Brazil-based mining company Vale SA stated that it was reviving its Potasio Rio Colorado potash project in Argentina, which it had halted in 2013, to tackle the impact of falling commodity prices and increased fears of the asset’s nationalization.
Vale has scaled down the project and it now aims to produce 1.3m tonnes of potash a year, down from the 4m tonnes it planned earlier. The miner would have to invest $1.5bn up front in the project and wait for about a year to deliver the new technical specifications to the Argentine government.
Prices of potash hover around $240 a tonne, significantly down from more than $800 a tonne in 2008.
Vale had abandoned the project in January 2013 due to a dispute and had already invested $2.2bn into it. Further, the miner was looking for up to $3bn in tax breaks from the Argentine government to offset soaring costs, but was denied.