Friday, June 2 2006 12:44 Hrs (IST) - World Time -

La Paz (Bolivia): Bolivia today (June 2, 2006) awarded India-based Jindal Steel and Power Ltd. the development rights to a massive iron mine near the Brazilian border.

The company will invest US$2.3 billion (euro1.8 billion) in the production of iron and steel plates at the Mutun mine, said Carlos Villegas, Bolivia's planning and development minister.

"This is a historic step that marks the transition of Bolivia from a country that exports raw material to one that's entering the iron and steel industry," Villegas said.

The announcement came a month after President Evo Morales nationalized Bolivia's natural gas industry, and the Mutun bid was seen as a test of how the government would handle mining investments.

The mine is estimated to hold 40 billion metric tons of iron ore. Government officials say the deal could earn the poor Andean nation more than US$250 million a year in exports and employ over 1,800 people.

Bidding on the contract has dragged out through decades of delays, the most recent of which came last December when Bolivia's outgoing government left the final decision to Morales' new leftist Government.

The Morales administration required bidders to not only extract the iron but also industrialize its production into steel using Bolivia's plentiful natural gas.

Jindal became the lone bidder after the government disqualified an offer by Netherlands-based Mittal Steel Co.

Details of the contract will be finalized in 60 days so the company can begin operations, Villegas said.