MUMBAI: Jindal Steel & Power Ltd has secured natural gas supplies for its steel and iron ore project in Bolivia, allowing the company to move forward with the $2.3 billion (Rs10,184 crore) venture.
Bolivia will sell the fuel at $3.32 per million British thermal unit (btu), Finance Director Sushil Maroo said. That’s less than the $4 to $5 rate the nation charges for exports to Brazil and Argentina, state information agency ABI said on 1 March.
The project at El Mutun, based near Bolivia’s southeastern border with Brazil and Paraguay, will help Jindal Steel secure supplies of iron ore, prices of which have tripled after five years of increases. El Mutun probably holds 40 billion tons of the steelmaking material, thrice India’s recoverable reserves.
“We expect to sign the accord in the next 45 days,” Maroo said by phone from New Delhi.
Jindal Steel won the rights to explore half of El Mutun’s deposit or 20 billion tons, after three years of negotiations. The company in August got Bolivia’s government to reverse a June order shelving the contract because of disagreement on sharing of the profit from the project that includes a steel plant and a sponge iron factory.
Shares of the company rose as much as 2.5% to Rs2,410 in Mumbai and traded at Rs2,400. The stock has climbed 52% in the past year.
Bolivia’s natural gas reserves are the second biggest in South America after Venezuela and its 9 million inhabitants are the region’s poorest, with gross national income per capita of $960, compared with Argentina’s $3,580 and Brazil’s $3,000, according to World Bank figures for 2004.