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Jindal Steel and Power, India’s third-largest private steel company by revenue, has cancelled a $2.1bn Bolivian iron mine contract following a protracted dispute with the leftist government of President Evo Morales.
The move to terminate follows disagreements over the provision of adequate natural gas supplies for the project and what the Indian group called the “non-investor friendly attitude” of the Bolivian authorities.
Billionaire Naveen Jindal’s company, which posted revenues of $3.6bn in 2011, struck Bolivia’s largest foreign investment deal in 2007 to develop one of the world’s largest untapped iron ore deposits, along with related steel projects.
The pull-out is the latest setback for foreign miners in the landlocked South American nation in recent weeks, following the government’s decision to cancel a tin and zinc mine licence owned by Switzerland-based Glencore, along with a second licence owned by South American Silver, a Canadian group.
Foreign natural resources investors have become alarmed at the actions of Mr Morales’s administration, which has nationalised hydrocarbon and other assets in recent years and is undertaking a wider review of the nation’s mining code.
JSP described the group’s increasingly strained relationship with the government as characterised by opaque communication, shifting contractual rules, arbitrary financial penalties and judicial harassment of senior executives.
“Initially . . . we were welcomed. We had direct access to the president. He was enthusiastic, and we were enthusiastic and we were keen to make it work,” the group said.
“But in particular there was a problem with the contract for the gas; they were dilly-dallying, and then they admitted to us that they didn’t have the gas they needed,” it said. “It went on and on: the gas was not there, then they wanted to stick to the old conditions, then they wanted to change the contract . . . eventually we had to give up.”
Mining minister Mario Virreira claimed the Indian group cancelled the contract on account of poor planning and a lack of financial resources.
JSP said it planned to seek international arbitration to recover about $90m it has invested in the project.
Bolivia has also threatened legal action, and said it planned to seek a new partner to develop the mine.