Vale Said to Seek Early Rebates at Halted Argentine Project
Vale SA, the third-biggest miner, asked Argentina to grant its halted potash project permission to receive tax rebates early in a bid to make the $5.9 billion venture viable, said a person with knowledge of the discussions.
The request would allow the Rio de Janeiro-based company to be reimbursed for value-added tax on its investments during development rather than over the production years of the project, said the person, declining to be named because talks between authorities and company officials are private.
Vale hasn’t received at least $300 million in rebates its entitled to under the current regime, the person said. Those delays and additional demands from provincial governments are making the project economically unviable, the person said.
Work at the Rio Colorado fertilizer project in the country’s western province of Mendoza was suspended indefinitely last month. Vale Chief Executive Officer Murilo Ferreira is selling assets, cutting investments and seeking partners for lower-return projects as profits are expected to fall to a three-year low amid lower commodities prices.
Vale hasn’t received an answer from the government on the request, the person said, adding that the company isn’t seeking tax waivers. Mendoza Governor Francisco Perez said this week that Vale was seeking tax deferrals during the construction phase. That request had been rejected, Perez said in an audio file e-mailed by the province’s press office.
The company didn’t seek any exchange-rate benefit to resume the project, the person said, adding that tax rebates are part of existing legislation in the Latin American country.
Vale’s press office in Rio declined to comment when contacted by Bloomberg News today. Jessica Rey, a spokeswoman for Argentina’s Deputy Economy Minister Axel Kicillof, and Horacio Mizrahi, spokesman for the Planning Ministry, didn’t reply to calls seeking comment.
Vale gained 0.8 percent to close at 37.74 reais in Sao Paulo today. Vale’s market value of $105 billion makes it the biggest mining company after BHP Billiton Plc and Rio Tinto Group.
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