Argentina's government has ordered compulsory conciliation in a dispute stemming from Brazilian mining giant Vale's decision to halt operations at the giant Rio Colorado potash project, a move that effectively prohibits the company from laying off its workers.
The decision was announced Friday after Vale representatives did not show up for a meeting with Argentine authorities.
Labor Minister Carlos Tomada said the compulsory conciliation declaration - effective until April 11 - applies both to Vale and its contractors and sub-contractors at the Rio Colorado project in western Argentina.
"Vale has a social responsibility to fulfill and the company's president didn't even come to the meeting" to analyze the situation of thousands of affected workers, he said.
Argentina's government said Wednesday that Vale's move two days earlier to halt the project amounted to a breach of its concession contract.
The decision to cancel the project, in which Vale had already invested $2 billion, affects more than 8,000 workers in Mendoza, Neuquen and Rio Negro provinces.
The company had initially estimated the total investment cost at $5.9 billion but said cost overruns had driven that price tag up to $10.9 billion.
Planning Minister Julio de Vido said Wednesday that Argentina's economic situation was not the cause of the decision taken by Vale, which the minister said has also suspended other projects elsewhere in the world.
He rejected the company's assertion that its costs skyrocketed by 80 percent in the final quarter of last year due to high inflation in Argentina.
Seeking to reassure the affected workers, De Vido said a solution would be found to resume mining activity at the Rio Colorado project.
Vale, the world's largest iron-ore producer, estimates that Rio Colorado's potash reserves amount to 430 million tons and its production capacity could total as much as 4.35 million tons annually, which would transform Argentina into the planet's fifth-largest producer of that crop nutrient. EFE