Good afternoon, everyone, and thank you for waiting. Welcome to Rumo Logística conference call to discuss the fourth quarter 2020 results. Today with us, we have Mr. Beto Abreu, CEO, Mr. Ricardo Lewin, CFO and IRO, and Mr. Gustavo da Rosa, Investor Relations Executive Manager. We would like to inform you that during the company's presentation, all participants will only be able to listen to the call. We will begin the Q&A session, when further instructions will be given. In case you need any assistance during the conference, please request the operator's help by pressing star zero. We also would like to inform that the conference call will be presented in English by the company's management, and there will be a simultaneous translation to Portuguese. This event is also being broadcast simultaneously on the internet via webcast.
Before proceeding, we would like to mention that forward statements are based on the beliefs and assumptions of Rumo management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry conditions, and other operational factors could also cause results to differ materially from those expressed in such forward-looking statements. I will now turn the conference over to Mr. Ricardo Lewin. Please, Mr. Lewin, you may proceed.
Good afternoon, everyone, and thank you all for joining us in this conference call for the fourth quarter of 2020. Before the results, I would like to invite our CEO, Beto Abreu, to share his view on some bold accomplishments that we delivered in 2020. Beto, I give the floor to you.
Thank you, Lewin. Good afternoon, everyone. Welcome to our fourth quarter 2020 results. I will start talking about 2020 and also share our views regarding 2021. 2020 presented us many challenges, also allowed us to achieve great progress in the consolidation of our long-term strategy. We developed our portfolio even further by increasing the capacity of the terminal in Rondonópolis. We signed the early renewal of Paulista Network concession until 2058 and completed the investment to render the Central Network operational at the beginning of 2021, thus making history, connecting by rail the state of Goiás and Tocantins to the Port of Santos in São Paulo.
We have improved our capital structure, conducting a BRL 6.4 billion follow-on offering, the prepayment of concessions fee of Central and Paulista Network, worth BRL 5.1 billion, and the issuance of the first green bond in Latin America rails, thus getting Rumo ready to deliver on its business plan. We have also strengthened the organizational structure in key areas such as commercial, pricing, people, innovation, and regulatory, so we can continue with the solid implementation of our strategy. We moved our efficiency agenda with important improvements in several operational metrics and therefore assuring our capacity to grow. In the Port of Santos, we started and will conclude this year transformational investment that will positively affect port capacity and efficiency. At the third line of Paquetá, the addition of the line in Macuco and the extension of T39 and Termag terminals. We had significant advance in our ESG agenda.
With respect to the environment, this year, we deliver a reduction of 10% out of 15% of our 2025 target on a specific emission. As for the social component, our personal and rail safety results have been remarkable, having outperformed U.S. Class I rails. Regarding governance, we continue to operate at the highest corporate governance level and have recently appointed Janet Drysdale to the Board, who, in addition to being the first woman to hold this position, has broad experience in international rails. We got off to a better start in 2021 than in 2020. Things are looking up in terms of competitiveness. The strong demand for logistics, coupled with the recovery of fuel price, brought more favorable market conditions to Rumo.
We're envisioning increasing our volume supported by three drivers, an expansion in the grain market and the recovery of the industrial sector, an increase in market share supported by a higher attractiveness of rail versus other logistical alternatives, and the start of the Central Network operation, which has great potential and was well-received by customers. I conclude, reiterating my trust as well as the entire organization in execution of our long-term plan, with strong discipline on capital allocation and enormous value generation for our shareholders and clients. Thank you very much, I will hand over to Lewin, who will manage the presentation.
Thank you, Beto. Talking about our operational results, in 2020, our volume went up 3.9%. Throughout the year, several factors impacted the volume performance of each operation. The North operation had a 7% increase in volume. In grains, the most relevant product, during the whole year, we had higher competition coming from the paving of BR-163, still with no toll charges, and also from lower oil prices that prevented the company to improve even more volumes and affected the pricing for grains. In the second half, producers held back on corn exports, leading to lower railway transportation. In this context, we used the capacity to transport sugar that grew 76%. Pulp and fertilizers continued to grow consistently. The South operation saw a decrease of 5.8% in volume. The industrial segment was affected by COVID-19, decreasing 20% year-over-year.
