MAC: Mines and Communities

Goverment Suspends Bidding To Develop El Mutún - Bolivia

Published by MAC on 2005-12-21

Govt suspends bidding to develop El Mutún - Bolivia

by Harvey Beltrán

21st December 2005

Bolivia's government has delayed for 60 days plans to receive bids from up to five companies to develop the El Mutún iron ore deposit in Santa Cruz department, state mining company Comibol president Juan Cabrera told BNamericas.

"The process was put off but has not been cancelled and I believe the bidding process will go forward as planned. It's a normal procedure within the context of the change of government," he said.

The government delayed bidding "to solve any issue that could be questioned by the next government. We have managed this process with complete transparency," government news agency ABI quoted presidential minister Iván Avilés as saying.

According to the original plan, bids would have been received December 21 from interested groups.

But newspapers reported that before the government's announcement of the delay, the MAS (Movimiento al Socialismo) party of Bolivia's president-elect Evo Morales called upon the government to halt the process, warning that El Mutún would be nationalized if bidding continued.

The left-wing radical Morales won Sunday's presidential election and is due to take office January 22.

A government mining official who asked not to be named told BNamericas the decision to push back the bidding came as a result of pressure from mining cooperatives that plan to develop the deposit independently.

Other press reports cited a community leader in Santa Cruz department as saying that mining cooperatives supported by MAS were at odds with Santa Cruz department officials who want bidding to continue.

Cabrera said the process has always generated strong regionalist feeling among miners from the east of the country, including those from Santa Cruz, against those from the west, including those from the departments of Oruro and Potosí.

Companies that bought bidding rules are Brazil's EMPX Siderúrgica Brasil, China's Luneng Shandong Group, European steel giant Mittal Steel (NYSE: MT), Argentina's Siderar and India's Jindal Steel & Power.

"We are ideally expecting the five companies to submit offers on December 21," Abelardo Valenzuela, an executive with French bank BNP Paribas said earlier this month. Valenzuela is in charge of the bidding process.

El Mutún is one of the world's largest iron ore deposits, with some 40Bt of reserves over 60 sq km at an average content of 50% iron, according to Bolivia's government. The deposit is close to the Bolivia-Brazil border, 41km south of the city of Puerto Suárez, with access to the Atlantic Ocean via a series of waterways.

According to bidding rules, operations would have to start 3-4 years after project startup, reaching minimum production of 1.5Mt/y iron.

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