Wednesday, February 6th 2013 - 05:54 UTC

Argentina eases pressure on potash project timetable but denies fiscal incentive

Argentine authorities backed away from a recent ultimatum for Brazilian mining giant Vale to submit a new timeline for its 6 billion dollars Rio Colorado potash mine, giving the company more time to find a solution for the imperiled project.

Mendoza governor Perez said “he will support any initiative so that work doesn't remain paralyzed”

Work at Rio Colorado has been suspended since Dec. 22, and Vale has repeatedly declined to specify when or if the project is likely to resume. Mendoza Governor Francisco Perez last month gave Vale a February 4 deadline to present a working plan and threatened to revoke the company's concession if it failed to do so.

The date came and went without a word from the governor or Vale, which cut its 2013 budget for Rio Colorado amid a company-wide austerity effort and is seeking to avoid further project delays and cost overruns of the sort that has plagued big mining firms in recent months.

However, Governor Perez met this week with Argentine Planning Minister Julio De Vido and representatives from Vale, and the authorities accepted a request by the company to make a decision by the end of this month, the governor's press office said.

Mendoza's Los Andes newspaper reported that Vale Chief Executive Murilo Ferreira participated in the meetings, though this could not be immediately confirmed.

According to the press office, Mendoza's government is “of course going to support any initiative so that work doesn't remain paralyzed.” One possibility involves Vale teaming up with other investors.

But Argentine President Cristina Fernandez turned down a request by Vale to cut or defer taxes in exchange for maintaining Rio Colorado's timeline. Los Andes quoted Mr. Perez as saying a fiscal incentive for Vale “would imply a very significant loss of money” for the government.

Scheduled to begin operating in late 2014 with potash-production capacity of 4.3 million metric tons per year, Rio Colorado comprises a mining system, significant railroad works and construction of a maritime terminal in Argentina. Vale budgeted 611 million dollars in investments for the project in 2013.

10 comments Feed

Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.

1 reality check (#) Feb 06th, 2013 - 09:09 am Report abuse
So the deadline for their threat has passed, Vale has not provided the information they wanted and they have withdrawn it.

Then what was the point? none, just there usual way of doing business with people. Threaten, bully and hope it works, if it doesn't ignore it and pretend it never happened.

What was the threat? removal of the mining concession wasn't it. Obviously failed to find any other company willing to take it on, that will be the truth behind this story.
2 Anglotino (#) Feb 06th, 2013 - 10:54 am Report abuse
That can't be right, the workers are just on an extended holiday.

All those tax dollars gone!

All those jobs gone!

All the infrastructure gone!

Vale go next door to Paraguay or you are welcome to come invest here.
That can't be right, the workers are just on an extended holiday.

All those tax dollars gone!

All those jobs gone!

All the infrastructure gone!

Vale go next door to Paraguay or you are welcome to come invest here.
3 yankeeboy (#) Feb 06th, 2013 - 11:24 am Report abuse
There is no reason to operate in Argentina if you can't take your profits out.
Once CFK realizes that maybe and that is a big big maybe some companies will test the water again.

but my bet is they'll wait until she is gone though
4 Welsh Wizard (#) Feb 06th, 2013 - 11:53 am Report abuse

Yup, it is a little like going into work but then work telling you that they are keeping your money and you can only use it it buy things in the canteen and, at the same time, pressurising you to reinvest your salary by buying shares in the company...
5 yankeeboy (#) Feb 06th, 2013 - 11:58 am Report abuse
I bet CFK got a phone call from Dilma telling her not to touch Brazilian assets if she knows what is good for her.
6 row82 (#) Feb 06th, 2013 - 02:47 pm Report abuse
Please support this page - Falklands Forever British - dedicated to Falkland Islands current affairs, keeping the islands free and poking fun at the lunacy of the Argentine government and their various claims and winding up their Internet trolls -
7 Think (#) Feb 06th, 2013 - 06:26 pm Report abuse
Redhoyt (aka Mr. Lorton)........ are you reading?

Weren't you into Potash?

Maybe this is something for you ;-)))
8 yankeeboy (#) Feb 06th, 2013 - 07:19 pm Report abuse
BTW Thick the peso is on the way
Why no posts about it?
So many yesterday,
9 Shed-time (#) Feb 06th, 2013 - 10:18 pm Report abuse
Planned economies like the USSR and modern day Argentina are so hilariously dreadful that they make anyone laugh.

10 yankeeboy (#) Feb 07th, 2013 - 06:39 pm Report abuse
BTW Think Peso is at $7.81/1 U$
How come you aren't posting about that?

Only going to post when it goes down like you do with the companies exploring oil in the Falklands?

have some dignity

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!


Get Email News Reports!

Get our news right on your inbox.
Subscribe Now!