Jindal Steel enters Bolivia to mine ore

Jindal Steel enters Bolivia to mine ore
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First Published: Thu, Jul 19 2007. 11 59 PM IST
Updated: Thu, Jul 19 2007. 11 59 PM IST
After nearly two years of negotiating with two successive Bolivian governments, Jindal Steel & Power Ltd (JSPL) has signed a $2.1 billion (Rs8,484 crore) deal for the development of El Mutun iron-ore mine and setting up a steel plant on the country’s SouthEast border with Brazil.
The deal signals Indian steel companies’ global expansion appetite and was signed in Santa Cruz, Bolivia, by JSPL’s chief executive Vikrant Gujral and Walter Chavez, president of Empresa Siderurgica Del Mutun. Bolivian president Evo Morales also attended.
“This is the proud moment as this is the largest investment by an Indian company in Latin America,” Naveen Jindal, the company’s executive vice-chairman, said.
The Rs3,500 crore JSPL, already investing nearly $10 billion in the steel business in India, wants to take advantage of Bolivia’s available gas and abundant iron ore to make pellets, sponge iron and steel in three separate plants that will be set up in Bolivia over the next five years.
Bolivia, with a population of 9.1 million, consumes a mere 200,000 tonnes of steel a year.
Jindal Steel Bolivia SA, JSPL’s Bolivian arm will also export about 10 million tonnes of ore in the first year of operations. Steel output will begin in 2010.
“The implications are mainly on the iron ore front, which will boost the company’s profits rather than on steel,” said Rakesh Arora, a Macquarie Securities Research analyst.
The company plans to raise $800 million through internal accruals and $1.2 billion in debt from the global market.
El Mutun mine has a reserve of 40 billion tonnes, and JSPL has the right to mine half. JSPL’s bid beat those from firms such as ArcelorMittal, the world’s largest steel maker.
Gujral was in Santa Cruz for two months to broker the deal. Company officials had been taking Spanish classes to improve negotiation skills. A teacher from Bolivia was flown in recently. “I am trying to learn the language so that I may be able give a speech in Spanish,” Jindal joked. “We want to do the project in a spirit of partnership.”
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First Published: Thu, Jul 19 2007. 11 59 PM IST