India's Jindal Steel and Power scrapped plans Tuesday to invest $2.1 billion in a Bolivian mining project and blamed the South American nation's "non-friendly business attitude" for the deal's collapse.
The Indian steelmaking giant, which planned to ship home iron ore mined from Bolivia's El Mutun mines to supply its domestic steelmaking operations, said the Bolivian government failed to guarantee enough natural gas to run the project.
The long-threatened cancellation of the mining venture -- the single largest foreign investment in Bolivia -- was due "to the non-fulfillment of contract conditions on the part of the Bolivian government," Jindal said in a statement.
"The termination comes due to the non-investor friendly attitude of the Bolivian government," the statement added.
A company spokesman told AFP that Jindal stood to lose $90 million from its investment in the project but that it was "confident we will claim it (back) through international arbitration".
The Indian company warned the Bolivian government on June 8 it would scrap the contract to develop the sprawling iron ore deposit near the Bolivian town of Puerto Suarez and the Brazilian border unless the gas dispute was resolved.
"The company took the decision after all its efforts to resolve the issues and take the project forward did not meet with success," Jindal said.
There was no immediate comment from Bolivian government officials on Jindal's action but both sides have claimed breach of contract.
Jindal signed an investment agreement in 2007 with the Bolivians to build the El Mutun mines and to set up a plant to process iron ore and build a steel plant with an annual production capacity of 1.7 million metric tonnes.
But the project ran aground with Bolivia charging that Jindal had failed to adhere to its investment schedule.
The Indian group had been due to pay $600 million over two years, but only paid about a small amount, prompting Bolivia to seize Jindal's bank guarantees.
Jindal replied that the Bolivian government was willing to supply only a quarter of the initial 10 million standard cubic metres of natural gas a day the two sides agreed upon.
The fuel shortfall was due to lack of availability of gas in the country, Jindal said.
Jindal's contract had given it rights to mine El Mutun mines, regarded as one of the biggest untapped iron ore mines globally, for 40 years.
Jindal, which has been seeking to boost its self-sufficiency in raw materials, was due to exploit half the reserves in El Mutun area, creating 6,000 jobs directly and 15,000 indirectly,
But last week, Jindal's Chairman Naveen Jindal said the project's survival would depend on gas allocation for its functioning.
"What they are giving us is one fourth of the (required) gas and are saying that you don't scale down the capacity -- we will give you gas later. Is it possible? How can we plan our investment on such assurances?" Jindal had asked.