.gif?width=220&height=200&mediaprotectionhash=b13da841472e6e7ed500ee35df2a350aaf53d75246118b33ea2095cc7e9a3fc4&ext=.gif)
Jindal Steel Terminates Contract with Bolivian Government for $2.1 Billion Investment
07/17/2012 - Jindal Steel Bolivia terminated the contract signed with the Bolivian government for the investment of US$2.1 billion in the El Mutun mines.
Jindal Steel Bolivia (JSB), a subsidiary of Jindal Steel & Power Ltd., terminated the contract signed with the Bolivian government for the investment of US$2.1 billion in the El Mutun mines.
The termination comes in the wake of the issuance of a letter to the government of Bolivia on 8 June 2012 conveying its intention to terminate the contract due to the non-fulfillment of contract conditions on the part of the Bolivian government.
As per terms of the joint venture contract, the government of Bolivia had 30 days’ time to resolve the issues failing which Jindal could terminate the contract within seven working days thereafter. The company made the decision, after all its efforts to resolve the issues and move the project forward were unsuccessful. Due to the non-fulfillment of the contractual obligations and unwillingness to fulfill the contract on the part of the government of Bolivia, Jindal has been forced to terminate the contract.
Jindal had signed a Contract with the government of Bolivia in 2007 to invest US$2.1 billion in iron ore mining, pelletization (10 million tons per annum), DRI (6 million tons per annum) and steel making (1.7 million tons per annum). This was the single largest foreign investment in Bolivia.
As per the contract, the government of Bolivia was to sign an agreement to supply the natural gas required for the project - 10 million cubic meters per day (MCD) within 180 days of signing of the contract with Jindal. To date, the natural gas agreement has not been signed. The government of Bolivia was willing to commit only 2.5 MCD of gas from2014 onwards due to non-availability of gas in the country. Also, the Bolivian government did not provide the agreed contract area for setting up the steel project to date.
In view of the aforesaid breaches of the Bolivian government and its entities, the company intends to pursue international arbitration related to the contract.
