Jindal's Bolivian El Mutun iron ore project in limbo
12 June 2010
After the Bolivian government encashed Jindal Steel & Power' (JSPL) entire $18-million bank guarantee on the EL Mutun iron ore project last month, the $2.1 billion project seems to have gone in a limbo as JSPL' negotiations with the government have been frozen.
Last month, the Bolivian government encashed JSPL's entire $18-million bank guarantee for the El Mutun project alleging that the company failed to make the necessary investments stipulated under the contract signed in 2007 (See: Bolivia encashes JSPL's $18-million bond on El Mutun delays), after talks broke down early last month between JSPL's top executives and officials from the Bolivian ministry of mining and metallurgy (MMM).
Earlier MMM had turned down JSPL's request for changes in the contract terms although JSPL's revised investment plan had been rejected on two earlier occasions.
But although JSPL has asked for clarification regarding the encashment of the bank guarantee, the Bolivian government has so far kept silent on the issue.
The Bolivian government is learnt to be planning to cancel the concession awarded to JSPL for one half of the El Mutun iron-ore deposit and hand it to a local company or another overseas miner.
The Bolivian government is already negotiating with China Development Bank, which has offered the state $15 billion to develop the remaining El Mutun iron-ore deposit concession. (See: China offers Bolivia $15 billion to develop El Mutun iron ore deposit)
A JSPL spokesperson in Bolivia had told Bolivian newspaper BNamericas last week that the company believes that Sergio Alandia, the interim president of Bolivian state steelmaker Empresa Siderurgica El Mutun (Esem), is obstructing the development of the El Mutun iron ore deposit and steel project.