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Last Updated: Friday, 2 June 2006, 19:20 GMT 20:20 UK
Bolivia agrees iron mine contract
Bolivia has announced it has awarded development rights for one of the world's largest iron ore deposits to India's Jindal Steel and Power.

The project will be Bolivia's first move into the iron and steel industry.

President Evo Morales' government changed the terms of the bid to include a steel production operation that would use the country's gas reserves.

It is hoped the Mutun project will generate thousands of jobs as well as exports worth $250m (133m) per year.

Bolivia nationalised its energy sector in May. But analysts say a similar strategy for the mining industry has been ruled out.

Correspondents say Mutun's mineral wealth has been known for more than a century, but its inaccessibility and concerns over fuel supplies have scuppered earlier attempts to develop it.

Foreign investment boost

A ceremony announcing the deal had gone to Jindal was broadcast live on local television.

Situated near eastern city of Puerto Suarez
Estimated ore reserves: 40bn tonnes
Site covers 60 sq km (23 sq miles)
Owned by state mining firm Comibol

"No longer will we depend only on income from producing and exporting raw materials, but also we will get income from iron and steel," said Development and Planning Minister Carlos Villegas.

"In other words, we will launch an iron and steel industry, and this is an important contribution to the country, to the state and to the region."

The mine at Mutun, near the eastern city of Puerto Suarez, has an estimated 40bn tonnes of iron and 10bn tonnes of magnesium.

Once the deal is finalised and endorsed by Congress, Jindal will have development rights for 40 years.

It has promised an initial investment of $2.3bn.

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