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Brazil re-assessing its 3bn dollars potash project in Argentina due to ‘political risk’

Tuesday, June 5th 2012 - 23:53 UTC
Full article 11 comments
Roger Downey, head of Vale’s fertilizers department Roger Downey, head of Vale’s fertilizers department

Brazil’s Vale Doce, the world's second-largest miner, expects to overcome obstacles that prompted management to re-assess a 3 billion dollars potash project in the Argentine province of Mendoza, the company's head of fertilizers, Roger Downey, said.

Vale Doce said in April it would re-evaluate the 5.9 billion Reais project due to political and cost overrun risks.

The concession for the Rio Colorado potash project was suspended in the middle of 2011 when the provincial government of Mendoza accused Vale of failing to comply with local labour laws.

Earlier in April, Argentina worried investors when it initiated plans to seize control of Spanish-controlled energy company YPF to boost flagging oil and gas production.

“We remain in contact with the Argentine government, which is aware of the obstacles concerning the project” said Downey however “we're confident we'll overcome the difficulties with it”.

This week, the Brazilian and Argentine governments will meet to address trade issues, such as the adoption of barriers by Argentina that have slowed Brazilian exports to its neighbour.

Marco Aurelio Garcia, special spokesman for President Dilma Rousseff on foreign affairs, said he “felt Rio Colorado would move ahead,” after recent talks with Vale Chief Executive Murilo Ferreira and Argentina's Federal Planning minister, Julio De Vido

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  • Truth_Telling_Troll

    Mendoza is the California of Latin America in terms of environmental protections. A recent newspaper article put Mendoza as the province with the strongest green lobby. As a result, any mining project will be scrutinized in minute detail, and few if any have survived.

    Mendoza is just not ready to put its water supply which feeds the huge oasis for organic fruits, wine, garlic, plus the tourism the mountains and environment bring, at risk.

    Jun 06th, 2012 - 12:08 am 0
  • rnbgr

    1. Truth do you think the national government wants this mine more than Mendoza ? or is it all up to Mendoza ? Looks like Vale is trying to negotiate here.

    Jun 06th, 2012 - 12:15 am 0
  • Truth_Telling_Troll

    I'm not against mining; however, the record of mining projects even in developed countries in regards to the environment is of some concern. In the USA and Canada many mountain areas have been grotestly mutilated by open-pit mining, and people in Mendoza are quite conscientious of nature. The city itself should be sere steppeland, but it is lined by millions of trees watered through an elaborate channel system, so the denizens live face to face daily with the delicacy of mother nature. You drive out of the city and the vineyards and the landcape is beautiful, but DRY. Our entire water supply sources from mountain rivulets and streams which consolidate into a handful of rivers.

    Mendoza is one of the so-called powerful provinces; it provides more to the government treasury in taxes than it is afforded (in fact it is grossly underfunded). So the goverment leaves the province alone, and could not easily force the issue even if it had the desire to.

    Vale and Mendoza should negotiate. But to reiterate, the green lobby is a puissant entity, so I don't know how much latitude the provincial government has. They are keen on these projects, but they must answer to their constituents and in Mendoza there is a more positive relationship between government and citizens than in other parts of Argentina.

    Jun 06th, 2012 - 12:37 am 0
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