Brazil’s Vale considers C$3bn potash mine investment in Canada

18 November 2010 15:22  [Source: ICIS news]

TORONTO (ICIS)--Brazilian mining major Vale is considering investing up to Canadian dollar (C$) 3.0bn ($2.9bn) to develop a 2.9m tonne/year potash mine project in Canada’s Saskatchewan province, it said in a filing made late on Wednesday.

The company said the project was currently in the pre-feasibility stage.

If Vale went ahead, the project would take four years to complete and would, once in operation, create 500 permanent jobs, the company said.

Vale added that it expected to get board approval in 2012.

The company said that the potash project was part of a five-year programme to invest more than C$10bn in its Canadian operations. In 2006, it acquired Canada's nickel miner Inco.

Vale’s announcement about the potash mine project came as BHP Billiton this week withdrew its $39bn hostile takeover bid for PotashCorp after Canada’s government blocked the deal.

During the debate over BHP’s bid, Vale’s 2006 acquisition of Inco was cited as an example of a foreign investment that did not live up to conditions Canada’s government had imposed as part of its approval process. Last year, as global nickel prices fell, Vale started cutting jobs in Canada.

Canada's United Steelworkers Union dismissed Vale’s investment plans as “propaganda”.

The union said that most of the announced investment Vale had committed to Canada consisted of capital spending mandated by government, as opposed to the company willingly investing in its Canadian operations.

The union also said that the potash mine project was “speculation” and “may never see the light of day”.

However, Canada’s national Globe and Mail newspaper welcomed Vale’s investment plan, which it said would have “particular resonance in the wake of the federal government’s ill-considered rejection of BHP Billiton’s bid for PotashCorp”.

In an editorial, the paper said the government did not need to extract promises from foreign firms to make capital investments as a condition for approving takeovers.

($1 = C$1.02)  

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By: Stefan Baumgarten
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