MAC: Mines and Communities

Bolivian government threatens to take over half an Indian mine

Published by MAC on 2011-11-14
Source: Economic Times, Business News America (2011-11-11)

Exasperated at the alleged failure of Indian conglomerate, Jindal Steel & Power, to advance Bolivia's largest foreign minerals enterprise, the country's president is now threatening to take over half the company's iron ore reserves.

"This is a sign of countries, including ones like Mongolia and Mozambique, moving to enhance the terms of trade in their favour."

So commented Kameswara Rao, Executive Director, Energy, Utilities, and Mining, at Price Waterhouse Coopers (PwC), as exports from the El Mutun iron ore mine have stalled even further. See: Bolivia: Indians versus Indios?

A report by Business News Americas says the reason for this was local community protests.

But, even were there no further delays, a major question now hangs over the medium-term future of this vast enterprise.

In recent weeks, the global market price of iron ore has tumbled to its lowest level in years, as Chinese stockpiles reached one of their highest-ever levels.

While prospects of economic survival for the world's top three iron ore producers (Vale, Rio Tinto and BHP Billiton) may not be terminally damaged, those for smaller producers such as Jindal look far from rosy.

[Comment by Nostromo Research, 12 November 2011]

ESPAÑOL

Bolivian govt threatens to takeover half of Jindal Steel's El Mutun iron ore reserves

The Economic Times (India)

11 November 2011

NEW DELHI: Jindal Steel Bolivia (JSB), the Bolivian unit of Jindal Steel and Power, finds itself in choppy waters with the President of the Central American country threatening government takeover of Jindal's half of the prized El Mutun iron ore reserves.

News reports quoted Evo Morales, Bolivia's left-wing President as saying: "We hope that this contract can be accelerated and, if not, the state will begin to exploit and export the iron in Puerto Suarez." Earlier, Bolivia's energy minister had criticised the Indian company.

JSB has had a volatile relationship with the Bolivian government ever since it won mining rights to half of the 40 mt El Mutun reserves, considered amongst the largest in the would, in 2007. The contract is valid for 40 years.

JSPL Vice-Chairman and Head of Global Ventures, Vikrant Gujral insisted that its share of the iron ore - around 20 billion tonnes - is secure. Gujral said JBL has been assured gas supply for its proposed steel and power plants. "The same energy minister Jose Luis Gutierrez in fact promised to make gas available to the project," said Mr Gujral, adding that the minister was misquoted.

JBL wants 4 million cubic meters per day of gas by 2014 for its steel and power plants. State-owned gas firm Yacimientos PetrolAferos Fiscales Bolivianos (YPFB) is yet to make a firm commitment.

In exchange for iron ore and subsidised gas from the government, Jindal has committed to invest $2.1 billion over the next eight years to build steel, sponge iron and pellet plants and a 450 mw power unit near Puerto Suarez in Santa Cruz. Another Jindal subsidiary, Gas to Liquids International, has also signed an agreement for four blocks of gas which has to be sanctioned by the Parliament.

However, members of the Bolivian government have repeatedly threatened to annul the agreement because of alleged delays and had encashed a $18 milion bond. JBL officials said the Bolivian government is responsible for some of the delays.

The latest differences stems from the company's decision to stop shipment of iron ore until next year, since water levels in the Tamango canal had fallen with the onset of winter. In land-locked Bolivia, the ore has to be shipped down the Paraguay-ParanAi river on barges.

"We have a 10,000-tonne order from Paraguay and have already shipped 6,000 tonnes. There is a lull now, movement will be restricted but we can, maybe, consider half loads till water levels rise again in January," said Mr Gujral.

Speaking at a naval event Morales is reported to have threatened to send in the Navy to ship the ore if JSB would not do it.

Mines Minister Jose Pimentel has reportedly clarified that a revision or reversal of the agreement can happen only after a government audit of JSB's investments in May next year.

"This is a sign of countries, including ones like Mongolia and Mozambique, moving to enhance the terms of trade in their favour," said Kameswara Rao, Executive Director - Energy, Utilities, and Mining, PwC.


ESM, Acepar resume iron ore negotiations - Bolivia

By Harvey Beltrán

Business News Americas

10 November 2011

Bolivian state steel company ESM and Paraguayan steelmaker Acepar have resumed negotiations for the sale of iron ore, which were suspended due to local community protests near the El Mutún deposit, an official from Bolivia's mining and metallurgy ministry (MMM) told BNamericas,

"There was an agreement to export 6,000t of ore to Acepar, but the shipment will be made once conditions on the Paraguay river allow for it," the official said.

Iron ore exports from El Mutún in Bolivia's Santa Cruz department have been halted due to the low level of the river and will not resume until next year.

At the beginning of October, ESM sent the first 10,000t of iron ore to Acepar as part of a US$6mn sales contract for 140,000t.

ESM and state miner Comibol have a JV with India's Jindal Steel & Power to develop 50% of the deposit and build a steel plant.

El Mutún is located in a 65km2 area of Santa Cruz's German Busch province and has 40Bt in reserves grading 50% iron ore.


ESM to open new mine at El Mutún in January - Bolivia

Business News Americas

7 December 2011

The board of Bolivian state steel company ESM approved the opening of a mine called ESM-1 to begin extracting iron ore at Santa Cruz department's El Mutún deposit in January, state news agency ABI reported.

The opening of the mine was delayed due to regional problems that led to roadblocks and affected the arrival of the heavy machinery for the project, according to ESM president Sergio Alandia.

"Part of the machinery is already at [the Chilean port of] Arica. On January 6, it will arrive in the country and in mid-January, production will begin," Alandia said.

At least 1.8Mt/y of iron ore is expected to be mined from ESM-1.

ESM and state miner Comibol have a JV with India's Jindal Steel & Power to develop 50% of the deposit and build a steel plant.

El Mutún is located in a 65km2 area of Santa Cruz's Germán Busch province and has 40Bt in reserves grading 50% iron ore.

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