The agricultural segment had a marginally negative performance, especially in Rio Grande do Sul, where volume was impacted by a shorter crop due to bad climate conditions. Container operation grew 6.9%, still below the usual growth level for this operation due to limited demand because of COVID-19. The next slide shows our results by operation. EBITDA was 8.4% below 2019, impacted by lower yields and higher costs driven by a less profitable assortment of cargo with more sugar and less grains, which caused additional pressure over margins. North operation EBITDA went down 9.4%. Yields decreased 10.7% due to lower fuel prices and the increased competitiveness of trucks in the North region after the pavement of BR-163 highway, still with no toll collection. Volume of port loading and logistics solution grew more than the railway volume.
This helped net revenue, but also brought higher variable costs since these operations have lower margins. South operation EBITDA went down 6.4%, pretty much due to lower demand, once grains suffered from lower crops due to bad weather conditions and industrial demand was significantly affected by COVID-19. Container operation EBITDA rose 66% due to significant non-recurring gains in EBITDA as a result of the sale of some unprofitable business units during the year. We will take a look at our financial results. Regarding financial expenses, I would like to highlight some points. This year, we saw concession fee expenses increasing approximately BRL 200 million. Let's get back to 2019 to explain it. That year, on top of all the previous concessions, we had the entrance of Central Network that generated additional financial expenses for the last five months of the year.
In 2020, Central Network was generating financial expenses since January. On the top of that, once we renewed Paulista Network, we started to have additional expenses since June. In September, we prepared BRL 5.1 billion in concession fees, reducing significantly the level of financial expenses. From a cash flow standpoint, there will be no obligation of payment in the next 15 years for Central Network and 17 years for Paulista Network. For 2021, we expect roughly BRL 254 million to be recognized as concession fee expenses. On cash flow, there will be approximately BRL 121 million to be paid as financial expenses and BRL 107 million as amortization. That being said, let's take a look at the financial results. Financial result in the year grew 23%.
Cost of debt was affected by BRL 273 million due to non-cash mark-to-market effect with BRL 160 million of losses in 2020, compared to BRL 113 million gains in 2019. Other expenses increased by the additional impact of concession fees. Net income dropped by 61% due to the lower EBITDA and the higher financial expenses. On the next slide, we will take a look at our indebtedness. Our net debt increased from BRL 6.6 billion -BRL 7.2 billion, and the leverage stood at 1.9x gross debt EBITDA. Rumo ended the quarter with cash of approximately BRL 9.2 billion, leaving the company in a very comfortable position in terms of liquidity and amortization schedule. The next slides show information about the market scenarios for corn and soybean.
Regarding soybean in 2021, AgRural forecast shows 5.6% growth in Brazilian production and 1.2% growth in the country's exports. Production in Goiás should reach 13 million tons and in Mato Grosso, 35 million tons. The state of Rio Grande do Sul, that suffered with bad weather conditions in 2020, should raise its production in 6.6 million tons. According to AgRural, sales of 2021 crop is advanced compared to previous years, having already reached 60% in Brazil and 74% in Mato Grosso. Crop was late, grains are already arriving at our terminals. Once we have most of the volume sold in take-or-pay agreements, we hope to have significant volume growth. The next slide shows information on corn. In the corn market, according to Agroconsult forecasts, Brazil's production should grow 5.8%, reaching 109 million tons, and exports should reach 37 million tons in 2021, 5.7% above last year.
Mato Grosso is expected to produce 38.3 million tons, 2 million above last year. Goiás should produce 12.7 million tons of corn. Although we still see some uncertainties, especially due to late soybean crop, AgRural's forecast data also indicates that the sales are pretty advanced, 44% in the South Central region of Brazil and 68% in Mato Grosso. The next slide will show information about the improvement in the Port of Santos. Santos is an important cornerstone of our business. In order to debottleneck its capacity, we have several improvements underway. We are also building more lines in the Macuco region, segregating trains heading to the export corridor from the ones going to the pulp -and -paper terminals. Additionally, we have two important expansions. One in the T39 terminal that will more than double its capacity for grains, and the other in Termag, seeking to expand fertilizer capacity.
On the next slide, I will comment about Central Network . As Beto already said, in 2020, we accomplished the investment of BRL 711 million in Central Network , and we are very proud to announce that the first train was loaded last Friday. We accomplished the bridge over Paranaíba River between the states of Goiás and Minas Gerais, and also São Simão terminal is ready to operate. For the first time, we are able to connect by rail the state of Goiás to the state of São Paulo, allowing this important productive area to access foreign market with reliable transportation. Before ending this call, I would like to talk about our guidance disclosure expectation. We will announce our 2021 and 2025 guidance in early March. Further details should be given soon. Thank you very much for joining us today, and we are available for Q&A session.
