BEIJING, (Reuters) – China and Argentina have agreed to invest about $10 billion over several years to renovate the Latin American country’s dilapidated railway system and build a subway for its second-largest city.
Argentine President Cristina Fernandez is in the Chinese capital to boost ties, promoting her land-rich nation as a natural partner for commodity-hungry China, and seeking to resolve a Chinese freeze on imports of Argentina soyoil that has threatened a key hard-currency earner for Argentina.
Ministers signed the railway deals after Fernandez met with Chinese counterpart Hu Jintao — and apologised repeatedly for postponing a visit originally planned for January.
The bulk of the railway cash will be dispensed in three stages, with $2.5 billion over the first four years going to repair two branch lines with over 1,500 km (930 miles) of track, the Argentine government said on an official website.
Argentina’s once-extensive rail network was largely dismantled during the privatisations of the 1990s. But as agricultural output soars, farmers and grain elevators — who send more than 80 percent of grains by costly road transport — have been calling for investment to revive the railways.
China in recent years has been dipping into its deep pockets to fund infrastructure projects in poor and emerging economies that bolster relations and often further Beijing’s own economic goals by helping bring goods and raw materials to market faster.
The China Development Bank will provide 85 percent of the financing and Argentina the remaining 15 percent of investment for the two lines, which pass through central and northern regions key for both agriculture and minerals.
The government gave no details of the second and third stages of the three-part renovation programme, but another $1.85 billion dollars will go towards modernising the privatised Belgrano line.
It travels thousands of kilometres north from Buenos Aires to the border with Bolivia and is a vital lifeline for producers.
Another $1.8 billion deal covered four metro lines for the city of Cordoba, Argentina’s second biggest and a major agriculture centre, with a population of 1.5 million.
China’s Eximbank will fund the purchase of engines and passenger coaches for suburban commuter rail lines, and CITIC will provide cash for new subway trains for Buenos Aires.
Argentine travellers and businesses have mostly switched to road and air transport because of the decay of the rail system. But freight trains are still extremely important for the country’s agricultural industry, and the government is pushing for an upgrade of the system.
Road transport costs about 7 U.S. cents per tonne per kilometre in South America’s No. 3 economy — about twice the cost of rail cargo and four times what it costs to transport grains by boat, according to the grains exchange in the country’s biggest agricultural port, Rosario.
Fenandez, who will also travel to Shanghai later in the week, said on Monday a deal on soyoil would come within days, but Chinese officials showed no hint of striking an agreement.
China, the world’s largest soyoil buyer, halted cargo from Argentina in late March after the South American country imposed anti-dumping measures on some Chinese manufactured goods.
Argentina’s trade deficit with China had already widened to $1.2 billion last year from $700 million a year earlier.
Separately, China and Argentina signed memorandums of cooperation between Chinese oil giant Sinopec and Argentina’s state-owned utility Enarsa, and between Chinese hydropower contractor Sinohydro and Enarsa. No details were given.