Vale reaches deal with Argentine authorities, quits $6 billion potash project
The world's second biggest miner Vale (NYSE:VALE) signed a deal with the Argentine government on Friday that lets the Brazilian company abandon the $6 billion Rio Colorado potash project, in the province of Mendoza.
The agreement, reports Clarin.com (in Spanish), states that Vale will pay two and a half months' salary to nearly 4,000 workers employed at the now closed mine venture.
The pact could put an end to months of uncertainty for the Rio de Janeiro-based company, which halted work on the fertilizer project in January and announced its intention to pull out in March.
In an unprecedented verdict an Argentine provincial court responded with an order for Vale to stay in the country and "abstain from dismantling installations (and) removing tools, machinery and other work implements" from Rio Colorado or face heavy fines otherwise.
The company was also forced to keep its workforce and hold talks with both employees and contract workers, since early last week.
Vale acquired Rio Colorado from Anglo-Australian miner Rio Tinto in 2009. The mine was schedule to start operations in 2014 and be productive for over 50 years.
Vale is also said to be selling its Canadian Kronau potash project, after putting the $3 billion project on hold last August.
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.