China starts work on first Latin American railway project

Work on China’s first railway venture in Latin America got under way in Argentina this week, according to the China Machinery Engineering Corp (CMEC).

The $2.5bn Belgrano Cargas project, which will upgrade a near-derelict 11,000km freight network in the north and centre of the country, will take two years to complete. CMEC will renovate about 1,500km of track.

The network is in dire condition. After carrying 3.3 million tonnes of cargo in 1998, it carried only 500,000 tonnes in 2006. Attempts to tender reconstruction work to the private sector failed, and the government renationalised the line in 2013.

The turning point in Belgrano Cargas’ fortunes came during President Xi Jinping’s tour of Latin American countries in July.

During his stop-over in Buenos Aires, President Xi concluded a number of infrastructure deals with President Cristina Fernández de Kirchner.

One was a turnkey contract for CMEC to modernise the network, while another was a $2.1bn loan – an essential part of the deal given Argentina’s bad credit record.

The Argentine government is contributing $370m towards the work, bringing the total value of the scheme to about $2.5bn.

China will supply new trains as well. Chinese train maker CSR confirmed on 15 December that it had been awarded a contract worth around $270m to supply 100 diesel locomotives and 3,500 wagons to the network.

The scheme benefits China because it helps the export of Argentine soya beans: the country is the third-largest exporter and China is its main buyer. China’s appetite for soya is such that it has become Argentina second largest trading partner, after Brazil.

Other construction deals in the offing include a fourth nuclear power plant and two dams.

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