PTI reported that Jindal Steel Bolivia, an arm of Jindal Steel and Power, has won in excess of USD 22.5 million in arbitration judgment against state-run mining company Empresa Siderurgica del Mutun.

JSPL in a statement said that “Jindal Steel Bolivia has been vindicated in connection with its investment in the El Mutun project in Bolivia by an international tribunal ordering payment to Jindal of more than USD 22.5 million by ESM.”

Jindal commenced arbitration before the International Chamber of Commerce (ICC) of Paris and sought recovery of USD 18 million in principal, plus interest, related to the illegal encashment of bank guarantees.

The company said that in an award dated August 6th 2014, the ICC Tribunal agreed granting principal plus interest for a total in excess of USD 22.5 million.

In 2007, JSPL had entered into a JV pact with the Bolivian state, ESM and another state-run firm to develop and exploit El Mutun iron ore mine, having reserves of around 40 billion tonnes of iron ore in eastern Bolivia. The company also planned to set up a 1.7 million tonne per annum steel plant along with other facilities for backward integration with an investment of USD 2.1 billion.

JSPL said that it had invested USD 10 millions in the project, including providing USD 18 million in project guarantees.

It said that the project was impeded because it never received access to land where the project was to be developed, contrary to the contract.

In the statement, Jindal also said bank guarantees amounting to USD 18 million were wrongly encashed.

JSPL said that the tribunal ruled that there was no entitlement “to encash the guarantees” and “ESM breached, with its encashment, the contract obligations in respect of Jindal”.

It said that “There was ‘more than sufficient evidence to establish that ESM did not comply with the obligation to deliver the lands’ and this suspended Jindal’s obligations under the contract.”

In addition to unlawful encashment in 2010, additional actions by Bolivia and its entities undermined the El Mutú project and forced the termination of the project contract.