The planned route of the railway passes through 19 Indigenous lands and will affect 48 protected areas. Indigenous peoples, quilombo communities and riverine communities will be directly affected by the project but they have been deprived of their right to an adequate consultation process, including their right to Free Prior and Informed Consent (FPIC). Feedback received during a public hearing on the project’s feasibility studies highlighted environmental, societal and cultural issues related to Ferrogrão, such as the need to carry out consultations with indigenous peoples, traditional communities and municipalities located along the railway route and the need to complete environmental impact studies before the project is put to tender and awarded. However, this feedback was ignored and the Brazilian Investment Partnership Programme (PPI) plans to consult relevant stakeholders only at the time of preparing the environmental licence, which clearly undermines the ‘Prior’ principle of FPIC. 

In 2017, the Instituto Kabu, representing the Baúe Mekragnoti Indigenous lands, sent a letter to the Ministry of Transport asking for their right to Free, Prior and Informed Consent (FPIC) to be respected. However, the demand was denied on the basis that "the proposed route for the implementation of the railway is at a greater distance than that which could have a direct socio-environmental impact on the Indigenous land". This is in direct contradiction to the feasbility studies of the project which identified 19 Indigenous lands, as well as other traditional communities, located in the area of influence of the railway.

Indigenous peoples and traditional communities in the region rely on the forest and animals to sustain their livelihoods, but the increase of industrial agriculture, particularly soy, in the region has resulted in widespread deforestation and water sources drying up. The development of soya plantations has also destroyed sacred places and those who stand in opposition to further development are criminalised and accused of getting in the way of progress. The Ferrogrão railway represents, to these Indigenous peoples, yet another project that will cause further harm to the forest and destroy their livelihoods and sacred places.

An ex-ante evaluation of the project estimates that, for the almost 1000 kilometre-long railway, 2000 square kilometres of rainforest would have to be cleared, effectively cutting the Amazon in two parts. The same study found that the cost of the carbon emissions associated with such deforestation would correspond to roughly 60% of EF-170’s implementation cost. 

Affected communities expect, based on previous experience, that a mega-infrastructure project such as this railway will lead to additional destruction in the region through factors including connecting infrastructure, additional settlements and easier access for illegal gold miners. For example, along the railway, there are 53 planned loading and uploading terminals to be built. The BR-163 Highway, alongside which the railway will be built, has already caused the highest levels of illegal settlement, logging, small-scale mining and land grabbing in the Tapajos region. The installation and operation of the railroad will stimulate an increase in grain production in the region, leading to an increase in deforestation to open new production areas; the elimination of forest remnants; an increase in the use and contamination of water resources, both surface and groundwater; intensification of fertilizer use; and an increase in land concentration. 

In 2017, the federal government’s proposal to remove 852 hectares of land from the Jamanxim National Park to the Tapajos Environmental Protection Area was approved, thus allowing the railway to be constructed on the land. In practice, this is a way of legalising the land titles of illegitimate landowners and land grabbers. The Jamanxim National Park is the most conserved area in the region and is the last connection between the forests of the Singu and Tapajos basins and is important for the maintenance of biodiversity. In addition, the federal government is attempting to reduce protection for five Conservation Units along the route of the railway, which could result in the lack of protection for more than one million hectares of forests and an increase of mining exploitation in the Amazon.

In June 2020, the Brazilian government announced that it would fund infrastructure projects, such as the Ferrogrão railway, through the sale of so-called “green bonds”. It is expected that the railway will be certified as a sustainable project by the Climate Bond Initiative (CBI), as the railway offers a low-carbon transport compared to transport by trucks. It is hard to comprehend how, given the socio-environmental impacts this project would have, the project can be categorised as sustainable.