NY Daily News: Jindal Steel to exit Bolivia’s largest mining project

June 11, 2012 8:41 am0 commentsViews:

La Paz, June 11 (IANS/EFE) India’s Jindal Steel & Power Ltd plans to pull out of a contract to develop a massive iron-ore deposit in eastern Bolivia, President Evo Morales’ largest mining project, officials said Saturday.

Jindal sent a letter to the government to terminate its $2.1 billion contract to mine iron ore and other minerals at El Mutun and build a steel complex, having previously signalled those intentions in May after being penalised for the second time in two years for alleged non-compliance with contract terms.

Bolivian Mining Minister Mario Virreira confirmed to local media that he was aware of the letter but said he had not seen it yet.

El Mutun, located in the eastern province of Santa Cruz, which borders Brazil and Paraguay, contains some 40 billion tonnes of different minerals, mainly iron ore.

In 2007, Jindal signed contracts with Morales’ government to develop roughly half of El Mutun’s reserves and build a steel mill, an iron ore pellet plant and other industrial facilities.

The Morales government, which has struggled to bring industrial projects to fruition since coming to power in 2006, says Jindal should have invested $600 million to date but has failed to meet that commitment.

The Indian company, meanwhile, said its investments have exceeded that amount and denounced the government’s “unilateral non-compliance” with promises to provide land for the project, build access roads to El Mutun and supply natural gas for the proposed steel complex.

Jindal said in a statement last month that it was evaluating whether to remain in Bolivia after Virreira announced the government was collecting on a second performance bond from the company in the amount of $18 million.

Morales’ leftist government had collected on the first performance bond in 2010 in the same amount, accusing the company of delays in developing El Mutun, a move that sparked a still-unresolved legal dispute between the parties.