Start of CSN's Transnordestina railway postponed to late-2015

The start of operations of Brazil's Transnordestina railway was postponed to December 2015 after the federal government decided to place steelmaker CSN (NYSE: SID) in charge of construction works, paper O Estado de S. Paulo reported. The railway was designed to transport agricultural and mineral production coming from the country's northeastern region and encourage investment in its states. However, works are currently two and a half years behind schedule, with construction not even at 50% completion. In addition, the railway's costs, budgeted in 2006 at 4.5bn reais (US$2.20bn), will have to be reworked to avoid the stoppage of construction works, according to Transnordestina Logística S/A ( TLSA), the company responsible for building the railway. TLSA is controlled by CSN. According to TLSA's calculations, the project's current costs are now greater than 8.2bn reais. The Transnordestina railway project is included in the national growth acceleration plan (PAC). The railway project has consumed 4.2bn reais since 2009, according to CSN's IR director David Salama. "CSN must sign a new action plan for the Transnordestina railway with the federal government, clarifying its funding and clarifying its return on investment," Salama said. Designed to be the most important railway integration network for the country's northeastern states, the new railway was expected to be inaugurated this year. However, a financial impasse between TLSA and the federal government has virtually paralyzed construction during the last six months. When completed, the Transnordestina will connect the municipality of Eliseu Martins in Piauí state, to the ports of Pecém and Suape, in Ceará and Pernambuco states, respectively. When it reaches the Porto Real do Colégio city, in Alagoas state, the railway will connect with the Ferrovia Centro-Atlântica ( FCA). CSN is Brazil's third largest steelmaker.