Vale will try to sell a potassium project in Argentina

Vale will try to sell the Rio Colorado potassium project in Argentina by the end of the concession period, said a company executive this Wednesday in a meeting with analysts in Rio de Janeiro.

The world’s second largest mining company suspended the project estimated at about 10 billion dollars after a reassessment in its portfolio – which included the sale of 6 billion dollars in various assets in the past year.

A deal with thousands of workers involved in the project was conducted in April, 2013 to finish of the activities, but the concession remains in the hands of the mining company, for a period of about four years after the suspension.

The idea is to create value … if there is an offer that generates value it will be considered. If the offer does not come and we get to the end of the concession and do not see value in the project, it will be closed (permanently), said the company’s Relationship manager of Relationships with Investors, Viktor Moskzkowicz.

The company wants to try to recover at least part of the investment already made in developing the asset of at least 2.5 billion dollars. Officially budgeted at 6 billion dollars, the project cost was informally reevaluated considering the inflation in the country and other variables.

Located in the province of Mendoza, the project planned for a production capacity of 4.3 million tons of potassium includes, besides the mine, 497 miles of railway and a terminal at the port of Bahia Blanca, south of Buenos Aires.

Declarations from the Vale executive were made at an Apimec Rio seminar, where analysts who follow the mining sector exposed projections for prices of iron ore, the flagship of sales at Vale.

PRICES

Thiago Lofiego, analyst at the Bank of America Merrill Lynch, forecasts that the price of ore will stay at around 120 dollars a ton this year, dropping slightly to 115 dollars in 2015 and ing the 100 dollars mark in the long-term.

The persistence of the high iron ore price in 2013 led analysts to postpone their projections of the input’s value reduction.

With the entry of several ore projects in the coming years, which will increase the product’s offer, it is expected that the price will back down but the beginning of this fall is expected to take at least another year in the view of experts, notes analyst Marcos Assumpção, of Itaú BBA.

The long-term price (lowest) was predicted for 2016 and now 2017, said Assumpção.

Iron ore is the main product at Vale.