The Bolivian government has inked a “final” contract with China’s Sinosteel to develop Bolivia’s Mutun iron and steel complex after months of postponements.
While signing the contract for the building and implementation of what the Bolivian government defined as an “integrated steel mill for the production of non-flat finished steel,” Bolivia’s president, Evo Morales, said the deal means the country’s dream of having a nationalized steel industry came true.
According to the Bolivian government, the $422.6 million project meets important criteria established by the South American nation.
“First, the company [Sinosteel] will not only get the El Mutun working, but also producing. Second, the product to be delivered should be commercial and competitive, with ISO characteristics,” said the nation’s mining minister, Cesar Navarro.
The contract signed by Bolivia and China’s Sinosteel for the building of the El Mutún iron and steel complex was designed to protect the initiative against international arbitrage. Navarro said earlier in March that any issue related to the Chinese company will be dealt with according to Bolivian laws, and not to foreign rules.
The final contract was inked this week, following the postponing of the signing of the deal earlier in 2016 due to “lack of a necessary certification.”
The choosing of China’s Sinosteel to develop the projected involved several delays.
After stepping back in its previous decision in late 2015 to accept the same contractor, the Bolivian government gave one more chance for the two companies competing in a public tender to make their proposals.
Directors of state-run company Empresa Siderurgica del Mutún (ESM) elected with six votes Sinosteel as the company which will develop the steel and iron project.
The second company competing in the public tender, Henan, received just one vote at the time.
ESM expects to meet up to 60 percent of the country’s demand for steel. The Mutún iron and steel complex project includes concentration, pelletizing and direct reduction plants, which would be attached to a rolling mill. The rolling mill would be able to produce 150,000 mt of non-flat finished steel. Once the plant is ready to start up, Bolivia could save up to $230 million per year, as it won’t need to import finished steel from Brazil and Peru.