MAC: Mines and Communities

Bolivia: Indians versus Indios?

Published by MAC on 2010-06-19
Source: Business News Americas

Jindal's road to pretended riches in Bolivia has been a rocky one from the start.

This major Indian conglomerate has a 50% holding in the giant El Mutun iron ore project (encompassing one of the largest untapped deposits of its kind in the world), acquired six months after Evo Morales became Bolivia's president in late 2005.

There was speculation at the time that the company would be more amenable to backing Bolivia's equitable and "people directed" minerals agenda than multinationals from the North. Some of these (such as Rio Tinto and Glencore) had long sullied their reputation in South America's poorest country - which also has the largest proportion of indigenous inhabitants of any state in the sub-continent.

But little has moved forward for Jindal over the past four years. Now, the president of Bolivia's state steel-making company, Esem, has placed another stumbling block in Jindal's path.

Esem says that the Indians have refused to move the project forward. For its part, Jindal claims it's still not received land, supposedly guaranteed under the original agreement and that Esem has wrongfully cashed in its investment guarantees.

Whatever the truth of the matter, the continuing spat between the two companies doesn't augur well for Jindal's global ambitions. It has enough on its hands, fighting off resistance to its designs on Scheduled Tribal territory in Andhra Pradesh * and Orissa, without having to contend with "resource nationalism" (or should we say "Indigenisation"?) in a foreign state.

*For a recent summary of Jindal's mixed record in regard to residents of bauxite and alumina refining areas of Andhra Pradesh, see: Bauxite Mining in Eastern Ghats by Prajna Paramita Mishra and M Gopinath Reddy, CESS Monographs, RULNR Monograph-3, published by the Centre for Economic and Social Studies, Begumpet, Hyderabad, in collaboration with Samata, Visakhapatnam, March 2010.

Esem holding back development of El Mutun, says Jindal - Bolivia

By Harvey Beltrán

Business News Americas

9 June 2010

Indian company Jindal Steel & Power believes the president of Bolivian state steelmaker Esem, Sergio Alandia, is hindering development of the El Mutun iron ore deposit and steel project, Jindal spokesperson Rene Soria told BNamericas.

"We have been very respectful and loyal to our partner and, in particular, to the Bolivian state, and even more so to the Bolivian people. However, since October - when Alandia was appointed interim president - the relationship has become complicated and led to the current situation," Soria said.

Currently Esem and Jindal have frozen negotiations for the project's development. Soria said the state firm still has to hand over land to Jindal and clarify the reasons for cashing in US$18mn of investment guarantees. Alandia said the guarantee was cashed in as Jindal had breached its contract by delaying the development of El Mutun.

Good intentions

Jindal is willing to advance with the development of the deposit, but due to Alandia's attitude, which Soria characterizes as "unilateral, arbitrary and which even disregards the authority of the president of Bolivia," it has been difficult to move forward.

In 2007, the Bolivian government created Esem to work with state miner Comibol and sign a JV with Jindal to develop El Mutun.

The contract stipulates that US$1.5bn be invested over the first five years in mining the deposit and starting up steel production, and US$2.1bn in total. The agreement also gives Esem a supervisory role over Jindal, which must comply with an investment plan.

"Everything should be carried out within a relationship of respect, dignity, cooperation, solidarity and, above all, loyalty," Soria said, adding: "And this is what we have never received."

According to Soria, Alandia is looking to take the contract from Jindal so that a state firm can develop 100% of the deposit.

BNamericas tried to contact Alandia but he was not available for comment.

Jindal acquired 50% of the project through a public bidding process in June 2006. El Mutun is located in a 65km2 area of Santa Cruz department's German Busch province and has 40Bt in reserves grading 50% iron ore.

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