Bolivia moves to scrap Jindal's EL Mutun iron ore deal
08 Mar 2010
The Bolivian government has moved to terminate Jindal Steel & Power's (JSPL) 50 per cent interest in EL Mutun iron ore deposit, for not honouring its contractual obligations.
Bolivia's mining and metallurgy ministry (MMM) has requested the local branch of Peru's BCP bank to encash JSPL's $18-million performance bond since the company has failed to make the necessary investments stipulated under the contract signed in 2007.
The joint venture agreement, signed in 2007 between JSPL's Bolivia subsidiary Jindal Steel Bolivia SA (JSB) and Empresa Siderurgica Del Mutun (ESM), a government of Bolivia entity, to develop the EL Mutun iron ore for a period of 40 years will stand terminated with MMM encashing JSPL's $18-million performance bond, said mining minister José Pimentel.
José Pimentel said JSPL will also have to pay $1 million in exploration rights for 2009, an amount normally paid in advance, but he alleged that JSPL had used the pretext of hindrances in land acquisition in time by the Bolivian government for not paying.
Last month, the Bolivian government had threatened to cancel JSPL's development rights for 20 billion tonnes of EL Mutun iron ore deposits and enforce an $18-million performance bond for having failed to make the necessary investments stipulated under the contract signed in 2007.
Bolivia's mining director Freddy Beltran had said on 31 December that if JSPL fails to honour its pledge to invest $2.1 billion in the EL Mutun iron ore joint venture project under the time stipulated in the contract, the Bolivian government would not hesitate to scrap the contract.