Jindal irons out row with Bolivia, to invest $2 billion

Jindal Steel & Power (JSPL) is likely to sign the much-awaited contract with the Bolivian government next week to invest $2.1 billion (Rs 8,400 crore) to exploit the famed El Mutun iron ore mines and set up a 1.7-million tonne steel plant.

The proposed contract follows an amicable solution on gas pricing between both the parties. The only outstanding issue is the formation of a Bolivian subsidiary by JSPL, which is expected to be finalised next week, sources said.

Empresa Siderúrgica El Mutún (ESEM), the Bolivian government-owned Jindal's partner company in the project, will meet tomorrow to finalise its annual plans. The ESEM board will then start working on the partnership with JSPL. Jindal had won the contract for mining at EI Mutun in June last year, but the work was struck over gas pricing.

JSPL will also set up a 6-million tonne sponge iron plant and a 10-million tonne pellet plant. The El Mutun iron mines have 40 billion tonnes of medium-grade ore, making it one of the largest reserves in the world.

JSPL will build a 450 mw power plant near the El Mutun deposits and will be allowed to exploit 50 per cent of the reserves.

The Bolivian government expects to receive around $200 million a year in profit-sharing and taxes from the 40-year concession agreement allowing JSPL to exploit the El Mutun mines.