After more than a year of protracted negotiations, Naveen Jindal-promoted Jindal Steel & Power Ltd has bagged the $2.1 billion contract for development of one of the world's largest iron ore deposits, El Mutun, along with steel making facilities.
JSPL on Thursday signed the contract with the Bolivian government for developing the El Mutun iron ore mine.
The $2.1 billion project is the largest investment by any Indian company in South America, apart from being the largest private investment in Bolivia, company officials announced.
The project includes setting up of a 2-million-tonne steel plant. After the project, the deposits will remain Bolivia's property.
Jindal Steel had emerged the winner in an international bidding process started by the Bolivian government in May 2006, outbidding several competitors including Arcelor Mittal.
The final agreement took time as issues like the price of natural gas to be used in the project became a stumbling block. However, the Bolivian government has now committed supply of natural gas.
"We plan to start commercial production of steel by 2010," said Naveen Jindal, executive vice-president and managing director, JSPL. Jindal said they would produce TMT bars, wire rods and some flat products.
He ruled out the possibility of shipping ore to India for commercial sale or for captive use.
El Mutun is considered to be the largest iron ore mines in the world, having reserves of more than 40 billion tonnes, 50 per cent of which has been commissioned to JSPL for development.
The total amount will be spent over a period of eight years. It will be an integrated steel plant with steel production of 1.7 million tonnes per annum, pellet production of 10 mtpa and direct reduced iron production of 6 mtpa.
JSPL will also set up a 450 MW power plant to meet production needs. The project will be handled by Jindal Steel Bolivia SA, a subsidiary of JSPL which was created in October last year.