Iron ore firm Bamin suspends work on Brazil's FIOL railway

Brazilian iron ore miner Bahia Mineração (Bamin), controlled by Kazakhstan's Eurasian Resources Group (ERG), suspended work on the first section of the FIOL railway amid ongoing talks regarding the company's sale.

Divided into three sections, the 1,527km FIOL line will connect Ilhéus in Bahia state to Barreiras in Tocantins state.

In 2021, Bahia Ferrovias, a unit of Bahia Mineração, won the 35-year concession for the 537km section 1.

"Bamin, a subsidiary of the ERG Group, informs that the contract for the works of the Ferrovia de Integração Oeste-Leste (FIOL I), on the stretch between the municipalities of Uruçuca and Ilhéus, was deactivated as of March 31, 2025, completing the initial phase of the railway's construction, which began in 2023," the firm said in a statement.

"To date, ERG has invested 784mn reais [US$137mn] in the railway since the concession started in 2021. It is important to note that, even with the completion of this contract, maintenance services will continue, and all socio-environmental obligations related to the Pedra de Ferro integrated [mining] project will remain in effect. ERG continues to seek investors who can support the implementation of the project," it added.

SALE TALKS 

ERG put Bamin up for sale last year, initially attracting interest from a consortium led by mining giant Vale. The consortium also includes local mining company Cedro Mineração and development bank BNDES. In recent weeks, UK-headquartered Brazil Iron Mineração has also begun evaluating the acquisition of the firm.

The sale of Bamin ran into difficulties over financing the company's entire project, which includes the under-development Pedra de Ferro mine in Bahia state and the supporting logistics network, including FIOL and the port facility Porto Sul.

"Today, the necessary capex for the complete development of the mine, as well as for the railway section and the port, is estimated at US$6bn. This is why the sale process of Bamin is complex, as it involves a very high capex amount," an executive involved in the talks told BNamericas, asking not to be identified.

"It's very difficult for a project of this size to be taken on by Brazil Iron, because it's a junior company. Even Vale, which is a huge company, will only move forward with the acquisition if it reaches a financing solution with BNDES and the country's merchant marine fund," added the executive.

FIOL

The work on the section of FIOL under the responsibility of Bamin was carried out by Prumo Engenharia. Currently, the second section, called FIOL 2, is under construction, managed by state-owned company Infra SA. The section known as FIOL 3 is in the study phase.

"Fiol is a railway project that goes beyond mining, as it also passes through areas with robust agricultural production. It is quite possible that over the years, investors linked to the agribusiness sector will also take part in the project," said the executive.