India's leading steel producer Jindal Steel and Power Ltd. has inked a $2.1 billion (1.5 billion euros, 1 billion pounds) deal with Bolivia for development of one of the world's largest iron ore deposits, El Mutun, along with steel making facilities.

The Naveen Jindal-promoted company is the first Indian firm to invest such a huge amount in South America, a region whose mineral, oil and gas deposits have attracted interest from several Chinese and Russian companies in recent years.

According to industry watchers, the deal, signed on July 18, could lead to other Indian investments in the region.

The deal is a major victory for Bolivia's leftist President Evo Morales who has been wooing investors to utilize the natural resources and in the process, develop his nation.

Morales has previously criticized Western companies and countries for exploiting Bolivia's resources.

Just imagine: from this Mother Earth more natural resources continue to appear after 500 years of looting, said President Morales after announcing the deal. Together we are obligated to take advantage of these natural resources for the good of the region and the nation.

The agreement gives Jindal access to 50 percent of El Mutun, located in Puerto Suarez in south-eastern Bolivia near the border with Brazil.

With an estimated 40 billion tons of iron ore reserve, El Mutun is thought to be the biggest untapped iron ore deposit in the world.

Under the terms of the deal, the Indian company, which emerged the winner in an international bidding process started by the Bolivian government in May 2006, offered more funds than several competitors including Arcelor Mittal. Jindal will invest $2.1 billion in the project during the first eight years of the 40-year deal.

We plan to start commercial production of steel by 2010, said Naveen Jindal, executive vice-president and managing director, JSPL. Jindal said they would produce TMT bars, wire rods and some flat products.

The project will be handled by Jindal Steel Bolivia SA, a subsidiary of JSPL that was created in October last year.

Jindal has ruled out the possibility of the ore being shipped to India for commercial sale or for captive use.

Jindal expected to create at least 4,000 jobs with the company adding that up to 21,000 jobs could be created, both directly and indirectly, at the facility.

The government expects to receive revenues of $200 million annually.