RIO DE JANEIRO, Dec 18 (Reuters) – Brazilian miner Vale SA expects to more than replace the 4 million tonnes a year of potash it stands to lose from the cancellation of its Rio Colorado project in Argentina as it opens mines in Brazil and Canada, its top executive said on Wednesday.
At least 2 million tonnes a year of potash output is expected from its Carnalita project in Brazil’s northeastern state of Sergipe and 3 million to 5 million tonnes a year could be mined from its Kronau project in Canada’s Province of Saskatchewan, Chief Executive Officer Murilo Ferreira told reporters on Wednesday.
Vale canceled plans to build the $6 billion Rio Colorado project in Argentina in March on concerns the country’s currency-exchange policies made the mine, rail and port project unprofitable and after being denied legal tax breaks. It is now trying to sell shares of its fertilizer unit or stakes in specific fertilizer projects, Ferreria said.
“We are looking for partners in our fertilizer business,” he said at an annual holiday lunch with reporters. “But if the partner takes a stake in our fertilizer unit, we don’t want someone who is just a financial partner, we want someone who has their own production already.”
A decision to move forward with Carnalita could be made as early as the first quarter of 2014, he said. Vale mines potash and nitrates and makes nitrogen-based fertilizers.
On Oct. 9, Reuters reported that the $4 billion Carnalita project could be producing by 2017, citing officials in Sergipe. The mine would be built in two phases: a $2 billion startup to produce 1.2 million tonnes a year and a second $2 billion phase to raise output to 2.4 million tonnes a year, Sergipe officials told Reuters.
Carnalita is one of several potash projects Brazil’s government wants to build quickly to ease dependence on fertilizer imports and replace Vale’s canceled Argentine potash plans.
Brazil, the world’s largest exporter of beef, chicken, soybeans, sugar, ethanol, orange juice and coffee, relies heavily on imported fertilizer to enrich its extensive but often nutrient-weak farmlands. About 90 percent of Brazil’s potash needs are imported. Carnalita alone would supply about 15 percent of Brazil’s needs.
Vale preferred shares, the company’s most-traded class of stock, were up 0.5 percent at 31.89 reais in Sao Paulo, their first gain in seven days.
A decision on a Vale fertilizer partnership would likely have to wait until the it finished a planned sale of half of its 70 percent stake in the Nacala Railway project. The railway links Vale’s giant coal project in the Moatize region of Mozambique with an Indian Ocean port.
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