Vale SA, the mining company investing $5.9 billion in a potash project in Argentina, said it will have a review of the venture completed by May 20.
Vale needs to assess “new elements” regarding the construction of the Rio Colorado project in the Argentine province of Mendoza, Chief Executive Officer Murilo Ferreira told reporters today in Rio de Janeiro, without elaborating. The results of the technical review may be presented to the company’s board of directors as early as May 25, he said.
“It’s too early to know what will be the recommendation,” Ferreira said when asked if the company may consider cancelling the project. “We will look at it with the maximum interest in making the project but looking at all the challenges.”
Ferreira, 58, announced the revision of the Rio Colorado project during a conference call last week, saying the company is “very concerned” about the situation in Argentina. The government seized oil producer YPF SA on April 16. Vale started the revision of the project before that event, Ferreira said.
Vale, the world’s second-largest mining company, has already spent $1.1 billion on Rio Colorado, which will be able to produce 4.3 million metric tons of potash, a mineral used to help strengthen plant roots and defend against drought. The company completed 30 percent of the project’s work, which is expected to be ready in the second half of 2014.
Vale dropped 0.9 percent to 41.43 reais in Sao Paulo at 4:06 p.m. The stock has gained 9.5 percent this year, in line with the increase in the Brazilian benchmark Bovespa index.