Thank you. We'll now begin the Q&A session. If you have a question please press star one on your touch-tone phone. At any time, if at any point your question is answered, you may removed yourself from the queue, by pressing the star two. Questions will be taken in the order they are received, and we kindly ask you to make it one by one. Please also pick up your headset to provide optimum sound quality. When posing your question, please hold while we connect questions. Our first question comes from Lucas Barbosa with Santander. Please, Lucas, go ahead.
Morning, gentlemen. Thanks for taking my question. My first question is regarding yields. If you could provide more details on the yield performance on the fourth quarter, how much of that was explained by fuel? How much of that was explained by pressure from the North, Northern Arc, and how much of that is basically the dynamic pricing that the company was starting to develop in the middle of 2020? That's my first question. I'll ask the second one. Thank you very much.
Thank you, Lucas. This is Beto Abreu. Let me take the question and then the team, if you want to add anything else, please jump in. Lucas, let's firstly look for the 2021. I will cover your question regarding yields, but let's talk about the volume as well when we talk about the North operation, which was also, let's say, a downside for us on the corn business. If you look for the volume in 2020, we grew double digits in the North operation for everything but corn. Soybean, soybean meal, fertilizer, even industrial products, we grew at least 10% in each one of them. The corn was the downside. We lost 12% of volume on 2020 when we compare with 2019.
That's where we have to concentrate ourselves, by 2021, which is recovering the market share mainly on corn and keep it growing on the other products. Regarding yields, I think you answered already. We have these two
Main, let's say, issue during the year one was the 163 , yes. Let's say, which increased competitiveness, but also the fuel's price. I think it's important to look ahead as well. When we see what's going on for 2021, let's take the first semester which we already almost sold out in terms of volume, so very confident that we will grow the volume. That doesn't mean that we have to compromise yields. I also see, this is basically because the fuel's price is now on a completely different shape when we compare with exactly the same period last year. We will see even slightly better yields for 2021. I think we can say this after seeing everything that we sold already for the first semester. That's how we see, let's say 2021, and that's what happened in 2020.
Thank you for your question. If the team would like to add something else, please welcome.
Thank you, Beto. Lucas, I don't know if Beto, I think, already answered your question. Unless you have any clarifications, let me know.
Yes. Beto answered my question, but maybe just a follow-up. Is there any movement in terms of stimulating more prices near Sorriso region, for example, and less in Rondonópolis? That was an idea from the past? Has this developed or not up to now?
Yeah, I have to say Yes, Gustavo, please, go ahead.
No, Beto, you can take the question. Go ahead.
No, the answer is yes. I think we are a completely different mold this term of sophistication of, let's say, pricing. What we can see about Sorriso, I think the most updated information is that the freight cost on the roads has increased more than BRL 100 in the last, let's say, six weeks. The environment has changed completely in the last, mainly a month and a half. I'm talking about the cost from Sorriso to Miritituba. That's what's going on in the market. Okay?
Perfect. Thank you very much, Beto. If I may, a second question, regarding SG&A. In the fourth quarter, the SG&A increased 60% year-over-year in North operations. I just wanted to understand if there's any specific line causing this increase or if there's any non-recurring there.
Gustavo, if you want to take this, but I also would like to comment on that in the end, please.
No, okay. Specifically on SG&A, Lucas, we increased our costs pretty much related to cybersecurity. As you may know, in March, we suffered with a hacker attack. We review our systems. Now we adopted more firewalls. We shift all the data and the main systems to cloud. We also hire consultancy to shift the systems to cloud and to increase security to avoid further hacker attacks in the future. As North operation is by far where the most part of the profits come, it also receives the most part of the SG&A expenses. We did that at the corporate level, but North operation has to absorb most part of this cost of cybersecurity. This, we believe it's a one-off. It's not something supposed to last much. Also when it comes to cost and SG&A, we also saw some phasing back.
In the fourth quarter last year, we had probably the lowest cost ever. On average, between the first and the third quarter, our cost was around BRL 325 million. In the fourth quarter, it went down to BRL 270. It was a weak base in terms of cost. For that reason, coupled with the additional cost for cybersecurity, we saw cost going up in the fourth quarter. I think Beto would like to share his view as well.
