Vale SA, the world’s third-largest mining company, suspended works at its $6 billion potash project in Argentina indefinitely.
A suspension at the Rio Colorado potash project in the Argentine province of Mendoza since last month will be maintained, the Rio de Janeiro-based company said in an e-mailed reply to questions.
Vale Chief Executive Officer Murilo Ferreira is selling assets and canceling projects as the company is set to post the lowest annual profit in three years. Vale is in talks with a potential partner for the Rio Colorado project, Roger Downey, head for fertilizers and coal, said on Dec. 12. Last month the company cut the 2013 budget for the project to $611 million from $1.08 billion last year.
“The project isn’t canceled,” Rolando Baldasso, Mendoza province’s minister of infrastructure and energy, said in an e-mailed response to questions. “There are financial issues that are triggering an operational restructuring.”
Vale declined 0.2 percent to close at 39.50 reais in Sao Paulo. The stock has dropped 3.4 percent this year.
Los Andes newspaper reported earlier today that the project was suspended for an indefinite period and it won’t be reopened until Vale gets a partner. Vale is currently holding talks with two multinational companies seeking to seal a partnership, the Mendoza City-based newspaper said, citing an unidentified company official.
Brazil’s only potash producer, Vale said in October it has spent $1.8 billion on Rio Colorado and completed 41 percent of the project. The venture includes the developing of a mine in Mendoza, the renovation of 440 kilometers (273 miles) of railway trucks and the construction of a 350 kilometer-long railway spur to transport the potash to a terminal in the port of Bahia Blanca, in Buenos Aires’ province, for its export.
With the capacity to produce 4.3 million metric tons of potash, the project would make Argentina the world’s third-largest exporter of the crop nutrient, President Cristina Fernandez de Kirchner said in July after signing agreements with Vale to proceed with the project.