Jindal Steel to invest $2.1 bn in Bolivia

Steel major Jindal Steel and Power Ltd on Friday said it would invest $2.1 billion (about Rs 9,500 crore) to set up new steel plants in Bolivia for which it has reached an agreement with the Latin American nation.

"We have reached an agreement with the Bolivian government to set up a six million tonne sponge iron plant, 10 million tonne pellet plant and 1.7 million tonne steel plant at an investment of $2.1 billion in the country," Sushil Maroo, director, finance told PTI.

El Mutun is one of the world's biggest iron-ore mines with proven reserves of 40 billion tonnes of medium-grade quality ore. Jindal, who won the bid in June last year, would be allowed to exploit 50 per cent of the El Mutun reserve.

The debt equity ratio would be 60:40, Maroo said and pointed out that financial modalities were being worked out. A definitive agreement was expected to follow in the next 45 days.

The company would also be setting up supporting infrastructure for the proposed projects including a 450 MW power plant.

The Bolivian government has agreed to sell natural gas to JSPL at $3.91 per million BTUs (British Thermal Units) for steel making, which would account for 70 per cent of the total power requirements of the projects, Maroo said.

The agreement with Bolivia was help up earlier as Jindal wanted subsidised price on fuel and better tax conditions.

Maroo said that Bolivian President Evo Morales and the JSPL team led by Vice Chairman and chief executive officer Vikram Gujral agreed on the tax rate and natural gas prices for the said projects and a time-frame of 45 days was agreed upon for signing the contracts.

"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. This was followed by negotiations with the government on various clauses," he said.

He pointed out that the project would allow Bolivia to develop a steel industry and the proposed investment was the single largest in Bolivian history.

"The investment by JSPL 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," Maroo said.

JSPL is a part of the Rs 20,000 crore (Rs 200 billion) Jindal group and has a turnover of Rs 3,000 crore (Rs 30 billion) having wide business interests in steel production, mining, power generation and coal and diamond exploration.