Officials said the clash occurred as ministers from Mercosur -- Argentina, Brazil, Paraguay and Uruguay -- pointed out potential obstacles to trade created by new EU regulations on mining imports.

The European Parliament is debating regulations that aim to phase out all cyanide content in mining products and raw materials to protect European water resources and biodiversity.

Mercosur delegates argued current mining processes in South America made that unattainable and the new rules would potentially block South American exports to Europe.

Chile and Ecuador, associate members of Mercosur, said the new environmental regulations for the mining sector under consideration in European Parliament could practically bar their exports to the European Union.

An EU parliamentary initiative passed in May calls for a ban on all cyanide in European mining market by the end of 2011 and calls on the European Commission to eliminate any direct or indirect support to mining projects that entail the use of cyanide.

Cyanide compounds are widely used by the mining industry to assist in the extraction of metals, especially gold, from rock.

A Mercosur statement after the talks left no doubt about the trade bloc's position on the use of cyanide. "Given the latest restrictions sponsored by the EU Parliament which propose impediments to the industrialization and commercialization of products from productive sectors, such as the mining industry of our continent, countries of the region reject such measures which are considered restrictive and harmful for the development of our productive activities."

The Mercosur statement said South American industrial processes adhered to strict safeguards that took into account both the environment and the communities.

Substitutes to cyanide that are less hazardous are in use in mining industries in other parts of the world.

Jorge Mayoral, Argentina's minister of mines and host of the meeting, called the EU initiative "an attack on the normal development of the mining industry" in the South American region.

He said the proposed ban on the use of cyanide in mining processes was an assault on the autonomy of South American industries and could be a real barrier to international trade."

Analysts said both sides would likely seek further discussion on the topic to make sure the argument didn't sink into the semantics of cyanide use. The EU is unlikely to soften its position on the cyanide issue as any compromise would be unpopular with the European electorate.

The mining talks showed that Mercosur-EU contacts are still marred by deep differences over understanding of issues. The two sides are due to start formal talks in July on forging a new trade pact, although that is opposed by European farming communities fearful of cheap South American products driving them out of business.

EU officials are interested in pursuing the talks because it sees vast new opportunities in a free-trade zone representing 750 million people with annual commerce worth nearly $123 billion.

The officials said European industries stand to gain from any preferential trade deals in South America. Agriculture representatives say the gains would be outweighed by losses to farmers' communities in Europe.

earlier related report
Standard Chartered Bank to buy into AgBank IPO
Hong Kong (AFP) June 17, 2010 - Standard Chartered will buy a chunk of Agricultural Bank of China's upcoming shares in what could be the world's largest initial public offering.

The British bank has agreed to become a so-called cornerstone investor for the initial public offering, buying as much as 500 million US dollars of the rural lender's shares, Dow Jones Newswires said, citing an unnamed source.

A Standard Chartered spokeswoman did not immediately return phone calls.

Earlier Thursday, Standard Chartered said it had signed an agreement with AgBank to collaborate on various retail and wholesale banking products.

AgBank -- the last of China's big four lenders to list -- plans to float in Hong Kong and Shanghai next month. Recent estimates on the size of the offering have ranged from about 19 billion US dollars to about 28 billion US dollars.

There has been speculation that the size of the bank's share sale would be smaller than anticipated due to weak market sentiment and concerns over the profitability of its operations.

The bank was initially expected to raise about 30 billion dollars. The world's biggest IPO so far is the 22-billion-dollar offering of Industrial and Commercial Bank of China in 2006.

Singapore state investment company Temasek plans to buy around 300 million dollars of shares while Middle Eastern sovereign funds Qatar Investment Authority and Kuwait Investment Authority are eyeing at least a billion dollar investment.

Two of Hong Kong's richest tycoons -- Li Ka-shing, head of conglomerate Cheung Kong Holdings, and Lee Shau-kee, chief of property giant Henderson Land -- are each buying almost 130 million US dollars worth of AgBank shares.

In February, Forbes business magazine ranked Li as the financial hub's richest man with a net worth of 21.3 billion US dollars, followed by Lee with a 19 billion dollar fortune.

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