Washington, June 15 (ANI): India's Jindal Steel and Power Ltd. (532286.BY) has taken the first steps toward shutting down its iron-ore mine in Bolivia, even as it held 11th-hour talks with the Bolivian government to rescue a joint venture aimed at developing a local steel industry.
"We have sent out letters to employees and suppliers notifying them of the termination of their contracts. The decision has been taken because the government has not given the necessary assurances to make us decide to stay," Fox News quoted a senior Jindal executive at the mine, as saying, who wished to not reveal his identity.
A copy of Jindal's letter said that workers would be laid off Sept. 9.
In 2006, Jindal and the administration of President Evo Morales signed a 2.1 billion dollar contract to develop the El Mutun mine and build a steel mill near the river port of Puerto Suarez to export finished steel.
Located in a remote area of southeastern Bolivia near the border with Brazil, El Mutun is considered to hold one of the world's largest iron ore deposits with an estimated 40 billion tons.
However, Bolivia accuses Jindal of not investing enough, while the Indian company says the government has failed to provide the energy and infrastructure, which was needed to move the project ahead.
Jindal has been trying to convince Bolivia to scale back El Mutun because state-run energy company YPFB can't provide the 10 million cubic meters of gas per day which the Indian company says it needs for the steel mill.
The government can provide only 2.5 million cubic meters of gas per day, according to Bolivian officials and Jindal executives.
Morales said the Indian company had violated its contractual obligations with Bolivia and was lying about not getting gas and said that it was the government was right to seize Jindal's cash guarantee because the company had fallen short of its investment targets.
Jindal executives have said leaving Bolivia wouldn't represent a major loss to the company, though it would affect its plans to establish a strategic presence in South America. (ANI)