SANTA CRUZ, Bolivia--India's Jindal Steel & Power Ltd. (532286.BY) has suspended operations at its iron ore mine in Bolivia as last-ditch talks with the government to rescue the struggling project appear to have failed, according to Jindal executives in Bolivia.
Jindal's chief legal counsel in Bolivia, Jorge Gallardo, and other company managers said Wednesday that operations at the El Mutun mine were suspended and that negotiations had been stopped due to legal problems that made cancellation of the project "imminent."
In a statement, Jindal said it had "suspended its contractual obligations and informed the government of its intention to terminate the joint venture contract for El Mutun." Jindal executives said the company will leave Bolivia if the government doesn't signal its willingness to renegotiate the contract by July 8.
Mr. Gallardo said judicial charges levied by the authorities against Jindal executives as well as the Bolivian government's seizure of $36 million in cash guarantees posted by the Indian firm had generated conditions "unsuited to further negotiation or investment".
El Mutun is a vast iron ore deposit on Bolivia's border with Brazil which is estimated to contain 40 billion tons of ore.
In 2006, Jindal and Bolivian President Evo Morales signed a $2.1 billion contract to develop the mine and build a steel mill near the river port of Puerto Suarez.
But the ambitious project once showcased by Mr. Morales as an example of how his government and multinational companies could work as equal partners has been stalled for years.
The government accuses Jindal of violating the terms of the contract by not meeting its investment schedule. Jindal has blamed the government for failing to provide the gas and infrastructure necessary to move the project ahead.
Jindal began notifying Bolivian employees and contractors of plans to shut down the mine last month, pending last-minute negotiations with the government.
A chief engineer at the mine contacted by telephone also confirmed that operations "have been suspended."
Jindal wants the Morales administration to downsize the project due to the state's inability to provide the 10 million cubic meters of gas per day it needs for the steel works.
Bolivia's state oil and gas company YPFB said in April that it could only provide 2.5 million cubic meters of gas a day.
Jindal responded by proposing their investment be reduced.
Mining Minister Mario Virreira says that negotiations can't continue because Jindal's chief operating officer in Bolivia, Vikrant Gujral, can't be contacted.
Mr. Gujral is in India, according to Jindal executives, who say his return to Bolivia is being held up by legal charges filed against him and two other company officers, including Mr. Gallardo and Arvin Sharma, who is also India's honorary consul in Bolivia.
"The penal persecution initiated by a government prosecutor against our principal executives has not been withdrawn," Jindal said in its statement.
The Interior Ministry said the charges against the executives are related to "contract violations" and unwillingness to turn over company records for a government audit.
Write to Martin Arostegui at arostegui7@hotmail.com
Copyright ? 2012 Dow Jones Newswires
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