SAO PAULO Oct 13 The Brazilian government is in
talks with steelmaker CSN SA to surrender its
concession to build and operate the Transnordestina railway, so
that a new investor can be found to take up work on the
long-delayed infrastructure project, a source in the government
said on Thursday.
The source who has participated in negotiations between the
government and CSN did not want to be quoted as talks are
Without additional investments from the steelmaker or the
government in the railway's next segments, which the source said
was unlikely, the government plans to negotiate a friendly
surrender of the concession by the steelmaker so that the
project can be re-auctioned.
CSN, which is struggling to keep its earnings in the black
amid Brazil's worst economic downturn in 80 years, has run out
of capital to continue work on the railway. And the source said
the government would not likely grant an emergency loan to the
"In this scenario, if the company agrees to the negotiated
solution, it would return the concession and the government
could re-auction it quickly to assure the conclusion of the
work," the source said.
The Transnordestina railway project was conceived as a way
to expand infrastructure in Brazil's underdeveloped Northeast by
linking up farm- and mineral-rich hinterlands with several major
port cities in the region.
Work on the railway started in 2006 but has suffered several
stops over the years.
(Reporting by Leonardo Goy; Writing by Reese Ewing; Editing by