Well, thank you, Lucas, for the question. I think cost is something critical for us. It's something that we really look on a daily basis here. I'm not only cover SG&A, but also the fixed cost. As Gustavo said, the last quarter of 2019 is not a good one. I think when we look for the pace on the three first quarter of 2020, this is something that we really have considered as a good base for us. Excluding, let's say, Central Network, which will be operational by 2021 or relatives, there's no reason to operate on the different level, in terms of pace, than the level that we operate again on the three first quarter of 2021. I think this is a really good base to take into account, not only for SG&A, but also for the fixed cost.
Perfect. That's very clear. Thanks for taking my questions and have a good day.
Our next question comes from Bruno Amorim with Goldman Sachs. Please, Bruno, go ahead.
Thank you. Good afternoon. I have two questions. The first one is more short-term oriented and a follow-up on the pricing dynamics in the short term. Between the third and the fourth quarters, we saw an improvement in the level of diesel prices. BR-163 was probably as much of a problem as it was in the third quarter, right? It was safe in the third quarter, it was safe in the fourth quarter. What I'm really trying to understand is why have prices gotten even worse, right? The yearly variation of price in the fourth quarter was worse than in the third quarter. One potential explanation would be, and you correct me if I'm wrong, volumes which were weak in the fourth quarter, I mean, volumes for Mato Grosso as a whole, which might have to do with an overall supply of transportation capacity.
If that's the case, we will only see prices going up meaningfully when volumes revert to its trend, possibly towards the end of first quarter, beginning of second quarter, when the soybean season will get stronger this year. How are you seeing the dynamic? Do you agree with this rationale? Are we missing something? That's the first question. Thank you.
Thank you, Bruno. I will try to comment and please, if I don't cover something, let me know. Let me start. When we think about yields in the fourth quarter, of course, it was affected by the whole dynamic that affects us in the year, pavement of BR-163, low fuel prices. You're right, we saw some recovery in fuel prices, which brought a better environment. You have to remember that most part of the volume was sold in the previous quarters, therefore, under much worse conditions. We brought the market conditions from the previous quarters to the fourth quarter in our commercial agreements. That pretty much prevent us from having better yields in the fourth quarter, even though oil prices were a bit better. Another thing is, as Ricardo mentioned in his presentation, producers were holding back inventories of corn.
There was not much availability of grains in the market. That increased the competition for the grain, once the supply of logistics was much higher than the demand for logistics. That is something that is more likely to happen in the fourth quarter, where we have low volumes. Last but not least, we have to remember that December 2019, we had very low volumes. Typically, December is the month in the year where we have the lowest tariffs in the year. Because our volumes grew more than 30% in December 2020, it also increased the weight of December, a month where typically the tariffs are low, in the quarter, bringing our tariffs a bit down as well. I think, trying to summarize everything, I think those are the factors that create pressure, additional pressure over yields in the fourth quarter.
I think that makes sense. Thank you. Looking forward then, when do you expect for that trend to revert? Is it March? Is it second quarter, given the potential delay in the export of soybean this year?
Good question, Bruno. Of course, January, it's a bit idle. Everybody knows that we have a late crop of soybeans, it won't be a month with great volumes. We are already seeing trucks arriving at our terminals in Rondonópolis and in São Simão. We are foreseeing strong volumes. Then with much better oil prices, and once we started to negotiate take-or-pays last year, and we have a much higher percentage of take-or-pay, it's fair to say that right now we can predict slightly better prices without taking into account any additional pricing coming from fuel prices. Right now, fuel prices are helping us to have better tariffs. We cannot predict what's going to happen with fuel in the future, it continues that way, it could be even better than slightly better.
We expect to have better yields definitely, at least until the end of the first half, which is the period where we have almost full visibility once we are almost sold out in terms of take-or-pay. Second half must yet be sold. It will depend a bit on the market. We are evolving also fast in terms of negotiation. We'll have to see a bit more to have better figures to share with you guys for the second half. First half should be way better than the performance that we had last year.
