The Bolivian Government has given India-based Jindal Steel and Power Ltd until the end of the month to finalise an agreement to develop the El Mutun iron ore deposit which is believed to contain 40,000 Mt of reserves.

The deadline has been set to try and prevent any further postponement in signing the El Mutun contract.

The Indian company made a provisional agreement in August to mine the deposit, but has since postponed it several times. It pledged to spend over US$2 billion to mine iron ore and produce steel at El Mutun, located in the easten region of Santa Cruz.

The El Mutun investment will be the biggest in the history of Bolivia's mining industry and a political boost for President Evo Morales, who nationalised the energy industry in 2006.

Mining Vice Minister Luis Alberto Echazu told Reuters that the problems with the contract stem from Jindal's reluctance to accept the government's conditions on taxes and the price the company would pay for natural gas.

Mr Echazu added that the next two weeks are going to be crucial. "There is another Indian company interested in this contract, but we are engaged in serious negotiations with Jindal."

In other Bolivian news, the abandoned Corocoro copper mine – located 175 km south of La Paz – may reopen as part of its plans to overhaul the country's mining industry, said Reuters, citing Mr Echazu.

"We're designing the project, doing the feasibility studies, so we don't have an exact figure yet for how much we are going to invest. We don't have a figure for Corocoro's reserves."

He added that the plans to reactivate the mine, also include the construction of a copper smelter.

The mine – the country's largest – was shut down in 1985 after a drop in international metal prices forced state-owned mining company Comibol to close a number of mines across Bolivia, laying off about 35,000 workers.