The Bolivian government has said that it will not accept changes to a contract awarded to India's Jindal Steel and Power Ltd to develop a $2.1 billion iron ore and steel project at the El Mutun site in the east of the country near the Brazilian border.
A 40-year contract signed in late 2007 gives Jindal the right to mine about half the reserves at El Mutun which is believed to contain more than 40 billion tonnes of medium-grade iron ore.
However, the government now claims that Jindal rescheduled investments from late-2008 to the second half of 2009, which the company blamed on administrative delays.
As part of the project Jindal was to develop an integrated steel plant with annual capacity of 1.7 million tonnes. However the company has apparently approached the Bolivian government with a proposal to change the contract to reduce the quality of steel production at the proposed plant along with the quantity of steel produced.
"Unfortunately Jindal hasn't fulfilled its commitments with the state," Mining Minister Jose Pimentel told local radio, adding that the government will not accept the Jindal proposal.
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