Tunneling through the Andes to speed global trade

Associated Press

BUENOS AIRES, Argentina (AP) – South American engineers are trying to tackle one of the continent’s greatest natural challenges: the towering Andes mountain chain that creates a costly physical barrier for nations ever-more-dependent on trade with Asia.

Instead of pushing cargo over a 10,500-foot (3,200-meter) pass that is often blocked by snow for weeks, they plan to build the longest tunnels in the Americas right through the mountains. That would make billions of dollars worth of Chinese electronics, Chilean wine, Argentine food and Brazilian cars cheaper and more competitive.

The proposed $3.5 billion private railway known as the Aconcagua Bi-Oceanic Corridor would link train and trucking hubs on both sides with a 127-mile-long (205-kilometer) railway, including twin 32-mile (52-kilometer) tunnels. Construction would take 10 years, but once completed, it could save millions of dollars and carve days off shipping times.

As it stands, the only major Andean pass in the southern half of the continent is snowed in each winter, stranding hundreds of cargo trucks in temperatures that can fall to minus 13 degrees Fahrenheit (minus 25 degrees Celsius). And Pacific ports remain inaccessible to the Atlantic nation of Brazil, whose trans-Amazonian highway becomes a boggy mess even before reaching the mountains.

“There is a gigantic network of infrastructure on both sides of the mountain range with a bottleneck we must free up,” said engineer Nicolas Posse, who is directing the project for Corporacion America.

The Argentine company leads a consortium that proposed the project, and both governments have committed to it as a matter of “national interest,” creating a binational commission that is inviting bids. Initial feasibility studies have already been submitted.

Currently, much of the processed soy oils, wine and meat Argentina sends to China, as well as Asian electronics destined for Brazil, must first sail around the tip of South America, adding nearly 3,000 nautical miles and another week to the trip. Shipping by rail between Atlantic and Pacific ports would unite the most productive regions of Chile and its South American neighbors, making trade more competitive for all involved.

The shipping cost would drop from $210 to $177 a ton for cargo that now moves between Cordoba, Argentina, and Manzanillo, Mexico, the closest major port with direct rail links to the eastern United States.

“This project is just what’s needed,” said Mauricio Claveri, an economist with the Abeceb.com consulting firm in Buenos Aires. He called it a strategic necessity for the Mercosur nations of Argentina, Uruguay, Paraguay, Brazil and Venezuela to develop more efficient trade links with China, Japan and Southeast Asia.

Trucking company owner Ivan Caccia’s eyes light up when he calculates his potential savings from the tunnel, which promises to reduce the Andean passage from 12 hours to just 2 1/2 hours.

Each trip Caccia & Sons trucks make carrying wine and fruit between Argentina’s Mendoza province and Chile’s capital of Santiago costs $1,400 and takes two days. With the tunnel, it would cost just $840 and his trucks could make it there and back in the same day.

“The economic part of this project is important, but also the human aspect, because having a truck driver stuck in the snow for three or four days isn’t very pleasant,” he said.

The world’s longest tunnel now in operation links Japan’s two largest islands, Honshu and Hokkaido. That will be surpassed in 2017 by the Gotthard Base Tunnel, which will run for 35 miles (57 kilometers) under the Swiss Alps.

The Andean consortium also includes Japan’s Mitsubishi Corp., Chile’s Empresas Navieras SA, Contreras Hermanos SA of Argentina and Italy’s Geodata SpA, which helped design other proposed tunnels linking Turin, Italy, and Lyon, France, as well as Europe and Africa through the Straits of Gibraltar.

All those efforts had government funding. What makes the Andean project unique is that it will be paid for privately by the consortium and through usage fees. The binational commission will provide loan guarantees, but put up no taxpayer money.

Chile’s mining wealth and Argentina’s agricultural bounty have sustained their economies, delivering positive trade balances year after year, but both countries need to produce and move those exports more efficiently to maintain growth. Chile imported $75 billion worth of goods and exported $81 billion last year, while Argentine imported $74 billion and exported $84 billion, the U.N.’s regional economics commission reported Tuesday.

The project takes its name from nearby Aconcagua mountain, which dominates the border and is the highest peak in the Americas at 22,822 feet (6,981 meters) above sea level.

The train engines, which would be powered by electricity rather than coal or diesel to reduce the environmental impact, are to link a transportation hub in Lujan de Cuyo on the Argentine side with Los Andes, Chile. The tunnels will descend from Punta de Vacas, Argentina, at 7,851 feet (2,393 meters) above sea level, to Saladillo, Chile, at 5,039 feet (1,536 meters), both below the steeper slopes and higher altitudes that get paralyzing snow each winter.

The initial phase would open a single tunnel and cost $3.5 billion with a capacity of 24 million tons of cargo a year. Depending on demand, the capacity could grow to 77 million tons and the total price tag to $5.9 billion by adding a second tunnel and additional rail lines on either side. As many as four mechanical excavators will be used to carve through the mountains.

“It’s a multimodal system: It works like a ferry. Each train, about 750 meters long, can transport containers of merchandise and trucks with their drivers as well as other train formations, which would switch locomotives to make the crossing,” Posse said. The idea is to enable cargo to make the entire journey between Atlantic and Pacific ports without having to be transferred along the way.

Any megaproject faces difficulties in a region as politically and economically unstable as Latin America. To start with, there’s no guarantee that the consortium will win the bid, although Corporation America and Empresas Navieras are corporate leaders in Argentina and Chile, and Mitsubishi is one of the world’s largest trading companies.

Posse said there’s nothing particularly challenging about the Andes that engineers aren’t already resolving in the Alps.

“An enormous amount of understanding has developed in the last 20 years and this is a huge advantage,” he said. “What has been learned digging long tunnels is that the most important thing is to be obsessively prepared for what might happen in the field.”

And promoters say it will pay for itself and more through cargo fees that companies the world over will gladly pay to speed their products to market.

“We’re betting on reducing the travel time to a third of what it is now, and this bringing more profits all around. We’re talking about cargo fees that will make the shipments cheaper and Argentine and Chilean exports more competitive,” Posse said.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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