Indian and Chinese investors eye Vale’s Rio Colorado potash project

Argentine authorities said Chinese and Indian companies have expressed their interest in the now suspended Brazil's Vale (NYSE:VALE) Rio Colorado potash project in Argentina, reports Notícias de Mineração Brasil (in Portuguese).

Local media had previously stated that the Rio de Janeiro-based company was looking to sell the project, in the province of Mendoza, in hopes to recover most of the $2.2 billion invested in the mine, railroad and port complex.

Work on Rio Colorado had been halted since January, but only last month Vale informed the Argentine government it would no longer pursue the venture. The decision affected more than 8,000 workers in three provinces.

The potential sale comes only four years after Vale bought the project from Rio Tinto (LON, ASX: RIO) in 2009.

The world's second largest miner was expected to invest $6 billion in Rio Colorado, and before halting the project it had completed 45% of it.

Scheduled to begin production next year, the mine life was expected to exceed 50 years with an average annual production estimated at 2.4 million tonnes in Phase 1 rising to 4.3 million tonnes per year in Phase 2.

Experts don’t believe work at the mine will restart any time soon. Interviewed by Dow Jones, a spokesman for Brazilian holding company Bradespar, a major Vale shareholder, said Friday he didn’t “see how” Rio Colorado could be salvaged after high inflation, a depreciating Argentine peso and issues with local authorities drove up costs.

Although Vale never revised its $5.92 billion investment forecast for the project publically, the miner had most recently estimated Rio Colorado's cost at $10.9 billion, according to the Argentine government.

Potash has been trading at around the $400 – $430 a tonne level this year, down from $470 in 2012 and above $500 the year before.