Understood. I have, sorry, a second question on the long term. You usually guide for strong volume growth through time, which probably embeds some market share gains, the assumption for some market share gains on top of some growth in the volume of grain exported out of Brazil. Can you please remind us what's the rationale behind that? You have consolidated most of the markets in the southern region of Mato Grosso already. Maybe in order to grow above the volume of grain exported out of Brazil, you would likely have to gain market share over the Northern part. First of all, is this assumption correct? Am I right in reading your guidance for the long term, and if so, how do you intend to deliver those market share gains? Thank you.
Gustavo, let me take this one. This is Beto. I think what's important to say when we look for the long term is that in the next five, 10 years, the world will demand something between 75 and 100 million tons extra of corn and soybean. Most part of this volume will come from Brazil. That's the number. This is why looking for the market share, it's so important for us. When we look for what happened in corn, for instance, be very honest with us, what hurt us here, it's losing market share. Market share for us is important because in the long term, we will have a lot of volume. Capacity will keep growing. We have a new geography, which is Goiás, and Brazil will keep moving and keep increasing its participation on the global trading ranks.
That's what we see in the long term. Brazil increasing its participation on this global trend. It's very close now to 40%, will keep growing. The world will keep demanding more, and Brazil will be the main supplier. We must be very well-positioned in terms of market share and keep increasing our capacity. Regarding the guidance, we will see this in March.
Thank you.
Our next question comes from Victor Mizusaki with Bradesco BBI. Please, Victor, go ahead.
Hi. Thank you. I have two questions here. The first one, with regards to the expansion of capacity at the Port of Santos. In this slide, I think that is slide number six, you mentioned about a lot of construction works. I'd like to understand when do you expect to conclude all these expansions? If you can also comment about the recent MOU with DP World to construct a new terminal for grains and fertilizers outside the Port of Santos. The second question related to Malha Central. Lewin, you mentioned that the first train was loaded last Friday. Can you comment about this operation and if there is any concern about the ramp-up? Maybe the company is more confident that there's no problem with the construction, and then maybe we can have some positive news here. Thank you.
Victor, good afternoon. Thank you for the question. This is Ricardo Lewin. Well, first we showed a few projects that we have in terms of port. Okay. Actually, the ones that we showed here are expected to be ready by the end of this year. Okay. Usually, I split the projects from Santos in two boats. One are the transformational ones, and the other are the ones that since we merged with ALL, we have done to support the growth of capacity and efficiency in Santos. The ones that we showed here are the ones in this boat that we have always done. We barely talk to you guys about these projects. We don't talk, they are really relevant. They are the ones that will be bringing a lot of efficiency and consequently increase capacity.
You see the Paquetá, the third line of Paquetá is a project that we have been trying to approve with the government for the last five years, and finally, it was approved. It will bring efficiency to the entrance of the port. Third line of Macuco will improve efficiency and capacity of the ports. The T39 is a partnership that we have with Caramuru. The same one, Caramuru, we have a partnership in Malha Central, Beto will talk also a bit about that. We'll double the capacity and increase efficiency in T39. Keep in mind that we have a minority stake. We are also investing there to increase the capacity of fertilizers that will support the growth of volumes in the next years. You know the importance of fertilizers for the company, increasing revenues, increasing margins also. About the MOU with DP World.
It was the initial step for the construction of a terminal in the land that they have close to their terminal, close to also Suzano. They have a free piece of land there. We are studying together the construction of a terminal with 8 million tons of bulk, for grains mainly, and 3 million tons of fertilizers. The capacity for 3 million tons of fertilizers. We are evolving on that. Since we announced, a lot of conversations, we have been evolving in the development of the project. Much probably, we'll have a minority stake. This land belongs to them. We'll be only, as I always say, a capitalizer of this project, helping them to bring volumes and bring a lot of besidesCapacity, bringing a lot of efficiency. The terminal will have its own loop. Okay. That will be a very efficient terminal.
Hopefully, I answered your question. For about Central Network, I will give the word here to Beto.
Victor, thank you for the question. Regarding the Central Network, I think the first step was to conclude all the civil works of the line. That was concluded last year in December. The last big bridge, which is a 600 m bridge, was finalized and tested. This is everything ready. During January, we finalized also the civil works on the first terminal, which is São Simão. São Simão has, let's say, a capacity to almost 2 million tons, and it's ready. We are in this moment, commissioning. We will see the terminal operate in the next couple of weeks. The train is already there. All the test is being done. It's very good news for us since we were able to finalize before we expected. We were expecting it to finalize by March, April. Next, we will have Rio Verde.
