Vale reported in mid-March 2013 that it had informed the government of Argentina that it was suspending implementation of its Rio Colorado potash solution mining project in Mendoza province, Argentina, because “in the current macroeconomic environment, the economics of the project are not in line with Vale’s commitment to discipline in capital allocation and value creation. In case of resuming the implementation, preference will be given to the project’s current employees.”
Vale said it would continue to honor commitments related to the Rio Colorado concessions and would look for alternatives to enhance the economics of the project, which might lead to a renewal of project construction.
The government responded by ordering the company not to fire any workers and not to initiate any work to dismantle the project.
Subsequently, Vale said the estimated cost of the project had approximately doubled to $11 billion and told the project’s top directors to leave Argentina for “security concerns.”
Vale’s 2013 capital expenditures budget had included $611 million for the Rio Colorado project. The project includes renovation of 440 km of railway tracks, construction of a 350 km railway spur, and construction of port facilities at Bahia Blanca, Argentina. The first phase of the project was slated to produce 2.4 million mt/y of potash beginning in 2014, with a second phase planned to lift production to 4.3 million mt/y.