Jindal Steel & Power Ltd''s Bolivian subsidiary, Jindal Steel Bolivia (JSB), has signed a contract with the Bolivian government to develop its El Mutun iron ore mine, to which Jindal Steel had obtained mining rights for half its iron-ore reserves through global bidding in June 2006.

The El Mutun mine is said to be the world''s single largest iron ore mines with proven reserves of 40-billion tonnes of medium- grade quality ore. The Indian company will be allowed to exploit 50 per cent of the El Mutun reserve.

Earlier this year, the company had announced that it would invest $2.1 billion in Bolivia — the single largest investment in Bolivia''s history — to set up an integrated steel unit, with a capacity to produce 1.7 million tonnes of long products and six million tonnes of reduced sponge iron. (See: JSPL to invest $2.1-billion to set up steel plants in Bolivia)

The unit will also have a 10 million tonnes per annum pellet plant and a 450 MW power plant.

"The contract has to be formally passed by the Bolivian parliament and in three - four months we expect to start construction," member of Parliament and managing director of the company Navin Jindal disclosed at a press conference in New Delhi. "We will start selling around 10,000 million tonnes per annum of iron ore concentrate from the first year."

He also said that the Bolivian government had allowed the Jindals to export 10 million tonnes of iron ore and the company would start commercial production of steel by 2010. He said the Bolivian government had granted 40 years of mining lease and added that the company intended to expand investment after assessing the growth.

This project will open new business opportunities for Indian businesses in Latin America. "We will be partnering with the Bolivian government and the people to contribute positively to the growth of the economies of both countries," Jindal said.

The company will invest $2.1 billion over 8 years time to develop the integrated steel plant with the following facilities:

• Pellet plant: 10 million tonnes per annum
  
• Sponge iron plant (DRI): 6 million tonnes per annum
  
• Steel plant: 1.7 million tonnes per annum
  
• Power plant: 450 MW

This is the largest investment by an Indian Company in Latin America and the largest foreign investment in a single project so far in Bolivia. This huge investment is expected to generate large-scale employment in the country.