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SAIL consortium to invest $11b for mining in Afghanistan, setting up plant
A Steel Authority of India Ltd (SAIL) led consortium would be putting in a total investment of $11 billion for developing iron ore deposits as well as setting up a steel plant in Afghanistan.
SAIL Chairman CS Verma said that the Indian consortium has been awarded the rights to mine and develop three blocks of iron ore in Hajigak situated in Central Afghanistan, which have estimated reserves of 1.28 billion tonnes.
He added that the Hajigak reserves are of high quality having an iron concentration of 64 percent.
The Indian consortium would also be setting up a steel plant in Afghanistan which would be having an annual capacity of 6 million tonnes, and it will require an investment of $7.5 billion. “This would be subject to Afghanistan Government making available coking coal and limestone linkages in requisite volumes for the same,” Verma said.
He added that apart from this, the consortium would also be installing an 800 MW capacity power plant for running the mines and the proposed steel plant.
The SAIL Chairman indicated that the mined iron ore may also be trucked to India either through Iran or Pakistan route.
Over the prospects of this (trucking of iron ore reserves through Iran or Pakistan) facing difficulties from the neighbouring country, considering the fact that the proposed Iran-Pakistan-India gas pipeline project has been stalled since several years, Verma said that the issue would be discussed with the Government as this (moving of iron ore to India) was one of the motivating factors for private companies to join the consortium.
“However, we would require $75 million immediately for geological and exploration study of these mines. This cost would be met internally by the consortium members in the same proportion of their partnership. The geological study will take three years to complete, while the entire project, comprising the steel plant, power plant, and the road-rail network connectivity, will be completed in 10 years,” the SAIL Chairman informed.
Given the restrictions imposed on Indian financial institutions with respect to providing funds to a venture in Afghanistan - a country that falls in the negative list - the consortium has already written to the Government seeking sovereign funds.
“We need some funds from the Government. Afghanistan falls in the negative list and no financial institutions will take the exposure. It will be difficult for the consortium members to put in such an amount on their own from their reserves. So we need government assistance and aid,” Verma said.
The Steel Ministry has already brought the matter to the Government’s notice, he added.
The consortium might even request funds from the Afghan Government and reach out to multilateral agencies for part-financing the project. “Levels of comfort are needed from both the Governments,” Verma added.
Verma further said that the consortium would be meeting within a week to finalise its management set-up. Also a high level delegation from the India would be visiting Afghanistan within the next three-weeks to initiate discussions with Afghanistan Government on the project.
SAIL is the biggest steel maker in India with an annual capacity of around 12 million tonnes. The other members of the consortium are state-run miner NMDC Ltd and steelmaker Rashtriya Ispat Nigam Ltd (RINL). Other private sector steelmakers like JSW Steel Ltd, JSW Ispat Steel Ltd, Jindal Steel & Power Ltd and Monnet Ispat & Energy Ltd, form the remaining members.
