August 30, 2008

Bolivia and Venezuela evaluating JV for balance 50% of El Mutún

BNamericas reported that the governments of Bolivia and Venezuela are evaluating the creation of a JV to mine 50% of the El Mutún iron ore deposit in Bolivia's Santa Cruz department.

A spokesperson from Bolivia's mining ministry told BNamericas that "The issue is under review to look at feasibility and consider the benefits by taking into account Venezuela's experience in mining.” The spokes man added that another aspect that must be analyzed before a contract can be considered is gas supply, which is a complicated issue.

Mr Eduardo Garmendía president of Venezuela's mining and metallurgical industry association AIMM said "We as a country and as an industry are interested in the project because it is an additional source of raw material. Such a development contract would involve participation by Venezuela's metallurgical sector, which could provide steel making equipment for El Mutún. This factor also catches our attention.” Mr Hugo Chávez president of Venezuela had offered to help develop Bolivia's iron industry using his country's experience in the sector in August.

Mr Walter Chávez president of the El Mutún steel company ESEM said that “Iin order to develop the other 50% that hasn't been awarded, it is necessary to hold a bidding process. But as a business deal between governments, a bi national steel company could be created and Russian and Chinese companies have already expressed interest in the project.”

India's Jindal Steel & Power signed a contract with the Bolivian government through ESEM to mine and industrialize half of the El Mutún iron ore deposit, which will require a USD 2.1 billion investment over eight years. Jindal had won the contract in a bidding process in mid 2006. JSPL project includes industrial development of 50% of the deposit and the installation of a steel plant to produce 1.7 million tonnes of sponge iron and 1.4 million tonnes of rolled steel bound for domestic and foreign markets.