The Hindu Business Line : JSPL expects final nod for Bolivian acquisition in a few months

Facing Hurdle
The agreement signed between the Jindals and the Bolivian Government will now have to be approved by the Bolivian Parliament.
It is expected that the final clearance would come within the next few months
JSPL plans to set up a wholly owned subsidiary in Bolivia for this purpose

New Delhi , July 29

Jindal Steel and Power Ltd's(JSPL) plan to acquire the El Mutun iron ore mines in Bolivia would have to clear another hurdle even after it has won the mining and development rights for 20 billion tonnes of iron ore deposits. The agreement signed between the Jindals and the Bolivian Government will now have to be approved by the Bolivian Parliament.

The proposal would now go to the Bolivian Parliament for a final ratification of the agreement, the company Vice-Chairman and Managing Director, Mr Naveen Jindal, told Business Line.

The El Mutun mines are one of the largest iron ore reserves in the world with an estimated deposit of 40 billion tonnes. JSPL has won the rights for half of the mine deposits.

It is expected that the final clearance would come within the next few months though no exact time frame is available, given the political developments in Bolivia during the past few months, company officials said.

According to the plans, JSPL would be investing around $2.3 billion over the next 10 years for mining operations and setting up greenfield steel capacities in the South American country. JSPL plans to set up a wholly owned subsidiary in Bolivia for this purpose and would also be going in for a series of foreign currency bonds to raise the required funds, Mr Jindal said.

The company intends to set up a 1.7 million tonnes integrated steel plant for long products in Bolivia to cater to the South American market. It would also set up a six million tonnes per annum sponge iron plant and a pellet plant with 10 million tonnes annual capacity. The detailed plans also include a 400 MW power plant, Mr Jindal said.

"Out of the total estimated investment of Rs 10,000 crore, investment in iron ore mining would be around 15-20 per cent and around 80 per cent would be in the sponge iron and steel plants," Mr Jindal said.

Though the final agreement is yet to be signed, it is estimated that the company would be paying around 8-9 per cent to the Bolivian Government as royalty on iron ore and concentrates and 10 per cent on pellets. The company would also be expected to pay around five per cent royalty on steel exports and seven per cent on sponge iron exports, company officials said.

Royalty

Though there are no formal restrictions on exports of iron ore or steel from Bolivia but, being a landlocked country, ports are situated far away, he said

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