Prospective investors are reported to be circling a giant potash project in Argentina’s Mendoza Province at a time when Russia’s invasion of Ukraine and sanctions on Belarus are reshaping the global fertilizer trade, according to a Bloomberg report.
Companies from Europe, China, and the Americas have expressed interest in the half-completed Rio Colorado project, with provincial authorities expected to call for formal bids later this year and award the contract in early 2023, said Emilio Guinazu, Director General of province-owned PRC SA, which holds the asset.
“There’s a readjustment of global fertilizer trade, and people are looking for new providers,” Guinazu said on June 13 in an interview on the sidelines of the Prospectors & Developers Association of Canada conference in Toronto. “There’s an opportunity. The market is hot, and we’re seeing that.”
Mendoza – better known for its exports of Malbec wine than its vast mineral wealth – took over Rio Colorado after years of wrangling with Vale SA. The Brazilian company pulled the plug in 2013 after spending $2.2 billion to build almost half the mine (GM Jan. 28, 2013). It acquired the project from Rio Tinto in 2009 (GM Feb. 9, 2009). The Mosaic Co., Tampa, opted against taking the Rio Colorado assets when it purchased the bulk of Vale’s fertilizer assets in 2018 (GM Jan. 5, 2018).
Luring investment would be a big win in a country where onerous business rules, including capital controls, have scared off investors in the past, although recent years have seen significant spending in Argentine lithium deposits.
Rio Colorado has the potential to produce 4.5 million mt/y, but that scale would require rail investments to get the potash to an Atlantic port for export to markets like Brazil.
The interest from would-be investors ranges from a project of 200,000 mt to as large as 1.5 million mt, with investments estimated at roughly $1,000/mt. Mendoza wants to find an investor that would take a majority stake and operate the mine.
Guinazu said interested parties include mining firms with current fertilizer operations, miners looking to enter the fertilizer business, and non-miners with a presence in Argentina.
Guinazu and top provincial authorities are holding meetings this week in Toronto as part of the conference. UBS Group AG is advising Mendoza in the Rio Colorado process (GM Nov. 12, 2021).