MAC: Mines and Communities

Mendoza province suspends $4.6 bln Vale project, Argentina

Published by MAC on 2011-06-28
Source: Reuters (2011-06-18)

Tensions between Vale and the provincial governments of Mendoza and Neuquén in Argentina.

Tensions between the Brazilian mining giant Vale and the provincial governments of Mendoza and Neuquén (which share the richest deposits of potash in Latin America) are not new.

In March this year, Vale said it was complying with a request from the government of Mendoza to provide information within 30 days on the progress of the company's Rio Colorado potash project and the hiring of local contractors and workers.

In April 2011, the company pulled out of Rincon de Los Sauces (the project's nearest city‌, located in Neuquén) after protests and road blocks and demands for the hiring of local contractors and workers.

In response, the government of Neuquén broke relations with the company and withdrew 32 mining concessions previously granted to Vale.

Now, in what seems an escalation of the crisis, the government of Mendoza has suspended the project, claiming Vale has not complied with previous agreements and requirements to hire and buy supplies locally.

The  project is located in an isolated area of Mendoza, but the potash basin extends below ground into Neuquén, where there is better infrastructure. A massive shale gas reserve could allegedly satisfy the mine's enormous energy requirements.

For background, please see: Mendoza Government okays potash mine, ignores objections

 

ESPAÑOL

Argentina suspends $4.6 bln Vale potassium project

Reuters

18 June 2011

BRASILIA - The Argentine province of Mendoza has suspended a $4.6 billion potassium project of Brazilian mining giant Vale, saying it has not complied with local regulations.

The project could convert Argentina into one of the world's top 5 potassium producers.

The government of Mendoza, a province in the far west of Argentina, said in a statement posted on its website on Friday that Vale did not comply with a local labor law and failed to provide sufficient information on its investment plan.

"As government, we need a series of data to be able to act as watchdog and ensure the compliance of agreed requirements, such as purchases and hiring of local workers," the Mendoza government said in its statement.

"If the miner arrives in Mendoza without understanding this concept, it shouldn't carry out this type of project," the statement said.

The suspension would be lifted as soon as Vale complied with the requirements, the Mendoza government said.

Vale was not available to comment on Saturday but in a statement on Friday denied any irregularities and said it would provide any additional information required.

The Rio Colorado project, which is scheduled to start operations in the second half of 2013, has an initial production capacity of 2.4 million tonnes of potassium per year and a total cost of around $4.6 billion. (Reporting by Hugo Bachega; Writing by Raymond Colitt; Editing by Bill Trott)


Argentina studying Vale documents in project spat

Reuters

23 June 2011

BUENOS AIRES - The government of the Argentine province of Mendoza is studying documents presented by Vale that could allow the Brazilian miner to continue with a $4.6 billion potassium project, an official said on Thursday.

The Rio Colorado project was suspended late last week when the Mendoza government accused Vale of breaching local labor laws.

Vale later said the company presented "additional information" that the Mendoza government had requested pertaining to compliance with local regulations.

"We won't lift the suspension until we get to analyze in detail all the documents they have provided," a source at Mendoza's government told Reuters, asking not to be named.

He said Mendoza's hydrocarbons sub-secretary Walter Vazquez held a meeting on Wednesday with Vale executives in Buenos Aires in which the parties were due to discuss the reasons for the suspension and a timeline to analyze the documents.

Mendoza ordered the suspension of the project on Friday on grounds Vale may be breaching labor laws and because it failed to provide a timeline detailing the different stages of the investment.

The official said the spat with Vale had become a "sensitive" issue, as Mendoza politicians jockey for position ahead of regional and presidential elections in October.

However, he described the additional information requested by Mendoza as "not complicated", and said the regional government is under pressure to promptly find a solution.

The Rio Colorado project, which is scheduled to start operations in the second half of 2013, has an initial production capacity of 2.4 million tonnes of potassium per year and a total cost of around $4.6 billion.

The project could make Argentina one of the world's top five potassium producers. (Reporting by Maximilian Heath; Writing by Eduardo Garcia; editing by Jim Marshall)

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