JSPL's Bolivia plans may finally take off

MUMBAI: Jindal Steel and Power’s (JSPL) ambitious $2.3-bn project in Bolivia has got a fresh lease of life. The Bolivian government on Sunday accepted a technical report on the project submitted by JSPL, reviving hopes for the Naveen Jindal-promoted company.

The project includes development of El Mutun iron-ore mines and setting up of steel and pellets plants. The mines with reserves of 40bn tonne, would make JSPL one of the largest global players in iron-ore mining.
The Bolivian government had put on hold its approval for the development of the El Mutun mines, demanding higher royalty. JSPL had also failed to submit the technical report within 60 days of its June 2- agreement with the government.

“There is no looking back now. The technical committee (set up by the Bolivian government) has basically approved the whole project. The technical parameters of the project has been finalised. The final contract will be signed within four weeks,” managing director Naveen Jindal told ET. JSPL’s CEO Vikrant Gujral is heading the company’s negotiations in Bolivia.

Mr Jindal will sign the contract with Bolivian President Evo Morales next month in the border city of Puerto Suarez, whose residents had come out celebrating in the streets after the agreement was signed in June.

Sources add that JSPL’s investment will include projects to improve health, education, and water system for residents living near the mines. The contract will require the company to maintain its Bolivian operations for 40 years.

Reports from Bolivia added that JSPL and Bolivia will evenly split the earnings from the El Mutun mines. Bolivian planning minister Carlos Villegas was quoted announcing the preliminary accord with JSPL and added that the El Mutun-mines could earn $400m annually after three years of development.

But Mr Jindal was tight-lipped on the financial details of the agreement. Company officials though added that the royalty issue was also discussed in the latest round of negotiations. “The details will be disclosed when the contract is signed next month,” they added.

The latest development will bring respite to JSPL as the project was plagued by constant revisions in the agreement. Initially, the Bolivian government had wanted 2.5m tonnes per annum of iron ore to be mined and 54% of the net income from the operations.