Navin Jindal-controlled Jindal Steel & Power has sorted out the differences on payment of royalty with the Bolivian government for its proposed development of EI Mutun mine, a site believed to contain one of the world's biggest iron ore deposit. Both the parties had signed an accord on Monday and a final agreement is expected to be signed within a month.
Bolivian President Evo Morales is expected to sign a final contract with Jindal Steel next month in the border city of Puerto Suarez, where people are waiting for more than three decades for the long-proposed mining project to become a reality. Both the parties have agreed to evenly spilt the earnings from the iron mine in the South American country's eastern jungles.
Jindal Steel will invest nearly $2.3 billion for the project, which includes a steel plant, sponge iron factory and development of the 40 billion tonne iron ore mine and 10 billion metric tons of manganese, will be the biggest investment in a single project in Bolivia. Jindal's contract will require the company to maintain its Bolivian operations for 40 years.
Jindal Steel had bagged the rights to mine half of El Mutun's probable iron ore reserves on June 2. The final contract was to be signed by July after submission of a detailed project report (techno-economic feasibility report)by Jindal Steel.
Accordingto the contract, the company would pay royalties to Bolivia for export of ore, finished steel and pellets. However, the investment proposal went through rough weather after the Bolivian President Evo Morales seized oil and gas fields on May 1 to force companies to re-negotiate contracts to pay higher royalties.
The representatives, Bolivian ministries - treasury, public works, mining, planning and development and production --and other small companies made their case why Jindal should pay higher royalty to the government.
Once materialised, the project would help Bolivia, one of the poorest countries in the South American region, to receive some $200 million a year in profits and taxes as part of the 40-yearconcession.
Apart from developing the mines, Jindal Steel planned to set up a fully integrated steel plant with a capacity to produce 1.7 million tonne per annum of long products, 6 mtpa of sponge iron and 10 mtpa of pellets, and supporting infrastructure, including a 400mw power plant and a rail or road link to the nearest river port.
It was expected to provide direct employment to 2,000 people and indirect employment to 10,000people in Bolivia.
Do you want to discuss stock tips? Do you know a hot one? Join the