The port of Santos, Brazil's biggest, responsible for more than one fourth of the country's shipments, will more than double in size by the end of next year, Estado de S Paulo newspaper reported Tuesday.

The installation of new equipment and the construction of new terminals will increase the port's capacity to 8 million twenty-foot equivalent units, or TEUs, from 3.2 million TEUs currently, Estado said, citing Jose Roberto Correia Serra, president of government-controlled port operator Cia. Docas do Estado de Sao Paulo.

The new projects include the 2.3 billion Brazilian real ($1.2 billion) Embraport terminal, being built by Odebrecht Transport, DP World (DPW.NDB) and the Coimex Group. The Embraport terminal will have capacity to handle 2 million TEUs and 2 billion litres of ethanol, according to Estado.

Another project set to boost the port's capacity is the Brasil Terminais Portuarios project, in which Europe Terminal NV will invest BRL1.8 billion to build a facility with capacity of 1.1 TEUs and 1.4 million tons of liquid cargo, Estado said.

The new ports will begin operating in October of this year, with full capacity expected to be reached in 2013, Estado said.

In order to make full use of the expanded capacity, however, the port will need to improve its rail infrastructure, Serra told the newspaper. Rail transports just 1% of containers and 10% of grains, and the port authority wants to boost those levels to 25%, Estado said. That will require expanding traction systems that bring cargo from Brazil's highlands to the coastal region, as well as building a railway ring around the city of Sao Paulo to eliminate some bottlenecks, Estado said.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; paulo.winterstein@dowjones.com