Bolivia May Invest in $400 Million Peru Iron Ore Port

Bolivia may invest as much as $400 million in Peru’s Ilo port to allow Jindal Steel & Power Ltd. to export iron ore from the land-locked nation’s El Mutun mine, said Frank Boyle, president of Peru’s National Port Authority.

The Peruvian government invited Bolivia to discuss jointly investing in an upgrade of Peru’s southernmost port, Boyle said in an interview in Lima. Bolivia wants to use Ilo to export iron ore and other minerals to Asia and also import goods that are currently brought via road from Chile, he said.

Jindal plans to invest $2.1 billion in El Mutun, which is slated to begin exporting iron ore pellets and concentrate as early as next year. The New Delhi-based company has said it may transport its output by river to ports in Uruguay or Argentina.

Bolivia and Peru signed an accord last month allowing South America’s second-poorest nation to use Ilo for exports and naval exercises. The agreement gives Bolivia access to the Pacific Ocean for the first time since losing its entire coastal region during a war with Chile more than a century ago.

“Bolivian government officials say they may be willing to carry out an investment of up to $400 million in the port of Ilo,” Boyle said.

Alfredo Zaconeta, a spokesman for Bolivia’s Mining Ministry, said he didn’t have any information about investments in Ilo. Sergio Alandia, president of state-owned Empresa Siderurgica del Mutun, could not immediately be reached.

Road, River Transport

Bolivia relies on road and river transport for its exports of soybeans, zinc, and tin. Exporting iron ore via Ilo isn’t viable due to the lack of a railway linking the mine with the Peruvian coast, said Jorge Gallardo, legal director of the company’s Bolivian unit.

“If a rail connection is established and it’s competitive compared with exporting by boat, we can look at it,” Gallardo said in a phone interview from La Paz.

Southern Copper Corp., which has a minerals pier at Ilo serving its nearby copper smelter, may also invest in the port, according to Boyle. A railway managed by Southern could “easily” be extended to another line that runs close to the Bolivian border, he said.

Companies including Illinois-based CF Industries Holdings Inc., Aluminum Corp. of China and Cementos Pacasmayo SAA plan to invest at least $1.8 billion in Peru’s ports as the country increases shipments of metals, natural gas and fertilizers, Boyle said.