Brazil’s Vale (NYSE:VALE), the world’s third-largest miner, has suspended works at its $6 billion potash project in Argentina indefinitely, as it is set to post the lowest annual profit in three years, reported local newspaper Los Andes (in Spanish).
The article says the company confirmed that the suspension affecting its Rio Colorado potash project in the Argentine province of Mendoza since December last year will be maintained for an “indefinite period”.
The province’s minister of infrastructure and energy, Rolando Baldasso told Bloomberg that Rio Colorado would resume operating eventually, but after the company deal with “financial issues that are triggering an operational restructuring.”
The project faced its first main setback in June 2011, when local authorities suspended works over claims that Vale had failed to meet requirements to employ and acquire supplies locally.
Last November, the company was reportedly looking for partners and investors to move ahead with Rio Colorado, with no luck.
Vale’s CEO Murilo Ferreira has been selling assets and cancelling projects worth as much as $1.2 billion since the beginning of the year, as the miner scuffles to adapt to the latest slowdown across the iron ore and oil sectors, its main markets.
The Rio de Janeiro-based company, which is the world’s number one iron ore producer, was severely hit by the slump in the commodity prices in 2012. Iron ore traded last year as high as $150 a tonne and as low as $87.50 a tonne, making it one of the worst performers in the international commodities market.
Since iron ore prices fell to a three-year low in September last year, Vale has given up on its Simandou iron ore development in Guinea and dropped non-core assets already in production, such as its coal operations in Colombia.
In addition, the company is planning to sell its Brazilian oil and gasfields, worth roughly $1 billion.
Vale is also said to be selling its Canadian Kronau potash project, after putting the $3 billion project on hold last August.
(Image of Argentine Gaucho in Mendoza by Eduardo Rivero / Shutterstock.com)