Jindal Steel and Power Ltd (JSPL) on Thursday said it would invest $2.1 billion in Bolivia over the next five years to set up a steel plant of 2 million tonne, a pellet plant (10 million tonne), a sponge iron plant (6 million tonne) and 450 mw power plant. The company has signed an agreement with the Bolivian government for El Mutun Mine with iron ore reserves of 40 billion tonne.
This is the largest foreign investment in a single project by a private player in the country. The company, last year, had outbid various competitors including the world?s largest steel maker Arcelor Mittal and bagged the contract to develop El Mutun Mines.
There was, however, a delay in the final agreement owing to differences between the company and Bolivian government, Naveen Jindal, executive vice-chairman and MD, JSPL, said.
The contract is yet to be cleared by the Bolivian Parliament, he said adding that the construction activity should start in next 3-4 months.
On how would the company generate $2.1 billion, Jindal said the investments would be made in a debt-equity ratio of 60:40. He said that the company was in talks with some of the international banks and financial institutes to secure loans. ?Bolivian banks too have expressed interest in funding our project,? he said adding that the investments were likely to increase, as the company would like to expand the capacities in Bolivia. When asked about the subsidies JSWL would get from the Bolivian government, Jindal said iron ore is available in plenty and the government there has assured to provide gas at a low rate for the 450 mw power plant.
Besides, the government has allowed JSPL to export up to 10 million tonne of iron ore and the first consignment of 4-5 million tonne was expected in the first year of the operations.
Ruling out the possibility of shipping iron ore for captive use in India, Jindal said, ?It is just not viable. Raw material would be used to make steel from the green field project that may be commissioned by 2010.?