Jindal Steel and Power terminates contract with Bolivian Govt.

Jindal Steel and Power terminates contract with Bolivian Govt.

The termination comes due to the anti-investor friendly attitude of theBolivian Government

New Delhi, December 17, 2012: Jindal Steel Bolivia (JSB), a subsidiary of Jindal Steel & PowerLtd., on July 16, 2012 terminated the contract signed with the Bolivian Government forinvestment of US$ 2.1 billion for the El Mutun mines.

The termination comes in the wake of the issuance of a letter to the Govt. of Bolivia onJune 8, 2012 conveying its intention to terminate the contract due to the non-fulfillmentof contract conditions on the part of the Bolivian government.

As per terms of the Joint Venture Contract, the Govt. of Bolivia had 30 days time toresolve the issues failing which JSPL could terminate the contract within 7 working daysthereafter. The company took the decision, after all its efforts to resolve the issues andtake the project forward did not meet with success. Due to the non-fulfillment of thecontractual obligations and unwillingness to fulfill the contract on the part of the Govt.of Bolivia, JSPL has been forced to terminate the contract.

JSPL had signed a Contract with the Government of Bolivia in the year 2007 for investingUS $ 2.1 Billion in Iron Ore Mining, Pelletization (10 million ton per annum), DRI (6million ton per annum) and Steel making (1.7 million ton per annum). This was thesingle largest foreign investment in Bolivia.

As per the contract, Govt. of Bolivia was to sign an agreement for supply of natural gasrequired for the project - 10 million cubic metre per day (MCD) within 180 days ofsigning of the contract. The same has not been signed till date. The Govt. of Bolivia waswilling to commit only 2.5 MCD of gas (as against a total requirement of 10 MCD) from2014 onwards due to non availability of gas in the country, whereas the company wasbeing asked to make investment as per capacities originally envisaged under the JointVenture Contract. Also, the Govt. of Bolivia did not provide the agreed contract area forsetting up the steel project till date.

In view of the aforesaid breaches of the Bolivian Government and its entities, thecompany intends to pursue international arbitration relating to the contract.

For further information, please contact – Vivek Sharma@ 9818552437
Vivek.sharma@jindalsteel.com