LA PAZ – Bolivian President Evo Morales’ government called on India’s Jindal Steel & Power to make good on pledges to invest in a massive iron ore and steel project in the eastern province of Santa Cruz.
A 2007 joint-venture agreement between Bolivia’s socialist administration and Jindal requires the steelmaker to invest $300 million each year of the first five-year period and $200 million annually over the next three years, for a total of $2.1 billion in direct investment over eight years.
“We see that there’s a delay in the investments. We trust that Jindal will understand that it has to respect its commitments; we’re demanding fulfillment of those commitments,” Vice President Alvaro Garcia Linera told reporters Tuesday.
Jindal has a contract to develop one half of the El Mutun iron ore deposit, while the Bolivian government is to exploit the other 50 percent.
The contract went into effect in May of this year and Bolivian authorities plan to evaluate the firm’s compliance with its investment obligations beginning that same month of 2011.
The state-run ABI news agency quoted Bolivia’s mining director, Freddy Beltran, as saying that if Jindal has not made the investments stipulated under the contract by that time the Bolivian government could enforce an $18 million performance bond and “cancel the contract for non-compliance.”
Total investment by the Indian company this year in Bolivia’s mining and hydrocarbon sector amounts to roughly $60 million.
For his part, Jindal’s director in Bolivia, Arvind Sharma, told ABI that the steelmaker has had “some technical problems” related to lack of electricity supplies that have caused a “small” delay in approval of the investment plan submitted months back.
He said the joint venture’s board of directors will meet in early January to set a timetable for the company’s first exports and also to consider a new version of the investment plan that, according to local media, the Bolivian government has rejected on two occasions.
El Mutun is located in Puerto Suarez, a town near Bolivia’s border with Brazil, and contains some 40 billion tons of reserves of mainly iron and magnesium.
Jindal began developing the deposit this year with two mineral processors with a 400-ton-per-hour capacity and is awaiting approval of its investment and advance development plans so it can export the iron ore.
The delays affecting the project have included extra time needed by the government to expropriate lands needed by Jindal.
In addition, an investigation was opened last month into the former president of Bolivian state steelmaker Esem, Guillermo Dalence, and 32 other government officials for allegedly overpaying for lands to be used for the project. EFE