Jindal Steel and Power (JSPL) has set an August 10 deadline for Bolivian government to resolve the issues related to its $ 2.1 billion venture in Bolivia, or it will pull out of the Latin American country.
“If they (Bolivian government) resolve those issues to our satisfaction, we will stay. Otherwise we will get out of there. By August 10, we will decide for sure,” the JSPL Chairman and Managing Director, Mr Naveen Jindal, told PTI in an interview.
Jindal’s contract, signed in 2007, was considered as the largest foreign direct investment for Bolivia and consisted of 40-years mining rights of El-Mutun mines, one of the largest untapped iron ore mines in the world, and setting up of iron and steel plants in the country.
In June, the Indian steel major had sent a termination notice to the Bolivian government, while alleging that contractual obligations related to gas supplies for the venture had not been met.
The notice sought to terminate the contract in a month, if the issues were not resolved. The deadline had ended on July 8.
However, Mr Jindal said that JSPL officials are still in discussions with the Bolivian government to revive the project.
He, however, made it clear that revival of the project would depend on gas allocation and scaling down the project capacity.
“What they are giving us is one-fourth of the (required) gas and are saying that you don’t scale down the capacity, we will give you gas later. Is it possible? How can we plan our investment on such assurances?
“Cost of gas there is USD 8/mBtu (million British thermal unit), while in US it is USD 2-2.5/mBtu. Okay, we will pay higher prices but how can we plan bigger without the gas being committed? We have to scale down (the capacity),” he said.
According to the contract, JSPL’s $2.1 billion project requires gas supply of 10 million standard cubic metres per day (MSCMD).
However, the Bolivian government is willing to commit only 2.5 MSCMD gas from 2014 due to non-availability of gas in the country, the company had said earlier.
The mining and steel project consists of setting up of a 10 million tonnes per annum iron ore pellet plant, six MTPA DRI (direct-reduced iron) plant and 1.7 MTPA steel plant, besides mining of El—Mutum mines for 40 years.
So far, the Naveen Jindal—led firm has invested $90 million in the venture and made investment commitments exceeding $600 million till March 2012 for purchase of technology, machinery, equipment and advances to vendors.