Vale Potash Mine in Mendoza

The Vale project would make Argentina one of the five largest producers of potash in the world.

The world’s largest producer of iron ore could delay the opening of a Mendoza potassium mining project three years, according to Reuters and other industry sources.

Brazil’s Companhia Vale do Rio Doce (NYSE: VALE) was originally planning to invest approximately US$6 billion to launch a massive three-phase mine and transportation network including the Rio Colorado potassium mine in Mendoza, a railroad to transport the commodity to the coast and a port to ship the valuable potash worldwide.

Now the rising cost of doing business in Argentina is threatening to put the potash on the back burner for three years. Cronista says Vale is lobbying for US$1 billion worth of value-added tax exemptions and a preferential exchange rate on the funds it brings into Argentina to complete the mega-mine.

Construction activity at the mine ground to a halt on December 21 impacting roughly 4,000 workers and 30 subcontractors. Vale officials in Rio de Janeiro claim they are merely extending the annual worker’s holiday while they “re-analyze the economic fundamentals of the project.”

Originally scheduled to begin production in 2014, the delay could push the mine’s opening date to 2017. Once completed, the Rio Colorado Mine would make Argentina one of the five largest producers of potash in the world. (Full Story in Spanish)

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