New Delhi – Jindal Steel & Power Ltd. is sticking to its July 15 deadline for deciding on whether to continue its operations in Bolivia but would stay if the South American nation allows it to scale back the size of its proposed steel and mining projects.
“If the government wants Jindal to stay, that intent has to be backed up by positive action,” a senior executive at the Indian company, who didn’t wish to be named, said Monday.
He said the project size agreed to in 2007 was based on a supply commitment of six million metric standard cubic meters a day of gas, but since the government has now indicated it can supply only two-three MMSCMD gas, the scope of operations would have to be cut.
The proposed projects under the 2007 pact included a steel factory with a capacity of 1.7 million tons a year as well as iron-ore mining and processing facilities with total investment of $2.1 billion.
The executive said that the total project cost would decrease if the pact is renegotiated, but won’t fall drastically because of inflation.
He said the company has so far pumped in $90 million in Bolivia and has committed an investment of almost $600 million to be used for various construction and equipment supply contracts.
But if Jindal were to leave the projects, the total exit cost won’t be much higher than $90 million, he said.
While the Bolivian projects remain stuck, the company is scouring the globe for picking up iron-ore and coal mines to feed its expanding Indian steelmaking and power generation projects. Mining resources are a key stumbling block for Indian power and steel companies, as getting a mining license is a task fraught with long legal and procedural delays.
“We are in preliminary stages of looking at possible mines acquisitions in Peru, Uruguay and Brazil, and coal mines in Colombia,” the executive said.
He said the company has also received exploration tenements, a preliminary license for mining, for six to seven coal blocks in Queensland, Australia.
“The license allows us to continue exploring for five years, and later on we can take a mining lease,” he said.
Jindal Steel is also close to getting final approvals for beginning operations at its coal mines in Indonesia, he added.