Weekly Report - 14 February 2013 (WR-13-06)

ARGENTINA-BRAZIL | Vale still waiting for Argentina’s answer. On 7 February a Brazilian government source told Reuters that Brazil’s mining giant, Vale, was still awaiting an official response from the Argentine government to its request for additional fiscal incentives in order to go ahead with its planned US$6bn potassium mine project in the Argentine province of Mendoza. Argentina’s President Cristina Fernández said the Río Colorado mining project was of “strategic importance” when it was first announced in July last year. Vale estimates that the Río Colorado mine has 430m tonnes (t) of potassium and could produce some 4.35m t a year. With production scheduled to begin by 2014, Argentina could become the fifth largest potash producer in the world overnight. (Potash is potassium derivative widely used in fertilizers). In December 2012 Vale announced that it was revising its investment plans for 2013, given a “shift in the international markets towards lower prices for some minerals. Vale’s net profits fell 66.2% year-on-year in 2012.  In January Vale notified the Argentine government that it was indefinitely suspending the Río Colorado project while evaluated the “variations in the economic fundamentals” in Argentina.