Bolivia stalls on El Mutun auction

Reneging on last weeks promise to hold a Feb.21 auction for the massive El Mutun iron-ore project in eastern Bolivia, the Bolivian government now says bidders must wait up to 90-days to tender offers.

El Mutun is believed to contain the biggest deposits of iron-ore in Latin America and third largest in the world with a reserve of 40 billion metric tonnes. It could generate up to $200 million in exports a year.

Just how president Evo Morales’ recently elected socialist government deals with El Mutun, is seen by many as a litmus test of government’s attitude towards the mining sector. Morales ran on a platform which included the promise to look at nationalizing the countries vast hydro-carbon’s industry.

Local leaders around Santa Cruz the region in which El Mutun is located, and an area which largely voted against Morales threatened to blockade railways and roads connecting the region to the rest of the country if the auction was not held on Feb. 21. It had already been postponed from its initial date of Dec. 21.

But Morales insists the government must improve the terms of the tender so it will encourage a national steel industry in Bolivia instead of shipping out raw ore and use Bolivia’s massive amounts of natural gas to fuel operations instead of the initially favoured coal.

Bolivia’s planning minister Carlos Villegas said the dissension in and around Santa Cruz has been quelled and that leaders in the region have agreed to the new deadline.

A consortium of companies from India and China are among five groups bidding on a $5 billion project to develop El Mutun, according to confidential documents shown to The Washington Times.

Rumoured bidders include: Netherlands-based Mittal Steel (MT-N), Brazil’s EBX Siderurgica Bolivia, Argentina’s Techint, Rio Tinto (RTP-N, RIO-L), Companhia Vale do Rio Doce (RIO-N), India’s Jindal Steel and Power, and China’s Shandong Luneng.

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