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Argentina's Mendoza province seeks investors for US$2.5bn potassium project

Bnamericas Published: Monday, October 24, 2022
Argentina's Mendoza province seeks investors for US$2.5bn potassium project

Mendoza’s natural resource company PRC and Swiss bank UBS are seeking investors for the US$2.5bn Río Colorado potassium project 200km south of the Argentine province’s Malargüe city.

The 1.5Mt/y project is in an advanced stage and expected to start with 200,000t/y from 2023.

Investments so far went to infrastructure and facilities.

As a so-called plug and play asset, “the money arrives and the project starts. There are no new permits, no laws need to be changed. The project has all its papers absolutely in order,” the CEO of PRC, Emilio Guiñazú, told the Club Minero podcast. He highlighted that previous project partners included Minera TEA, Rio Tinto and Brazil’s Vale.

This last owner abandoned the project in 2012-13 at the onset of national crisis and as international potassium prices collapsed. Problems related to rail logistics added to the decision, Guiñazú said.

Río Colorado has 300Mt of proven and certified reserves, while solid price forecasts help financial sustainability.

In 2021, Vale and Mendoza agreed on an asset transfer. Overall, 78 wells were executed, which are protected by anti-corrosion systems, according to the project prospect.

The nearest road links are national route 40 and provincial route 189, which, however, require rehabilitation to ease logistics, Guiñazú said. "The project looks very attractive, and we are leaving ample room for potential investors to work and further improve the project equation."

Potassium prices rose after Russia's invasion of Ukraine. Although projected to fall slightly, they are expected to remain between US$400/t and US$600/t in the coming years.

"The market is there, prices are going to remain high, not at the level they are today, because it is bad for the world and we hope that the war in Europe will be resolved as quickly as possible. But even so, we see prices of over US$400/t," Guiñazú said.

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