New Afghan mining law eases path for SAIL-led firms Rs 7,000-cr plan

Written by Press Trust of India | Updated: Aug 9 2014, 07:28am hrs
Decks are almost clear for Indian steelmakers consortium, AFISCO, to initiate final negotiations with Afghanistan on a truncated Rs 7,000-crore investment following the passage of a new mining law in Kabul.

After winning bids for three iron ore mines at Hajigak in 2011, a consortium of seven Indian steelmakers, led by SAIL, had proposed a $10.8-billion investment in Afghanistan to set up a 6.2- mtpa steel plant in two equal phases, along with an 800 MW power plant, besides creating the required infrastructure.

However, AFISCO had sent a revised proposal subsequently, truncating its investment proposal to about $1.14 billion for setting up a 1.5-mtpa steel plant and creating necessary infrastructure aimed at reducing vulnerability of the project.

An Inter-Ministerial Committee of Afghanistan government had then proposed to re-commence negotiations with AFISCO under terms of the revised proposal after the new mining law is passed by the government.

"The new mining law has been approved by Parliament nearly two months back. Now, as per our Constitution, it needs to be signed by the President. This could be done in a month or so," Afghanistan's deputy minister for mines and petroleum Jamil Hares said on the sidelines of an Assocham event here.

Hares said the signing of the final agreement for taking the project forward would take place after both parties reach a conclusion that is a win-win for the SAIL-led consortium and the Afghan government.

Calling the new law a bridge for reaching the final negotiation, he indicated that the scaling down of the project size might not come in the way.

On the country's poor infrastructure, he said Afghanistan was keen on sprucing it up and with that the steel demand could also go up from 1.6 mtpa now to 10 mtpa within five years.

Asked whether the Afghan government would allow bringing iron ore to India, Hares answered in the affirmative, but it will be up to the Indian consortium to decide. He also left the choice to AFISCO on whether to transport ore via Pakistan or via Iran.

The SAIL-led consortium AFISCO had won three blocks, with an estimated reserve of 1.28 billion tonne of high-grade iron ore, of the Hajigak mine in November, 2011.

The consortium has public sector firms SAIL, RINL and NMDC holding a combined 56% stake. The rest is held by private players such as JSW, JSPL and Monnet Ispat & Energy, among others.