In what could be the single largest investment made by any country in mineral-rich Bolivia, Jindal Steel today said it would invest $2.1 billion (Rs 9,500 crore) there to set up new steel plants. The Indian steelmaker said it has reached an agreement on El Mutun iron ore mines in the South American country.
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“We will invest around $ 2.1 billion on setting up a 6 million tonne sponge iron plant, 10 million tonne pellet plant and 1.7 million tonne steel plant in the country (Bolivia),” said Jindal director for finance, Sushil Maroo.
Jindal successfully bid for the mines in June last year but the agreement was held up as consensus could not be reached on fuel price and tax concessions. The El Mutun mines, believed to contain one of the world's biggest iron-ore reserves, contain an estimated 40 billion tonnes of ore of medium-grade quality.
Jindal would have access to 50 per cent of the reserves.
Bolivian President Evo Morales and Jindal's senior management led by chief executive Vikrant Gujral agreed on the tax rate and natural gas prices for the iron and steel project. According to the pact reached, Jindal would get natural gas at $3.91 per million units for steel making. A definitive contract will be signed with the Bolivian government within 45 days.
The company would also be setting up the supporting infrastructure for the proposed projects, including a 450 MW power plant.
“In June 2006, JSPL emerged as the only company which met the qualifying criteria set by the Bolivian government to exploit 50 per cent of the El Mutun reserves,” Maroo said.
“This was followed by negotiations with the government on various clauses.”
He said the project would allow Bolivia to develop a steel industry and the proposed investment was the single largest in Bolivian history.
“The investment 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,” he said.