November 29, 2018 / 10:18 PM / in 17 days

Argentina, China sign billion-dollar cargo railway renovation deal

BUENOS AIRES (Reuters) - Argentina on Thursday said it had signed a $1 billion contract with a Chinese state builder for improvements to a rail line that transports raw materials, including the South American country’s main cash crop of soybeans.

The project with China Railway Construction Corporation Limited will repair or renovate 1,020 kilometers (634 miles) of railway that runs through the capital Buenos Aires, Rosario - the country’s main grains shipping hub - and Mendoza province, the country’s wine-producing region at the base of the Andes mountains in the west of Argentina.

The country’s once-vibrant grains cargo railway system has fallen into disrepair, leaving farmers to rely on trucks to transport soy, wheat and corn to the ports that dot the banks of the Parana River. That waterway, Argentina’s main export thoroughfare, leads to the shipping lanes of the south Atlantic. China is the main importer of Argentine soybeans.

“When the works are finished, the expectation is to go from 1.5 million tonnes of shipments this year to 3 million tonnes in 2025, and eventually to 8 million tonnes in 2030,” the transport ministry said in its announcement, which did not provide information about the deal’s financing structure.

The project, which will create about 3,800 jobs, will enable the line to support longer trains and reduce transportation costs by 55 percent, the ministry said.

A number of deals are expected to be announced during Chinese President Xi Jinping’s visit to Argentina this weekend, including a multi-billion dollar agreement for the Chinese-funded construction of a nuclear power plant.

China has widened its economic influence in Argentina in the last 10 years by positioning itself as a major financier of Argentine projects, mainly infrastructure, worth a total of about $18 billion, according to a Reuters review of Chinese state funding data compiled by the Inter-American Dialogue, a Washington-based non-profit think-tank.

Reporting by Eliana Raszewski; Additional reporting and writing by Cassandra Garrison; Editing by Ross Colvin and James Dalgleish

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