Grupo Mexico drops out of Argentine rail privatisation in setback for Milei

Mexican billionaire Germán Larrea’s conglomerate won’t bid for Argentina’s cargo rail network despite receiving US support, a setback for President Javier Milei’s efforts to lure investment through privatisations.

Grupo Mexico SAB dropped out of the race to take over state-run Belgrano Cargas SA on Wednesday after more than a year of lobbying Argentine officials to reconsider the rail model that would be implemented. The company had secured US support and partners in a bid to appeal to Milei’s strong ties with President Donald Trump’s administration, ultimately to no avail. 

A Grupo Mexico representative in Argentina confirmed it wouldn’t bid without providing further information. Bloomberg Linea first reported on the decision earlier Wednesday. Alejandro Nuñez, head of Belgrano Cargas, said the privatisation is an open process and companies are free to decide whether or not to participate.

Belgrano Cargas owns about 14,000 kilometres of freight rail across Argentina’s farmlands but due to decades of disrepair only 7,600 kilometres are operational. Milei wants to privatise the rail system as part of a broader economic overhaul to boost exports and reduce logistical costs. Almost all of Argentina’s freight cargo is transported by truck. 

The key issue revolved around Milei’s insistence to continue with a rail model that Grupo Mexico considered a dealbreaker. Under the government’s “open access” model, multiple freight companies would be allowed to operate on the same track, a decision directly attributed to the libertarian’s free-market philosophy. 

Milei’s officials referred to a law from 2015 that stipulates the cargo rail must operate under open access if it’s ever privatised, even though as a state-run entity it controlled the entire operation. Despite the president’s deregulation campaign, his government has no interest in repealing that law at the center of the privatisation.

“The open access law was kept because it’s totally aligned with the principles and values of this government. It’s a law that promotes competition,” Nuñez said in April as he led the privatisation.

In the United States, Mexico and Brazil, cargo rail companies operate under a different system known as vertical integration in which one company controls the infrastructure, trains and operations. 

“If they don’t make a radical change in how they plan to tender, we’re not going to bid,” Fernando López Guerra, chief executive officer of Grupo Mexico’s transport unit, said in an April interview. At the time, López Guerra had pledged to invest an initial US$3 billion to revamp Argentina’s decaying rails. 

Without Grupo Mexico, the only other top contender is a consortium that includes a local Argentine rail operator and another group of grain exporters led by Cargill Inc and Bunge Global SA. Investments in Belgrano Cargas would qualify for Milei’s marquee investor programme known as RIGI, which gives companies tax breaks, legal guarantees and other benefits.

Grupo Mexico, which has a US-based subsidiary, received support from the US Commerce Department to lobby on its behalf and also partnered with Pittsburgh-based Wabtec Corp to shore up support in Washington for a contract pitched as benefitting US jobs. 

The process has drawn out over about two years. The government first announced a privatisation in October 2024. It began pulling together an inventory of physical assets like tracks and workshops in July 2025, and published a formal call for bids hits August. Privatising Belgrano Cargas is part of a push to upgrade Argentina’s transport infrastructure, which included a government auction for a US$10-billion dredging contract to deepen a key waterway for exports, the Paraná River. 

In that auction, Belgian dredging firm DEME Group NV partnered with US-based Great Lakes Dredge & Dock Corp, which also sought out lobbying support from the US government. They lost out to rival Belgian giant Jan de Nul NV in a process marked by accusations of ties to China that Jan de Nul denies.