast regions, where 87% of the approved resources will be applied. The financing also makes it possible to build these vessels in Brazil, amid strong international competition from major players, such as China, which is the world’s largest shipbuilder and whose vessels would cost approximately 20% less,” says the BNDES note.

“This is an operation that contributes to the development of national production, generating thousands of quality jobs, driving decarbonization with cleaner transport and reactivating the naval industry, which faces tough international competition with countries such as China and Singapore,” explains BNDES president Aloizio Mercadante in the note.

According to the BNDES text, the project will allow for the expansion of the flow of minerals extracted in Corumbá (MS) and loaded onto barges, crossing 2,500 km along the waterway, crossing Paraguay, until reaching the maritime terminal in Nova Palmira, Uruguay, where they are loaded onto long-haul vessels. The financing priorities were granted by the Board of Directors of the Merchant Marine Fund (CDFMM), formed by the Ministry of Ports and Airports and other ministries, in addition to entities representing civil society and public banks.