LA PAZ, Mar 1 Lengthy negotiations between Bolivia's government and Jindal Steel and Powe

LA PAZ, Mar 1 (Reuters) Lengthy negotiations between Bolivia's government and Jindal Steel and Power Ltd failed to bring about a contract for the Indian company to exploit the vast El Mutun iron ore deposit, Bolivia's mining minister said on Wednesday.

The government had set February 28 as a deadline to either confirm Jindal had won the project, as was initially announced last year, or to void the bidding process to exploit El Mutun, believed to contain one of the world's biggest iron-ore reserves.

But the minister said the government was still not annulling the bidding.

''We don't want to sit down to talk anymore because all the arguments are worn out, theirs and ours, and the only thing left is for them to make a concrete final proposal,'' Dalence said.

In June last year, Jindal Steel and Power won an international bid to exploit 50 percent of the El Mutun reserve, which contains an estimated 40 billion tonnes of iron ore of medium-grade quality, promising to invest $2.1 billion.

But the signing of the contract bogged down as Jindal asked the Bolivian government to subsidize the price of fuel and balked at the government's tax conditions.

Dalence said that during eight months of negotiations, the two sides still had differences over the same issues.

''There's nothing more to negotiate but we are waiting for a final answer to our last proposal regarding natural gas prices,'' he said.

On Tuesday, Bolivia, a major natural gas producer, offered Jindal natural gas at $4 per million BTUs (British Thermal Units) for 70 percent of its energy needs and $2 for the rest.

Jindal, which had raised its offer on natural gas to $3.2 per BTU, still has not responded to that final offer, the minister said.

According to local newspapers, El Mutun could use nine million cubic meters a day of natural gas.

The minister said the government could not adjust the natural gas price any further, because it is based on the price of exports to Brazil and Argentina.

Jindal has said it will create 4,600 direct jobs in in the iron ore mine and the steel plant. The deposit is located southeast of La Paz, near the Brazilian border.

REUTERS PB RAI0900