Daily Archives: May 24, 2012

Jindal – El Mutun: A chronicle of a death foretold?!

For those of you not following earlier posts on this subject, will realize that this venture was doomed from the beginning: lack of enforcing contractual terms from day one on both sides; not-so-clear contract awarding to Jindal; and a highly visible political issue between Santa Cruz and central government. Walter Vasquez reports for La Razon:

April 24, sources of Jindal Steel Bolivia (JSB) which preferred to keep his name in reserve to La Razón reported that the implementation of the ballot of $ 18 million dollars for lack of renewal “imply” for the subsidiary of Jindal Steel & Power the “definitive” break with the Bolivian State. [the picture is from 2010 operations]

April 15, 2010, the ESM decided to execute the first two ballots of guarantee totaling us $ 18 million also by the non-renewal of the warranty to Jindal. Against this decision, the Indian steel filed arbitration against the State-owned company to the International Chamber of Commerce (ICC), París-France. The process is still in the stage of notification.

“Jindal has not pronounced on the replenishment of a guarantee to continue with the contract, but the Bank (of Credit-BCP) has formalized that already has made cash payment of the second ballot, which at this moment is in accounts of the Treasury General of the Nation (TGN)”, revealed yesterday the Minister of mining and metallurgy, Mario Virreira Iporre.

According to the contract of risk shared between Jindal and the steelmaker Mutún (ESM), if the private firm decides to continue in the Mutún shall submit already not a ballot of $ 18 million, but a policy of $ 27 million which will ensure compliance with the investment of us $ 900 million provided between the third and fifth year of the mining project.

Decisions. On May 7, Virreira had announced that “when this amount ($ 18 million) is already in a tax account, will be the moment that send a letter to Jindal, announcing the beginning of the contract resolution”. However, yesterday, the Authority said that the ESM “will not start anything until Jindal’s communicates their official position” on their continuity in the project.

For Jindal Steel Bolivia, the implementation of his last ballot of warranty was “illegal”, which warned that “within the framework of the contract, shall defend their interests in the legal fields as appropriate”, as reported by the Indian company through a communiqué broadcast on May 14. It is expected that the parties hold a meeting next week to address the issue “of continuity” of the firm in Bolivia, upon country arrival of the President of the directory of JSB, Vikrant Gujral announced Virreira.

ESM – Jindal disagreements

Currently, Jindal and the ESM argue disputes relating to the contract of supply of gas, the delivery of 100% of the properties for the project and the execution of their ballots of guarantee.

The Executive and the civic analyzed the Jindal case

The Minister of mining, Mario Virreira, met yesterday with the civic leadership of Santa Cruz and Puerto Suarez to explain the situation in which the Mutún iron and steel project after the execution of the guarantee of Jindal ballot. “The intention of the meeting is to explain the status of the project and the continuity of the company (Jindal)”, argued Virreira.

The civic from Puerto Suarez decided to go to indefinite strike blockade of roads and the railroad on the border with Brazil in demand for performance of the contract that allows the industrialization of the Mutún. The civic from Santa Cruz supported the Declaration of emergency in the Germán Busch province and measures of pressure that can be taken.

“In case of not having a favorable response from the Government, we will implement the work stoppage, because we cannot allow the Jindal to abandon the project”, warned the leader José Luis Santander.

The results of the meeting were not known by the closure of this edition. According to the President of the iron and steel company of the Mutún (ESM), Sergio Alandia, “the effective fruit (of the project in six years) is the export of 20 thousand tons of ore and the income into the coffers of the State of $ 40 thousand.”

http://www.la-razon.com/economia/Gobierno-oficializa-Jindal-perdio-MM_0_1618638159.html

I think last remark from Alandia in the above news, clearly reflects the level of effort of Jindal’s participation in the largest mining venture of Santa Cruz Department. I do still believe that is not worth it to force anyone’s presence to save a good business potential. If Jindal had not delivered as expected in paper, was due not only to their performance but also to our government’s inability to provide what was needed long before a company like Jindal stepped in.

Had the civic committees blockade the road and railroad to Brazil, it is compounding the economic damage. Efforts should be made to provide all the inputs (energy and transportation sources) needed for a competitive iron and steel industry. While an international clean-transparent bid offers Law compliance to those companies that can handle efficiently and effectively this monumental industry. We must forget about exporting the ores alone, we should and must create industry.