Rio Verde will be the real terminal. Let's say, will be our hub 11 in Goiás. This one, we are expecting to be finalizing in the third quarter this year. We hope to be in the beginning of the third quarter, not the end of it. We are trying to anticipate two, three months so the team is working, Rio Verde, it's real. It's very modern with a great layout, with 8 million tons capacity. There's also good information here. We signed it a couple of weeks ago, a contract to have a fertilizer in the terminal plant, 100% funded by third -party. So everything, it's on the plan. By end of the year, we will finalize the container terminal that is being built in Imperatriz. This is in Maranhão, with capacity to export two million tons. That's the plan for 2021.
A lot of work to do, a lot of news on the Central Network. Far, so good. Regarding volume for this year, the challenge is capacity. It's not demand. The solution that we have, it's really a very competitive one. The challenge for the team here is really try to bring as much volume as they can since the demand is there. Thank you very much, Victor, for your question.
Thank you.
Our next question comes from Rogério Araújo with UBS BB. Please, Rogério, you may proceed.
Thank you. Hey, Lewin. Hey, Gustavo. Thanks for the call. I have a couple here as well. One is a follow-up on the Central Network. First, on São Simão terminal. It's a partnership with Caramuru, and is it going to be exclusive for Caramuru cargo, or is it open to other trading companies to operate as well? Also, in terms of Rio Verde, do you have any third -party there that is constructing a grain terminal? You mentioned about a fertilizer already. Is there going to be already a partner there, or it's going to be a completely open terminal to negotiate with trading companies in the region? That's the first one. Thank you.
Rogério, regarding São Simão, yes, you're right. It's a partnership with Caramuru. It's 51 Rumo, 49 Caramuru, there's no exclusivity here. Caramuru has a lot of interest in bringing their soybean public, which is great. There's also soybean that will start moving first, which not necessarily belongs to Caramuru. Again, there's opportunity to bring it from other tradings. There's not exclusive to Caramuru. That's the point. In Rio Verde, there's many opportunities in term of partnership, on fertilizer, as I said, on fuels. At this time, it's 100% Rumo investment. It's a completely open, for grains, it's a completely open terminal. That will be really the heart of the operation of Rumo in that region.
How you are thinking about the capacity in Santos Port? I imagine that those cargo there is currently being done with another rail network or by trucks. How are you planning to add this extra capacity in the right or left margin in Santos? Those projects that you mentioned, the third line of Paquetá, so is it enough? How are you thinking about the Santos capacity to attend the Central Network?
No, Rogério. Thank you. It's a very good question. Santos is critical as you can imagine. For us, was really good news to be able to implement all the projects that Lewin just mentioned and just showed to us. Those are important, let's say, bottlenecks in the right hand of the port. We will finalize during 2020 on all the projects that we show already. Paquetá, Macuco, the expansion of our terminal, which the T39, which it's also a partnership with Caramuru. It's a 50/50 partnership. We are expanding that terminal. Termag, which is for fertilizer, is also the expansion. We will have three times more capacity than it has today. Will be finalized this year. I think the answer here is to keep promoting more capacity and more efficiency in the port.
Not only building capacity, static capacity, but also working on the line to improve efficiency and productivity. I cannot disclose, but there's many projects on the pipeline. We just show a few of them, our job here is to keep, again, working very hard, to promote Santos as the main port for all this product that will come from Goiás.
Okay. Thank you. Just a confirmation. When you say that according to your negotiations with trading companies for first half 2021, we may see a slight increase in yields. Do you mean first half 2021 against first half 2020? For the full year, if there is any normalization in the 1Q 2021, we may see better than maybe low single digits, right? Only a normalization of 1 Q may imply three to five percentage points of yield increase for the full year, if there is a normalization. Just thinking about the, when you say freeze, do you mean first half against first half, but the full year can be more than that, or is it for the full year?
Rog ério , when we said it's basically comparing first half 2020 with first half 2021 with 2020. As I mentioned, second half is still not clear. Of course, it will depend on the market and on fuel prices as well. What we have a good visibility at this point is pretty much for first half. Second half, we'll try to get the best yield we can, but we have to remember that we are a scale business, so we must be sure that our operating will be running with full volumes. It will depend more on the market side in the second half of the year. First half will be, as I mentioned before, good, especially because right now fuel prices are helping us to increase even more the tariffs.
