LA PAZ – The China Development Bank has offered to loan Bolivian President Evo Morales’ government $15 billion to develop half of the massive El Mutun iron-ore deposit, a source in the Andean nation’s mining ministry told Efe.

Half of El Mutun, located in eastern Bolivia along the border with Brazil, is owned by the state while concession rights to the other 50 percent were awarded in 2007 to India’s Jindal, which is behind on its planned investments.

The offer was presented a few days ago to the president of state-owned Empresa Siderurgica Mutun, Sergio Alandia, who is in South Korea to promote investment in Bolivia’s mining industry, the source told Efe.

La Paz daily La Razon reported that the China Development Bank offered to loan $15 billion for the project, which includes the construction of a railroad and infrastructure at the Puerto Busch port – necessary to export the ore along the Paraguay-Parana river route.

Under the terms of the proposal, Chinese firm Chung Hsing Mining must first carry out exploratory work to confirm the reserves at El Mutun, located in the eastern province of Santa Cruz.

The Bolivian government says El Mutun has 40 billion tons of reserves of different minerals and particularly iron ore, which it plans to use to produce steel.

Bolivia would be able to repay 40 percent of the Chinese loan with cash and the rest with the steel to be produced at El Mutun, the daily reported.

La Razon also quoted Alandia as saying that China has also proposed the creation of a joint venture between Chung Hsing and Bolivia to produce a minimum of 100 million tons of iron ore for export.

Other companies interested in the El Mutun project include South Korean giant Hyundai and an unidentified Japanese firm, Alandia said.

Morales’ government is concerned about investment delays by Jindal and, in an unprecedented move in relations with foreign investors, fined the company $18 million last month.

Jindal pledged to invest $600 million in the first phase of the project, but had invested just $12 million through the end of the first quarter of 2010.

The Indian company recently decided to continue operations in Bolivia after unsuccessfully challenging the fine, although it says it still hopes the sanction is eventually withdrawn. EFE