Bolivia's Iron-Ore Mine Contract Awarded to China's SinosteelPublished by MAC on 2016-01-26
Source: AAP, LATINONE (2016-01-21)
In 2014, the Indian company Jindal won its international arbitration case against the Bolivian government for losses purportedly sustained when it was "forced" to surrender its El Mutun iron ore lease. See: Jindal Steel wins $22.5m verdict on Bolivia project
Now, the government has reportedly given permission for the Chinese company Sinosteel to take over the mine and set up a smelter and steel-rolling plant.
Can the gambit succeed? What (if any) benefit will it bring to Bolivia - let alone to the project's neighboring indigenous communities?
MAC earlier noted:
"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".
That wasn't a recent prediction - it was made more than four years back in 2011: Bolivian government threatens to take over half an Indian mine
Bolivia chooses Sinosteel as mine partner
21 January 2016
Chinese state-owned steelmaker Sinosteel Equipment has been awarded a contract for processing the output from El Mutun, Bolivia's largest iron ore mine.
Officials say the project to be developed includes construction of a steel complex at the mine in the eastern province of Santa Cruz, additional infrastructure and the professional training of Bolivian personnel.
The decision was adopted "unanimously" on Tuesday by the board of state-run mining company Empresa Siderurgica Mutun, or ESM, Mining and Metallurgy Minister Cesar Navarro said in the eastern city of Santa Cruz.
Sinosteel was chosen "due to its experience" and financial backing, Navarro was quoted as saying by state-run news agency ABI.
Chinese privately owned steelmaker Henan Complant was the other company in the running for the El Mutun contract.
Most of the investment cost for the project will be covered by a Chinese loan, the Bolivian government said.
El Mutun, which is primarily located in the eastern Bolivian province of Santa Cruz but extends across the border into Brazil, contains some 40 billion tons of different minerals, mainly iron ore.
ESM sought a new partner after India's Jindal Steel & Power pulled out of its contract to develop El Mutun four years ago amid a legal squabble with President Evo Morales' government, which accused the company of contractual non-compliance.
Jindal won a $US22.5 million ($A32.63 million) arbitration judgment against Bolivia in 2014 before the Paris-based International Chamber of Commerce, which accepted the Indian company's argument that, among other things, it never received access to lands where the project was to be developed.
The ICC ordered ESM to return a performance bond it had collected after accusing Jindal of failing to make sufficient investments in the project.
Bolivia's Iron-Ore Mine Contract Awarded to China's Sinosteel
21 January 2016
The contract for the output processing in Bolivia's largest iron-ore mine was awarded to a Chinese-owned company.
Fox News Latino reported that steelmaker company Sinosteel Equipment was granted the contract for Bolivia's El Mutun mine in Santa Cruz province.
It explained the agreement was made to carry out a project, which includes the building of a steel complex at the mine, professional training of Bolivian personnel and adding more infrastructure.
As for the reason why Sinosteel was the chosen company, board members of the state-run mining company Empresa Siderurgica Mutun (ESM) Mining and Metallurgy Minister Cesar Navarro noted that the Chinese-owned steelmaker has a lot of experience and ample financial backing.
Sinosteel beat another Chinese-owned company, Henan Complant, for the El Mutun contract.
In a similar discussion, Steel Orbis noted that Bolivia previously hesitated to accept the same contractors for their previous projects.
However, the country still gave chances for these Chinese firms to submit their bids and proposals for the project.
Navarro noted that Sinosteel will ink a final contract with them soon.
"First, we hope that the [elected] company will not only deliver us the El Mutún [project], but will also let it start producing. Second, the product that the company will deliver should be commercially feasible and competitive, in other words, with ISO characteristics," the metallurgy minister said in the Steel Orbis report.
Based from their submitted proposals, Sinosteel reportedly gave an initial bid of $338 million of investment for the project, while competing companies proposed higher amounts, noting that these already included a gas pipeline and a steel pipe.
Earlier, the government of Bolivia expressed their plan of starting the project in the mine by 2019.
Prensa Latina added that the contract for the project will be formalized by next month, as per Navarro.
He said that the government and Sinosteel will agree on the international standards to be followed for the project, and maintaining the quality of the service and infrastructure.
According to Xinhua Finance, the project is aimed at producing 150,000 tons of rolled steel annually for the next 10 years.
This projection is expected to cover the demand for Bolivia's product, which is already being imported to other South American countries like Peru and Brazil.
Navarro explained that by completing the said project, the country will be able to acquire more than $230 million in savings.
For his part, ESM president Jose Alberto Padilla explained in a BN Americas write-up that the state spends the said amount on imported steel, but with the project completion, these imports will already be substituted.