New Delhi: Steel major Jindal Steel and Power Ltd (JSPL) will invest $2.1 billion dollars (about Rs9,500 crore) to set up new steel plants in Bolivia. The project would allow Bolivia to develop a steel industry and the proposed investment was the single largest in Bolivian history.
Sushil Maroo, director finance, JSPL, told reporters, "We have reached an agreement with the Bolivian government to set up a 6-million tonne sponge iron plant, 10-million tonne pellet plant and 1.7-million tonne steel plant at an investment of $2.1 billion in the country."
In June 2006 Jindal Steel had obtained mining rights for half of the El Mutun iron-ore reserves, through global bidding. The El Mutun mine is said to be the world''s single largest iron ore mines with proven reserves of 40-billion tonnes of medium- grade quality ore. The Indian company will be allowed to exploit 50 per cent of the El Mutun reserve.
According to Maroo, the debt equity ratio for the project would be 60:40, and pointed out that financial modalities were being worked out. A definitive agreement was expected to follow in the next 45 days.
The Indian company would also set up supporting infrastructure for the proposed projects including a 450 MW power plant.
The Bolivian government has agreed to sell natural gas to JSPL at $3.91 per million BTUs (British Thermal Units) for steel making, which would account for 70 per cent of the total power requirements of the projects, Maroo said.
The agreement with Bolivia was help up earlier as Jindal wanted subsidised price on fuel and better tax conditions.
Maroo said that Bolivian President Evo Morales and the JSPL team led by Vikram Gujral, vice chairman and CEO had agreed on the tax rate and natural gas prices for the projects. They also agreed on a time-frame of 45 days for signing the contracts.
"The investment by JSPL will create gainful direct jobs in the iron ore mines and the steel plants. The mines are located in the south east of Bolivia and about 50 km from the Brazilian border," Maroo said.
JSPL is a part of the Rs 20,000 crore Jindal group and has a turnover of Rs 3,000 crore having wide business interests in steel production, mining, power generation and coal and diamond exploration.