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.
Argentina returned to the credit markets with a planned bond issuance of $15bn.
According to Argentine newspaper La Nacion and sources involved in organizing the debt auction, the government had received offers worth $67bn, which was more than five times the amount of bonds available.
Source: Business Standard
Argentina is finalizing it’s return to capital markets with a proposed $15bn bond issuance, the largest by a developing nation since Mexico’s $20bn issue in 1996.
Proceeds would be firstly be utilized towards paying certain creditors in relation to its default on debt in 2001, with further issuances to focus on fiscal spending and towards boosting reserves.
However, investors are speculating on the interest rate that would be offered on the debt, considering the nation’s history of defaults over the last 200 years.
The issuance would be contingent upon approval from the congress and would commence next month, according to Finance Secretary Luis Caputo.
The proposal comes on the backdrop of Argentina’s $4.6bn settlement agreement with certain creditors in relation the nation’s default on debt in 2001. Certain creditors, including Paul Singer’s Elliot Management, refused to restructure the nation’s debt when it defaulted during 2001.
Talks with HSBC, Citi and JP Morgan have begun in London to arrange the sale.