Okay. Very clear. Thanks so much. Have a great day, everyone.
Our next question comes from Regis Cardoso with Credit Suisse. Please, Regis, you may proceed.
Good morning, everyone. Thanks for taking my questions. Okay. One question and then two quick follow-ups. The question is regarding the Lucas do Rio Verde extension of Ferronorte. What do you believe are the next milestones for that project? Is it something that you believe could be included in the next meeting of the PPI? When is the next meeting of the PPI, if you know? Whether you expect or does it make a difference if the Bill of Law 261 is approved or not, whether that makes a difference for that project. If you could update on those fronts, which would be pretty appreciated. The follow-ups are regarding your speech at the beginning. You talked about the guidance, in the beginning of March. I wanted to know, I suppose this new guidance will include the Central Network.
From your comments earlier, I understood that this ramp -up of the Central Network will still take a few years. If there's maybe a guidance for a few years down the road, not anymore for 2023. When is it that you'd have the Central Network fully operational, fully ramped up? Whether this would be part of the long-term guidance? Still on the Central Network, also a question there is whether you believe the value is essentially in the grains or if you see more upside in other kinds of cargo. Just maybe one last follow-up, same topic as Rog é rio's question right before, regarding the yields for 2021. If you could maybe, just to be clear, I understood it correctly. It's up year-on-year versus 2020, but it's probably still down versus 2019, I imagine.
You talked about Sorriso Miritituba freight, increasing very sharply, but the data we have so far in IMEA was actually through the end of January, was still that freight was coming down very sharply. I think the latest data point was closer to BRL 140 per ton. I just wanted to confirm I understood it correctly, that you expect an improvement sequentially, but still below 2019, and that the freight you see higher for Miritituba is already more recent than that latest data point at the very end of January. Thanks.
Thank you for all the questions. Let me start with Lucas do Rio Verde and also some further information regarding Central Network, and then I hand over to Gustavo and to Lewin. Regarding Lucas do Rio Verde, let's say, I have been saying that we have three fronts on that project. One is the environmental license, the second one is the approval in the government, and the third one is on engineering side. There's many questions regarding the way and the regulatory side. Firstly, I have to say the project not necessarily will go to the PPI, okay? Actually, will not. We are discussing directly with the regulatory agency, and there are a couple of alternatives, but the PPI is not necessary here. We are working on that. We are also working on the engineering side.
Be very honest with you, for me, the bottleneck is not that part of the project, it's the environmental license, which we stopped a year and a half ago. We think we will need at least an extra year, until at least end of the year, maybe early next year, to be ready. For me, that's the bottleneck in the whole process. Okay? I think this answers, somehow, the milestones. On the Central Network, yeah, there's some extra opportunity besides grains. There's sugar. We will have by 2022, another terminal in Iturama, Minas Gerais. This one is already being built. We went there. This is 100% third -party investment. It's being done by Coruripe. We also have a lot of opportunities on biofuels and liquids as a whole. Going with gasoline, diesel and B -back, bringing biodiesel and ethanol.
There's also a lot of opportunities on that side. By 2022, let's say, we also see opportunities on Malha Sul. Maybe there's also opportunities on kind of up to date. I mentioned everything related to 2021, but when we look at the medium term, there's some nice opportunity on that layer. Okay? Hand over to Lewin, over to Gustavo, to go through the other questions.
Okay.
Please let me go ahead.
Okay. Well, I will start. If you have anything to add, let me know. Let me see if I remember all the questions that you did. Regarding yields in 2021 being still below 2019. Remember that we had in 2019, only at the end of 2019, that we start with the government favored BR-163. That was the most important reason for this betterment in prices for going to North part or going down to center. We imagine that BR-163 may be privatized by mid-2021 to Q4 2022. We don't foresee our pricing being affected in 2021 by a privatized to 2021. This privatization was a reason maybe for having the prices going back to 2019 levels. Okay. To delete maybe the start for improving in prices.
Once prices start going up, actually the toll roads can increase the prices of transportation going to the North part by my calculation, between 15 and 22 BRL per ton. The second part of your follow-up on prior yields, you said something around Sorriso and Miritituba increases shortly. Could you repeat this part, the second part of the question of the follow-up yields?
