Despite recent comments indicating that it may be reconsidering a $6 billion fertilizer project in Argentina, Brazilian mining company Vale SA (VALE, VALE5.BR) re-iterated a pledge to invest $1 billion this year to move ahead with construction, Argentina's planning ministry said in a statement Friday.
Vale's local executives met with the planning minister and mining secretary Friday and "ratified that they will spend $1 billion on the Rio Colorado project this year," planning ministry spokesman Horacio Mizrahi said in the statement.
The government is keen to show that the massive mining project is moving forward amid signs that investors are wary following the Argentine government's decision last month to nationalize the country's largest oil company, YPF SA (YPF, YPFD.BA).
On May 3, Vale Chief Executive Murilo Ferreira said the company planned to make a decision on the project's future on May 20. Vale is evaluating Rio Colorado in view of Argentina's economic situation, Ferreira told reporters. There may now be "new factors in the project's construction," Ferreira said.
A Vale spokesman declined to comment.
At the end of April, the Vale executive said that the project was already up for review even before the YPF takeover because of Vale's concern over "an explosion in inflation" of around 30% a year in Argentina, and "a series of discussions over infrastructure, port, railroad and taxes."
However, Argentine authorities are keen to send out signals that the project is on track.
Next week, Vale officials are scheduled to meet with the new president of state-run YPF Miguel Galuccio to discuss plans to develop tight gas deposits in the Lajas fields needed to provide the project's power, the planning ministry said.
Vale bought the potash mine project from Rio Tinto PLC (RIO, RIO.LN) in 2009 and production is slated for 2014.
Heated water will be pumped deep under the surface of the site in the remote southern tip of Mendoza province to bring the potash to the surface.
The project also calls for construction of a railroad to carry the mine output to a port on the Atlantic Ocean and an electric power plant at the Rio Colorado site.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; [email protected]
--Jeff Fick in Rio de Janeiro and Alberto Messer in Buenos Aires contributed to this article.