"JSPL has signed a historic agreement with the Bolivian government to develop a 20 billion tonne iron ore mine and setting a two million tons steel plant there," JSPL Executive Vice-Chairman and Managing Director Naveen Jindal said.

The investment will be made over five years, he said, adding the company would look for more opportunities to invest in other South American nations.

Jindal said JSPL would also set up a 450 MW gas-fired power plant in Bolivia to meet production needs and the country's government has assured to provide gas at a low rate.

Of the 20 billion ton iron ore reserves in the El Mutun mines, the Bolivian government has allowed JSPL to export up to 10 million tons. The first consignment of 4-5 million tonnes was expected in the first year of the operations.

JSPL had won the contract to develop El Mutun Mines, one of the world's biggest reserves of iron ore, last year after outbidding various competitors including the world's largest steel maker Arcelor Mittal. The signing of a final agreement was, however, delayed due to differences between JSPL and Bolivian government on a few issues.

Asked if ore would be shipped to India for commercial sale or for captive use, Jindal ruled out such a possibility.

Instead, the mineral would be used to make steel from the greenfield project that is likely to be commissioned by 2010.

He said the proposed steel plant would produce six million tons of Direct Reduced Iron (DRI), besides TMT bars, wire rods and some flat products.

The 2.1 billion dollars investment would be made in a debt-equity ratio of 60:40, Jindal said and pointed out that talks were on with various international banks and FIs to secure loans. "Bolivian banks too have expressed interest in funding our project," he said.

He said investment was likely to increase, but refused to divulge details, saying the company would make necessary arrangements as and when required.