Jindal Steel Bolivia, a subsidiary of India’s Jindal Steel & Power Ltd. (JSPL), reported on June 9 it had sent a letter to the government of Bolivia conveying its intention to terminate its contract for investment of $2.1 billion to develop the Mutún iron ore deposits in eastern Bolivia due to non-fulfillment of contractual obligations.
JSPL signed its contract with the government of Bolivia in 2007 for a project that would include iron ore mining, a 10-million-mt/y pelletization plant, a 6-million-mt/y direct reduced iron (DRI) plant, and a 1.7-million-mt/y steel-making facility. JSPL set up offices and deployed manpower soon after entering into contract and started developing the project. The company said it has invested more than $90 million in the project and as of March 2012 had made investment commitments exceeding $600 million for purchase of technology, machinery, and other equipment and for advances to vendors.
The JSPL/government contract called for the government to sign an agreement to supply 10 million m3/d of natural gas required for the project within 180 days of signing of the contract. That agreement was never signed, JSPL reported, and now the government states that it is willing to commit only 2.5 million m3/d of gas from 2014 onwards due to non-availability of gas in the country.
JSPL also states the government did not provide substantial land for the project until 2010, which delayed work on the project, and that even now all of the land required for the project has not been made available by the government.
JSPL concluded its statement by saying the government had 30 days from June 8, 2012, to resolve issues and that failing to do that would result in termination of the project development contract.