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$50 Billion Mega Project Could Change South America Forever

$50 Billion Mega Project Could Change South America Forever

Infrastructure is a critical part of mining -- often making the difference between profitable and pitiful projects.

And in that respect, one part of the world got a lot more interesting late last week: South America.

Particularly Brazil and Peru, which are set to get a major new rail corridor. Thanks to a massive investment from China, one of the world's most resource-hungry nations.

The BBC reported that Chinese and Brazilian interests will construct a rail line running across the continent -- all the way from Brazil's Atlantic coast to Peru's Pacific waters. Related: Canadian LNG Export Future Delayed, But Not Dead Yet

The project will reportedly be backed by a $50 billion commitment from banks in China and Brazil. Which will be officially signed during a visit by Chinese Prime Minister Li Keqiang to Brazil this week.

Few additional details were given. With Brazil's undersecretary of state for Asia, Jose Graca Lima, quoted as saying that the governments would elaborate on this mega-project at the end of the Chinese visit. Related: Oil Prices Will Fall: A Lesson In Gravity

If the project does indeed offer a rail link crossing from Atlantic to Pacific, it would be a game changer for miners in both Brazil and Peru -- and possibly beyond.

Brazil is rich in bulk commodities like iron ore. The majority of which is currently shipped from Atlantic ports -- with China being a major buyer. Related: The Best Way To Find Major Gold Deposits

The Pacific route would save considerable time in sending supplies to China. And it could also provide an outlet for mines that aren't positioned to ship to the Atlantic coast -- or which lack shipping infrastructure entirely at the moment, both on the Brazil and Peru sides.

We'll have to wait for more details on the routing of the line to see which projects could benefit. Watch for an announcement prior to Thursday, when the Chinese delegation leaves Brazil for Colombia.

Here's to linking up,

Dave Forest

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  • vince on May 19 2015 said:
    would that have a positive effect on stocks such as DRYS?

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