On Friday, a company spokesperson told Reuters that the Vale SA, a global miner, has already inked an agreement with the government of Argentina allowing them to quit from US$6 billion Rio Colorado potash mining project. The agreement may end the months of indecisiveness that resulted in a decision of putting work at the fertilizer project on hold last December then later disclosing the plan to leave the project altogether by March.
In the agreement, according to the spokesperson, Vale's existing participation at the mine stands until the next four years. Meanwhile, Vale is allowed to find a buyer or a partner that will replace or continue its part. According to Vale, the project seems to be unviable due to the fluctuating exchange rate and inflation. Vale intends to sell the project as an effort to earn back the $2.2 billion it did spend on the mine, including the railway and port improvements that was required to move transport the potash to market.
The Argentine government and Vale have been head to head regarding the outcome of an estimated 6,500 jobs at the mining site as a result of the approved plans of Vale to pull out then sell the project. But in the meantime, Argentine court has released an order that requires Vale to maintain work sites and continue to give workers their salary.
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