Bolivia seeks to invest US$410mn in El Mutún

The Bolivian government has drafted a three-stage plan to start building the delayed El Mutún iron and steel project this year.

A national steel plan has lined up funding to invest US$410mn in the first stage of the project, which will take 30 months, the mining ministry said, citing José Alberto Padilla, president of state mining company ESM.

International financing will cover 85% of the first stage while the state fund the remainder, according to the ministry. Two more stages will be built by 2025.

El Mutún is projected to produce 150,000t/y of iron during the first stage, which will cover 65% of the local construction industry's iron demand. The project will gradually cover 100% of domestic demand, the ministry said.

"The state spends US$200mn to US$250mn [a year] on imported steel, and we are going to substitute these imports," the ministry cited Padilla as saying.

El Mutún project will involve construction of direct reduced iron (DRI), pellet, laminating, oxygen and thermal power plants. The plant will be supplied with 300,000m3/d of natural gas during the first stage and 3Mm3/d by 2025, the ministry said.

Bolivia earlier this month began talks with former El Mutún operator Jindal Steel & Power after the Indian steelmaker last year won an International Chamber of Commerce (ICC) ruling against the government for seizing a US$18mn guarantee linked to Jindal's investment in El Mutún in 2012.

Jindal acquired rights in 2007 to develop the deposit in Santa Cruz but pulled out of Bolivia in 2012 citing lack of support from President Evo Morales's government. Jindal said the government denied access to lands where the project was to be developed.

Jindal last year began a second ICC arbitration related to the project, seeking US$100mn in damages arising out of the contract termination. After arbitration proceedings began, Bolivia initiated criminal proceedings against Jindal executives and lawyers and seized the company's Bolivian assets.

President Morales, who was sworn in for a third consecutive five-year mandate in January, has seized gas fields, mines, refineries, pension fund, electricity, water and telecommunications companies since taking first taking office in 2006, in a bid to strengthen state control over the country's economy.