Bolivia Announces Partnership Offer For Mutun Iron Mine, Biggest In Country, After Indian Company Jindal Pulls Out

The Bolivian government announced Monday that it is accepting bids from mining companies to begin extraction in the biggest iron mine in the country, after Indian company Jindal (NSE:JINDALSTEL) left the project a year ago. The prospective company would work on half of the mine, which has reserves of 40 billion tons of minerals.

Jindal left the project in 2012, only five years after signing the contract, in the midst of an investigation for alleged malpractice. The Bolivian government accused the company of not making the promised investments, while Jindal argues that the government was to blame by hindering access to the mine. Mining Minister Mario Virreira said the Indian company lied to the country, and hence was asked to leave the project.

“Mutún’s potential remains intact. Jindal’s departure will give us the opportunity to find a worthier partner, with the technical and economical ability to warrant the success of the project,” Bolivian mining expert Héctor Córdova told La Paz newspaper La Razón.

The project was started by state-owned Empresa Siderúrgica Mutún with an investment of $10 million, but the government wants half of the mine to be exploited by a private company. Production is expected to yield a million tons of iron a year that will be sold to China, Paraguay and Brazil.

This is not the first disagreement President Evo Morales has with a foreign company since expropriating parts of the energy sector in 2006. Only in the last year, the administration nationalized two other projects.

Anglo-Swiss mining company Glencore Xstrata PLC (LON:GLEN) was exploiting a tin site at the Colquirí mine since 2005, until violent protests over management of the project led Morales to take control in June 2012. Canadian mining giant South American Silver Corp. (TSE:SAC) filed an international arbitration against the Bolivian government in April, still unresolved, after the government revoked mining concessions in the Malku Khota mine in August 2012.

Now the question remains of who will take on the offer of Morales to come extract iron in Muntú. A recent agreement signed on Wednesday by Morales and Belarus President Alexander Lukashenko for cooperation in mining, agriculture and defense might point to a new partnership between the South American and Eastern European nations.

And if all else fails, China might seize the opportunity to further its interest in the region.