Bolivian breakthrough

Bolivian breakthrough

Bhupesh Bhandari / New Delhi

Business Standard Online

11th July 2006

Jindal Steel & Power's executive VC and MD on bagging the biggest iron ore mines deal in Bolivia.

Naveen Jindal is not a rock star. Neither is he a post-modern guru, nor a soccer sensation. Still, on June 2, it was because of the 36-year-old youngest son of the late O P Jindal that the people in faraway Bolivia were dancing and jiving on the streets. News agencies were full of reports of the celebrations that went on till late in the day at La Paz and other cities of Bolivia, writes Business Standard.

Jindal’s flagship, Jindal Steel & Power, had been selected by the Bolivian government to develop the coveted El Mutun iron ore mines in the country. Jindal, who is the executive vice-chairman and managing director of the company, had, in turn, announced that he would invest $2.3 billion in developing the mines and in a brand new sponge iron and steel plant.

This is the biggest foreign investment in the country and will provide direct employment to 2,000 Bolivians and indirect employment to another 10,000. The merrymaking in Bolivia does make sense.

A month later, any talk of the Bolivian acquisition is enough to bring a satisfied smile on his youthful face. “I am learning Spanish these days. I always liked the language,” he says, adding, on a more serious note: “It is the only place on earth where you have iron ore as well as gas in abundance.”

We are at TK’s, the oriental grill at the Hyatt Regency, seated at the Tapenyaki counter. Jindal has ordered an appetiser of green salad and I have asked for Miso soup.

The deal gives Jindal control over 20 billion tonnes of iron ore. To put it in perspective, India’s total reserves add up to around 13 billion tonnes. There were several global players in the race for the mines that began some two years ago, including L N Mittal. But it was Jindal who bagged the mines.

La Paz had attached stringent conditions to the bid. But, in the last two months of negotiations, Jindal’s team was able to dilute many of these conditions. Jindal hopes to begin work on the mines early next year. The logistical challenges, Jindal admits, are strong. The mines are 800 km from the nearest port; Jindal plans to evacuate the steel and sponge iron made at the pithead plants through the river Paraguay.

The investment proposed by Jindal in Bolivia is almost four times of his 2005-06 turnover of Rs 2,617 crore ($580 million). Not to forget, he has made an investment commitment of more than Rs 10,000 crore in Chhatisgarh, lined up a six million tonne steel plant in Orissa that could cost around Rs 13,500 crore and signed a MoU with the Jharkhand government for another five million tonne plant at a cost of Rs 11,500 crore. Not a small amount of money.

“How will you find the money,” I ask Jindal as he deftly balances the salad with chopsticks. (He has asked for a knife and fork as well, in case his fingers get tired.)

“Just like L N Mittal does,” says Jindal, adding: “I am fully committed to the Orissa plant. And there are enough people who would like to invest through debt in the Bolivian venture.” He might also look at listing the venture at a later date, Jindal says.

As we speak, the cook, wearing a karate shirt and a headband, starts doing our orders: assorted vegetables and a generous helping of cottage cheese for Jindal and salmon for me. While Jindal watches the salmon change colour from pink to a golden brown, my mind races back to a few years ago when Jindal used to say he wasn’t interested in expanding outside India as the country offered enough opportunities for growth. The traces of Swadeshi were unmistakable.

“Mindsets keep changing,” says Jindal. “But isn’t there a scare that the Areclor-Mittal combine may devour more steel companies,” I probe. “Yes, there is. But I think it is good for the industry. In case of a downside, the larger players will scale down output to hold prices,” says he.

Apart from a steel baron, Jindal is also a Parliamentarian, an ace shooter (he will be leaving for Croatia shortly as a part of the Indian contingent), a polo player and a public crusader for the tricolor (let’s see if he hoists the national flag at his factory gate in Bolivia). The various avatars leave him with little time for himself. “I haven’t been able to take a shower since last evening,” says Jindal.

About time he wore one of the other hats. A day before our lunch, the DMK had arm-twisted New Delhi to give up its disinvestment programme. “Hasn’t it sullied the image of your party,” I ask the Lok Sabha MP from Kurukshetra.

He dismisses the suggestion with a shake of his head: “What was there to give up? It happens everywhere. Like in business, plans keep changing.”

How about a nice trap for him? “The Congress is pressing hard for job reservations in the private sector, while industry is resisting it. Where do you stand?,” I ask him. “I think industry should be consulted before such a step is taken,” the keep-everybody-happy line is delivered to perfection.

But he did create a flutter after getting the Congress ticket in the last general elections when he praised the then prime minister, Atal Bihari Vajpayee. “I see it differently. Just because I am contesting somebody in an elections, doesn’t mean that I shouldn’t speak well of him,” says Jindal.

Our lunch is over. Jindal decides to brave the Delhi sun and walk to his office next door, accompanied by an armed guard from Haryana Police.