Daily Archives: July 16, 2012

Jindal walks away from Bolivia – UPDATED

Breaking news: El Deber’s website just announced the inevitable… our desires and hopes to consolidate iron steel industry have suffered a serious drawback. Bolivia lost in the last six years, the opportunity to consolidate El Mutun, follows the short news and below the extended information, thank you:

Jindal walks away from Bolivia

According to preliminary data, the steel company Jindal Steel Bolivia removed their investments in the country by differences with the Government. The official announcement will be in the next few hours.

Report in preparation…

http://www.eldeber.com.bo/jindal-se-va-de-bolivia/120716190249

Henrry Ugarte reports for El Deber:

“It’s over, it does not go. We break the contract with the Government; they will do well”. With this brief but at the same time forceful statement uttered by the legal adviser, Jorge Gallardo, Jindal Steel Bolivia company rescinded the contract that linked them to the Mutún iron and steel company (ESM).

Now, while the international arbitration process opens, the Government announces that it will launch a new bid to continue the exploitation of the iron and steel field in the Germán Busch province.

Headed by the Minister of mining and metallurgy, Mario Virreira, and the President of the ESM, Ricardo Cardona, the directory of the national company met yesterday for nearly nine hours in Santa Cruz.

The legal adviser Jorge Gallardo, consul Arvind Sharma and Amid Kumar personal Advisor of Naveen Jindal, participated for Jindal.

In the first instance, the directory of the ESM received a letter from Jindal that was handled in reserve and which warned of the breach of contract if the Government did not modify certain conditions, but finally no agreement was reached and the Indian company executives slam the door.

Then the Minister Virreira revealed the details that Jindal needed to continue with the Mutún iron and steel project, which were the ones that finally made the contract to brake.

According to the Government official, Jindal had two impossible demands to be complied by the Government: that the executed two ballots of guarantee amount be returned ($36 million dollars) and that the judicial process by which the public prosecutor’s Office investigates if the company carried out investments involved in the project or not, be abandoned.

As the discomfort and the rush to leave the venue for the meeting were so evident among the executives of the Jindal, Minister Virreira version could not be contrasted.

Antonio Tudela, former civic leader of the Germán Busch province, however, pointed out that, beyond gas provisions unfulfilled by YPFB that blocked the project, the real issue is because the Government does not want to advance the development of the region. “Calculating the Jindal is going to go to arbitration suing the Government for at least $200 million dollars,” Tudela said.

The congressman, Luis Felipe Dorado, representative of the region and head of the opposition [in the Congress/Assembly], warned to be vigilant so that the new bidding process is carried out as soon as possible and ask that it should not grant a 50% concession, but 30% to two companies and the remaining 40% for the ESM. [Dorado’s recommendation does not make sense, not only to potential investors but to produce and market in sufficient quantities and same quality this market requests]

«They did not want an audit»

Mario Virreira / Minister of mining and metallurgy

– Why was it demanded a deposit of $2.1 billion dollars and that it also be put in an account of the Central Bank of Bolivia or the Union Bank?

– No, it is not. They were required to open an account for operating expenses and they had the option of getting $200 or $400 million, but they would not do so. We demanded only that there are economic resources for operating expenses because experience tells us that they even hadn’t paid the rent of offices or to cover costs for basic services.

– And what about the audit that should be made to determine the actual amount of investment?

– They didn’t want to do the audit, being that it was from a previous process, and very important to continue with the project.

– But is it true or not that the Government requested financial guarantees to continue with Jindal?

– At the time Mr Naveen Jindal said that his company was one of the largest in the steel field globally and their assets exceeded $1.5 billion dollars; then, how they would not be able to meet our demands. In addition, around $1,400 million dollars they thought to get credit and continue operations from the revenues of the Mutún , that can not be. [it looks to me that this government official has severe trouble understanding how any private investor operates; most of them use credit and cash flows…]

– What will do now as a Government, understanding that a series of protests on the border could trigger?

– According to the provisions of the contract we are going to go to instances that correspond, but we will also initiate a process of bidding to replace Jindal and the project development work to continue being monitored by the ESM. We are going to go with the plan because it’s a large development project.

On the day

Meeting. From 10:00, the members of the Board gathered in the Office of the ESM in Santa Cruz. In the first instance were the Jindal executives, but they retreate around noon to return about 17:00. The agreement broke down at 18:35 pm yesterday.

Invitation to tender. The President of the ESM, Ricardo Cardona, announced that the company will run a pilot plan until December of this year, so that the continuity of the exploitation of iron is assured. They will invite companies in China, Japan and Canada to replace Jindal. [there are other capable international mining companies, not only from those countries…, current Bolivian government should not mix its political views with market reality]

Plan. Jindal Steel announced that it will convene to Delta Consult as a witness in the arbitration that started the implementation of the second ballot of guarantee amounting to $18 million dollars.

http://www.eldeber.com.bo/vernotaeconomia.php?id=120716230736

Today the road to Chiquitania, Beni, which also goes to Puerto Suarez is blocked, chances are that this news will trigger more blockades from the Civic Committees of Santa Cruz Department…

In the meantime, current government continues to give the wrong message to international investors; and the number of unemployed Bolivians continue to raise…