Known as FIOL Stage 1, the 537-kilometre stretch of the East-West Integration railway will connect the ERG Pedra de Ferro mine, Caetite, and the Porto Sul port in Ilhéus, Bahia state.

The news follows ERG's recent announcement it was starting up commercial operations at Pedra de Ferro at an initial capacity of 2 million tonnes per year of high-grade iron ore. Additionally, it is already in motion on construction at Porto Sul, which it started late last year.

ERG CEO Benedikt Sobotka said the contract award for BAMIN is a "vital milestone" in the companies' shared mission to respond to the demand for iron ore and other materials in a manner that is sustainable and responsible.

"Our business plays a strategic role in Bahia's socioeconomic development, and the addition of the FIOL railway marks an important achievement for our integrated portfolio of mining, processing, energy, logistics and marketing operations," he said.

BAMIN chairman Erik Gaustad added that FIOL Stage 1 and its Porto Sul project will together have a "transformative impact" for that region of Brazil.

"[They will provide] environmentally friendly, safe and reliable logistics for mining, agriculture and a range of other industries," he said.

"For BAMIN, FIOL is critical to enable the expansion of Pedra de Ferro production to 18Mt/y."