Jindal Steel and Power (JSPL) today terminated its $2.1 billion mining and steel venture in Bolivia over fuel supply woes.
"The termination comes due to the non-investor friendly attitude of the Bolivian government," JSPL said in a statement.
The project was considered as the largest foreign direct investment in the Latin American country.
The decision came following a 30-day termination notice sent by Naveen Jindal-led company to the Bolivian government on June 8, which said contractual obligations related to gas supplies for the venture had not been met.
"The company took the decision after all its efforts to resolve the issues and take the project forward did not meet with success," JSPL said.
"Due to the non-fulfillment of the contractual obligations and unwillingness to fulfill the contract on the part of the Government of Bolivia, JSPL has been forced to terminate the contract."
JSPL's contract, signed in 2007, consisted of 40-years mining rights of El-Mutun mines, which is estimated to hold a 20 billion tonnes of reserves and is considered as one of the largest untapped iron ore mines in the world.
Besides, the project also consisted of setting up of a 10 million tonnes per annum (MTPA) iron ore pellet plant, six MTPA DRI (direct-reduced iron) plant and 1.7 MTPA steel plant.
Last week, JSPL's Chairman Naveen Jindal had told PTI that revival of the project would depend on gas allocation and scaling down the project capacity by the Bolivian government.
"What they are giving us is one fourth of the (required) gas and are saying that you don't scale down the capacity, we will give you gas later. Is it possible? How can we plan our investment on such assurances," Jindal had said.
According to the contract, JSPL's $2.1 billion project requires gas supply of 10 million standard cubic metres per day (MSCMD) and a gas supply pact was to be signed within 180 days of signing of the main contract.
"The same has not been signed till date," JSPL said, adding that the Bolivian government is willing to commit only 2.5 MSCMD gas from 2014 due to non-availability of gas in the country.
It added that the company was being asked to make investment as per capacities originally envisaged under the joint venture contract.
Besides, the Bolivian government did not provide the agreed contract area for setting up the steel project till date, JSPL said.
"In view of the aforesaid breaches of the Bolivian government and its entities, the company intends to pursue international arbitration relating to the contract," it added.