Tuesday, August 26, 2014

Bolivia to Appeal Ruling Favoring India's Jindal in El Mutún Dispute

Ruling Says Bolivia Should Pay Jindal $22.5M Compensation for Seizure of Guarantee Funds
Bolivia said Tuesday it would appeal a ruling from an international tribunal that gave India's Jindal Steel & Power Ltd. a multimillion-dollar award in a dispute over the development of the El Mutún iron ore project.
"We are going to appeal the decision in the corresponding tribunals in order to defend the interests of the Bolivian state," Vice President Álvaro García told reporters Tuesday.
The Paris-based International Chamber of Commerce ruled earlier this month that Bolivia's state-owned mining company Empresa Siderúrgica del Mutún should pay Jindal $22.5 million in compensation for the seizure of funds to guarantee the development of El Mutún.
Mines Minister César Navarro also criticized the judgment. "We don't share these types of actions or decisions that think about private capital and don't think about the well-being of the people and the state," he said in a statement.
Empresa Siderúrgica del Mutun, or ESM, took Jindal's $18 million guarantee in 2010, arguing that the New Delhi-based company had failed to comply with the contract for El Mutún.
Jindal signed a 40-year contract with ESM and another state mining company, Comibol, in 2007 to develop El Mutún. Jindal says the deposit, located in the eastern Santa Cruz region, has about 40 billion tons of iron ore reserves. The contract also included plans to build steel and power plants.
The $2.1 billion project would have been the largest by an Indian company in South America, and one of the biggest foreign investment projects in Bolivia, according to Jindal.
Jindal said it was the victim of broader "anti-investor policies" by President Evo Morales ' administration, which has nationalized several foreign owned assets since taking office in 2006.
The company said the seizure of the guarantee was illegal as it was unable to develop the project under the contract's schedule because the government had failed to provide access to land, among other things.
Jindal terminated the El Mutún contract in 2012. It said the tribunal's judgment was a "vindication" for the company.
"Bolivia and its entities broke Jindal's trust, broke Jindal's investment, and acted in violation of the contract and law," Jindal said Saturday in a statement.
Jindal said it has started another arbitration case against Bolivia at the International Chamber of Commerce to seek $100 million in compensation for investments made at El Mutún prior to the termination of the contract.
 Ryan Dube at ryan.dube@dowjones.com


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