11 March 2013 18:52 [Source: ICIS news]
HOUSTON (ICIS)--Unable to gain desired tax breaks for its $5.9bn (€4.5bn) Rio Colorado potash facility in Argentina, Brazil mining company Vale SA announced on Monday that it has informed the government that it is suspending implementation of the ambitious project.
On suspension since January, the project centred on the developing of a potash mine and related facilities in ?xml:namespace>
The company held a board meeting on Monday. Citing the economic conditions within the country, it decided that the Rio Colorado was not in line with the company’s commitment to capital allocation and value creation.
Vale had been seeking the tax breaks from the government to help offset rising costs related to inflation and exchange rates. Analysts have speculated that without the tax breaks, and due to annual inflation rates within
In late 2012, company officials announced that 42% of the project site work had been completed, but that they expected to reduce the push for completion as Vale had cutback spending company-wide and had reduced the 2013 budget for Rio
Vale has been looking for a strategic partner since that decision was made, and according to Brazilian media reports there have been at least two ventures interested in joining forces to see the completion of the project.
One of the groups interested has been identified as
The value of having an operation capable of producing significant supplies of potash would have been considerable for the ever-expanding agricultural industry within
The company said in a press release that it will honour the commitments made to previous concessions received from the government and that it is still searching for alternatives that would enhance the economic situation and allow for the resumption of the project.
($1 = €0.77)
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