Tinkerer,
It looks like Vale SA not only got out of their Argentine commitment,but also postponed a proposal to develop a potash mine in Canada. I would think they would at least be interested in seeing what kind of development deal they could reach with Prospect Global,especially since Prospect already has the $2B supply contract with China. Below are the news articles.
Miner Vale SA able to pull out of potash mine
Reuters April 29, 2013
Global miner Vale SA signed an agreement with the Argentine government on Friday that will allow the Brazilian company to leave the $6 billion Rio Colorado potash mining project, a company spokeswoman told Reuters on Friday.
The agreement could put an end to months of uncertainty for Vale, which suspended work on the fertilizer project in December and announced its intention to pull out in March.
Under the terms of the agreement, Vale's existing concession at the mine remains in place for up to four years, the spokeswoman said. In the meantime, Vale is free to seek a buyer or partner for the venture.
Between December and March, Vale sought and failed to get the Argentine government to approve tax breaks to help ease rising costs related to surging Argentine inflation and the country's tightly controlled official exchange rate.
Vale said the inflation and exchange rate could make the project unviable.
People familiar with Vale's plans have said the company, the world's second-biggest miner, planned to sell the project in efforts to recoup the $2.2 billion it has already spent on the mine and on railway and port improvements needed to move the potash to market.
In a conference call with analysts and investors on Thursday, Vale said it is seeking new potash projects in Brazil and abroad to replace the Rio Colorado project.
Since approving plans to pull out and seek a buyer for the project, Vale and the Argentine government have been at loggerheads over the fate of at least 6,500 jobs at the Rio Colorado site.
Despite the suspension, an Argentine court ordered Vale to maintain work sites and continue paying its workers.
Brazilian president Dilma Rousseff said on Thursday, after meeting with Argentine President Cristina Fernandez in Buenos Aires, that she was confident Vale and Argentina would come to an agreement.
The Rio Colorado project includes an 800-km (500-mile) rail line from the mine in Mendoza province to Bahia Blanca, an Atlantic Ocean port.
Potash, a potassium salt, is a key fertilizer and is considered a strategic product for Brazil. While it is the world's largest producer of coffee, orange juice, sugar and beef and the No. 2 exporter of soybeans, Brazil must import the vast bulk of its fertilizers, including about 90 percent of its potash.
Vale will postpone $3 billion potash project in Kronau, Sask.
By Juan Pablo Spinetto, Bloomberg August 16, 2012
Vale SA will postpone a $3 billion fertilizer project in Canada and may delay other investments as it seeks to contain spending and focuses on the expansion of its biggest mine, Chief Executive Officer Murilo Ferreira said.
The world’s largest iron-ore producer is committed to “cost austerity,” Ferreira told reporters during an event in Rio de Janeiro today. Vale’s priority is the expansion of its $8.04 billion Serra Sul investment in Carajas, the world’s largest iron-ore mine, which is the company’s biggest project ever, Ferreira said.
Ferreira, who took the helm at the Brazilian miner from Roger Agnelli a year ago, is considering selling unprofitable assets and reviewing spending plans amid rising costs and labor shortages. The company this year sold a thermal-coal project in Colombia for $407 million, its ferromanganese alloy businesses in Europe for $160 million and also exited the kaolin mineral business.
Vale, based in Rio, will postpone the development of its $3 billion Kronau potash project in the Canadian province of Saskatchewan, the world’s largest potash producing region, which the company is reassessing, Ferreira said.
“Certainly it won’t be implemented now,” Ferreira said. “We have other” projects that may be postponed too, he said, declining to name them “because it needs to be announced to shareholders first.”
Price Recovery
Vale expects iron-ore prices to start rebounding as soon as next month because of declining stockpiles in China and the country’s rising demand for construction, Ferreira said. Iron- ore prices dropped to the lowest since December 2009 today on slower growth in China, the biggest user of the steelmaking ingredient, and a weaker outlook for the global economy.
“We will have a good improvement in price starting in September or October,” he said.
The price of ore with 62 percent iron content for immediate delivery to the Chinese port of Tianjin dropped 1.1 percent to $111.90 a ton today, the lowest since Dec. 24, according to a price index compiled by The Steel Index Ltd. The price, which rose to as much as $191.90 per ton last year, slid 19 percent during 2012.
Chinese manufacturing growth is “anemic” and private companies in China are reluctant to invest, while the country’s construction industry shows “much better” signs of recovery, Ferreira said.
Vale rose 1.2 percent to close at 35.92 reais in Sao Paulo. The stock declined 9.6 percent in the past 12 months.
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