Argentina’s Mendoza Province has narrowed its search for a company to resume development of the Rio Colorado potash mine, a decade after Brazil’s Vale SA withdrew from the project (GM Jan. 13, 2018).
“We have completed the bid selection process,” according to a Sept. 4 post from Mendoza Governor Rodolfo Suarez on X, the social media platform formerly known as Twitter. “Now, we will move quickly in the final negotiation of the contract with the best qualified bidder.”
Under the advice of UBS Group AG, provincial authorities sought offers in a competitive process that initially drew the interest of more than 30 firms, according to Suarez. The winner will invest $1 billion over five years.
Mendoza, which is better known for its exports of Malbec wine than its vast mineral wealth, took over Rio Colorado after years of wrangling with Vale. The Brazilian company pulled the plug in 2013 after spending $2.2 billion to build almost half the mine. Vale acquired the potash project in February 2009 from Rio Tinto Plc (GM Feb. 9, 2009).
The original plans for the project proposed an initial 2.1 million mt/y capacity with a second phase increasing that to 4.35 million mt/y, as well as the construction of a railway spur of 350 km to transport the potash to Argentina’s Bahia Blanca port.
A more likely scenario for the project would be for an annual output of 1 million mt, which could be transported by truck, according to a 2021 Bloomberg report (GM Nov. 12, 2021), which cited provincial officials. This scenario would need an investment of some $1 billion. Absent the $1 billion investment, reports were that Mendoza may have been prepared to scale down the project still further simply to get it operational and to serve the Argentine and Uruguay markets.