President Evo Morales wrote tough protective provisions into Bolivia's new constitution to ensure foreign entrepreneurs vying for the country's mineral wealth don't acquire unfair advantage over underdeveloped resources.

Viewed against Bolivia's historical experience with foreigners, the constitutional safeguards seem an understandable response. But India's difficulties with the Mutun iron project indicate that all may not be well with Bolivia's plan to attract only the "right kind" of foreign investors.

Most Western investors have been ruled out of the equation by prohibitive provisions. That leaves the door open -- in theory at least -- for investors from emerging economies such as India and China. In practice, Indian business representatives complained they were becoming drawn into internal politics and possibly malpractices.

Jindal Steel and Power, a leading steel manufacturer, said it was told a contract it signed with the Bolivian side in 2007 could require revision because of new legislation designed to draw more investment into the country.

Bolivian Mines Minister Jose Pimentel told the media an addendum might be required to the Bolivian contract with Jindal for the exploitation of the Mutun iron ore reserves.

Relations between Bolivia and the Indian corporation soured when the Bolivian government decided to cash a $18 million guarantee deposit for the steel project in the eastern state of Santa Cruz, which has one of the world's largest unexploited iron ore deposits. Bolivia said it was right in doing so because Jindal had fallen behind with promised investment.

The Bolivian Mines Ministry accused Jindal of having invested only $12 million of a promised $600 million. Jindal responded that the government hadn't honored its commitment to provide land for the project to begin. Bolivian officials said only a small part of the land had yet to be allocated.

Officials said Bolivia had pinned hopes on the project coming on stream, putting the country on course to becoming a major steel producer by 2014.

Officials said talks with China and South Korea were under way to cut additional deals with those two countries for exploitation of the iron ore mines. It wasn't immediately clear if Bolivia would keep the contract with Jindal or seek substitute investors if the dispute was not resolved.

Jindal representatives said the contract was being blocked from within the Bolivian government by people who didn't want the project to go ahead.

Meanwhile, interest in other mineral deposits in Bolivia has drawn investors.

An estimated 50 percent of the world's known lithium reserves lie in remote parts of Bolivia's Andean high-mountain plateau, where some of the world's largest uranium deposits have also been located.

Lithium, a low-density metal used in batteries, is seen as crucial to the auto industry's effort to produce hybrid and electric cars. Currently, competing research programs at automotive companies in Europe, Japan and the United States are busy developing energy-efficient, battery-operated cars as substitutes for gasoline-fired cars.

A growing global consensus on nuclear power has also ignited interest in uranium deposits worldwide.

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