Natural gas price has become the main obstacle for India's Jindal Steel & Power corporation project to develop Bolivia's richest known reserves of iron.
Bolivia's Finance Minister Luis Arce said that Jindal has until Monday to deliver a final proposal because the government does not accept any subvention for natural gas or a freezing of taxes during forty years as demanded by the corporation. "The Bolivian government's priority is to favor the state and not Jindal", underlined Arce who revealed that Jindal has demanded a fixed unmovable tax on mineral exports for forty years plus a steady natural gas supply at 2.5 US dollars per thousand BTU "when the going price of Bolivian natural gas exports is 4.51 US dollars". Jindal officials who are negotiating with the Bolivian government have said that with those prices and current level of taxes "the deal becomes unattractive". Arce states the contrary and has requested the Indian company to give evidence of those arguments. According to Arce, Jindal is proposing a two level price for natural gas: 2.10 US dollars per thousand BTU for the generation of electricity needed for the foundry, since current Bolivian legislation privileges the processing of hydrocarbons in the country, and 4.20 for the process of converting iron into steel. Jindal last June won the contract to exploit 50% of Mutun deposits, a huge mountain range of iron in the border area between Bolivia and Brazil with reserves estimated in 40 billion tons. Jindal at the time announced investments for over two billion US dollars and 6.000 jobs over the next ten years. Arce underlined that other international corporations are interested in "exploiting the other 50%, companies from India, China and Britain", although he did not mention any names. However the government is also in a bind since the postponement of the signing of the contract has local authorities and political leaders pressing for "an agreement once and for all" to help develop the area. Antonio Tudela political leader of the small town of Puerto Suárez next to the Mutun deposits announced that beginning Monday "there will be street protests and later pickets in national routes". Pickets in the area, when Brazilian companies were interested in the project, interrupted for days an international route leading to Brazil demanding the industrialization of iron to help the area take off economically and create jobs for the locals.