Yeah, regarding the yields, just questioning on the IMEA data on the freight. The most up-to-date data point we had was from late January, and it still showed prices coming down rather than up. I just wanted to make sure that this view of increasing prices you're seeing for freight is a lot more recent than that data point.
Yeah. What we have of information that from truck from actually prices from Sorriso to Miritituba in the last two months have been going up.
Price of truck, as steel has been going up, we see that steels are more or less at the level of January 2020, so at the peak prices of 2020. As the North Arch prices, logistics prices, are very influenced by steel prices. What we have seen is the increase in the last months. Gustavo, do you have something to complement here?
Yeah. Regis, maybe the difference is because the new harvest is arriving right now. Right now, the demand for transportation is pretty high. Maybe IMEA that data didn't capture that yet, but they will soon, because the market prices are going up due to the entrance of the new harvest of soybean. We have checked the price with other sources as well, and right now what we are seeing the market is higher prices, but we hope that EMEA will show that soon as well. There was a missing point in your questions, Regis, before. You asked about the value of other cargoes, and as we announced in the previous earnings call, there's gonna be a lot of other cargoes to be transported in the Central Network. Grains are gonna be the most important cargo this year because we're gonna have only terminals for grains.
Alongside, in the next upcoming years, there's going to be also other cargoes.
Thank you. Maybe just on that last point is, I was maybe thinking if the other way, going up rather than down, is imports going up, more value-added products, containers, I mean, that kind of thing was part of the plan. Also the timing of all of this, especially for the guidance, right? I imagine by 2023, the Central Network will not be fully ramped up. You might want to provide a guidance for later down the road. That's what I'm trying to understand.
Yeah. Regis, this is Lewin. We will be providing in some weeks the guidance, and we will explain a bit more on the next years, what will happen with Central Network. Okay? We will not be providing anything on numbers today. You are right, in 2023, it's not the peak. There is a ramp up.
We'll be providing guidance to 2025. In two weeks, just wait a bit more. You'll see that in 2025, volumes in Central Network will be going up and will be close to mature, let's say, to maturity. Okay. I just ask you to wait for additional two weeks here, and we will provide the guidance until 2025.
Very clear. Thanks, Beto, Ricardo and Gustavo.
Let me just complement one thing. If you take the presentation that we did in the third quarter, you'll see that we provide all the terminals, and the products that will be built for the Central Network. It's one of the last slides. This gives you a good clue about what we'll be transporting and when. Okay? Beto already said about Rio Verde, then you'll see other projects that we'll be transporting another terminal. This will give clues if you go to the third quarter presentation and take a slide on that.
Very clear. Thanks.
Our next question comes from Jorge Lourenço with Morgan Stanley. Please, Jorge, go ahead.
Good afternoon, everyone. Thank you for taking my question. This is a quick one on Malha Central. Could you provide a rough breakdown of how much of volume growth the next maybe three to four years you expect to come from incremental production in the influence area? How much you expect to come from shared gains from trucks and other rail operators? Thank you very much.
Jorge, here. I just would ask you to be a bit more patient, because in two weeks, we'll be providing guidance. We don't want to provide any guidance in this call. Obviously, remember that thing that we already talked about, is that Central Network is going through the heart of growth of grains in Goiás. Okay. This is a natural market for Rumo. Okay. Having said that, remember that our market share today is zero. Will be zero only for a few days because we already loaded a train there. Naturally, we'll be gaining a lot of market share in this area. Okay. There is a huge growth of market share.
When you compare all the growth of the market in the Central Network, it's a bit lower than in the North network. This was a calculation that we did based on other sources. When we bid for Central Network, the size of the potential market for Central Network doubled in 10 years. Okay? Only for grains, okay? The potential market in 2018 when we bid was something around 12 million tons, and it doubled until 2028. There is a huge gain in market share and the market's growing. Okay? Just wait for the long-term guidance that we can provide more details on that. Okay?
Okay. Very clear. Thank you very much.
That concludes our question and answer session. I would like to turn the floor over to Mr. Ricardo Lewin for his final remarks. Please, Mr. Lewin, you may proceed.
I would like to thank you everybody for participating in the call. It was a very rich conversation, and see you in the next quarter. Thank you.
I also would like to thank you for all, everyone, and for the great questions, good conversation, and we hope all of you have a great year. Thank you very much.
That concludes Rumo's conference call. Thank you very much for your participation. You may disconnect now. Have a good day.