Jindal bags Bolivia's Mutun mine deal | Hindustan Times
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Jindal bags Bolivia's Mutun mine deal

Bolivia's leftist Govt has awarded Jindal Steel and Power a contract to develop El Mutun.

india Updated: Jun 02, 2006 11:41 IST

Bolivia's leftist government on Thursday awarded Jindal Steel and Power Ltd a contract to develop El Mutun, a site believed to contain one of the world's biggest iron-ore deposits.

Officials said Jindal vowed initially to invest a total of $2.3 billion to mine ore and produce steel -- the biggest investment in a single project in Bolivian history and a boost for the government of President Evo Morales, which nationalized the energy industry last month.

"The company firmly manifested the government's commitment to the El Mutun project, to Santa Cruz and to Bolivia," Planning Minister Carlos Villegas told journalists and local leaders gathered to hear the result in the eastern city of Santa Cruz.

"From now on we won't just earn money by exporting raw materials, but also from producing steel in the mother of all industries -- steel-making," he said, drawing applause.

The 60-sq-km El Mutun site, which lies near the Brazilian border near the city of Puerto Suarez, is estimated to contain iron-ore reserves of more than 40 billion tonnes, though they are said to be of medium-grade quality.

In comparison, proven reserves in ore-rich Carajas in Brazil's northern state of Para total 1.5 billion tonnes.

Local radio said residents of Puerto Suarez took to the streets to celebrate the announcement, while city councillors declared Friday a public holiday.

El Mutun's mineral riches, which also include magnesium and limestone, have been known for more than a century, but its inaccessibility and concerns over fuel supplies have scuppered earlier attempts to develop it.

Arving Sharma, India's consul general to Bolivia who was acting as Jindal's representative, said the eventual investment would be "much more than the sum we have already committed".

"Bolivia and India are two countries that are uniting, and this is good news," he added.

Steel production

The site is owned by Bolivia's state mining company, COMIBOL, which Morales has vowed to revitalize as part of his drive to increase state control over the impoverished country's plentiful natural resources.

Morales' government has ruled out a similar strategy for the mining industry, saying it instead favors raising taxes and encouraging industrialization to add value to raw materials.

The government had changed the conditions of the El Mutun bidding to include a steel production operation in order to generate jobs and supply the country's domestic needs.

It also demanded the site be fueled with the country's plentiful natural gas supplies, instead of charcoal, and the project will include extending a gas pipeline linking Bolivia and Brazil as well as building a rail-linked river port.

Last week the government ruled out a second bid for the project by Netherlands-based Mittal Steel Group on the grounds that it did not meet the demands of the tender.

Villegas said last month the contract to exploit El Mutun would last 40 years, and that the successful bidder would get total administrative control of the project for the first 20 years. After that, control would be shared with COMIBOL.

Officials have said the project will create 10,000 jobs.

El Mutun lies in the wealthier, mainly agricultural province of Santa Cruz, which is an opposition stronghold, and regional leaders had put pressure on Morales to push ahead with the bidding process in order to boost the local economy.

In television ads, Morales's MAS (Movement Toward Socialism) party has been trumpeting its success in attracting a bidder on its terms under the slogan "Evo gets things done."

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