India's Jindal Steel & Power has pulled out of its contract to develop the El Mutun iron-ore mine in Bolivia, the largest mining project of President Evo Morales' tenure, Mining Minister Mario Virreira said.

In the most recent talks, the New Delhi-based company's local subsidiary, Jindal Steel Bolivia, had set two "non-negotiable" conditions for staying on, Virreira said in a press conference Tuesday.

Jindal demanded an end to a probe into its alleged failure to make required investments and insisted the government return $36 million in performance bonds it had collected after accusing the company of non-compliance with contract terms.

After those conditions were rejected, Jindal's executives made the decision to void the contract, the minister said.

"This brings an end to Jindal's participation in the country, but it's a great opportunity to qualitatively improve the development of the Mutun deposits," Virreira said, adding the government will seek a new partner in the project through an international bidding process.

Jindal signed a contract with Morales' government in 2007 to develop roughly half of the mine, which is located in the eastern province of Santa Cruz and holds about 40 billion tons of mineral reserves, mostly iron ore.

The company blamed the government for a three-year delay in the project, citing difficulty in acquiring land rights, a lack of legal certainty and failure to guarantee natural gas supplies for a proposed steel complex.

The Bolivian authorities, in turn, said Jindal was responsible for the delay and accused the company of reneging on a pledge to invest $600 million as of this year, nearly a third of the expected total investment outlay of $2.1 billion.

The Indian firm also had asked for guarantees its operations would not be nationalized by Morales' government, which last month expropriated a tin and zinc mine owned by Swiss commodities giant Glencore amid a dispute between rival factions of miners.

The minister said the government has made "every effort" to make the contract more flexible and provide Jindal with "positive conditions," but he did not comment on the request for assurances against nationalization.

He said Jindal's pull-out will not damage Bolivia's image because the Indian firm "has shown it lacks the economic capacity" to fund the project, although the company insists it does not have financial difficulties.

Jindal, meanwhile, said in a statement Tuesday that it terminated its contract due to the "anti-investor friendly" attitude of the Morales' socialist government.

It said the lack of solution to the natural gas supply issue triggered its decision.

The Bolivian government "was willing to commit only 2.5 million cubic feet per day of gas (as against a total requirement of 10 million cfd) from 2014 onwards due to non-availability of gas in the country, whereas the company was being asked to make investment as per capacities originally envisaged under the joint-venture contract," Jindal said. EFE