FinMin will not give loans for Afghan mining project
The Indian steel companies’ consortium that won the bid for the Hajigak iron ore mine in Afghanistan will have to finance the Rs 40,000 crore to explore the mine and set up a steel plant from their own pocket as the finance ministry has shot down their demand to part finance the project. This means the consortium will have to borrow abroad without a sovereign guarantee making the loans expensive.
The seven-member consortium of Indian companies is led by SAIL. It has won the rights to Hajigak mine in Afghanistan’s Bamiyan province in November last year, which is said to contain the world’s second-largest reserves of of 1.8 billion tonne of high grade iron ore. The consortium, Afghan Iron and Steel Company (AFISCO) had subsequently appealed to the Prime Minister’s Office for financial assistance in executing the project as the bill became steep.
But the finance ministry after a meeting with the steel ministry’s top brass has told them that given the tight resource position of the government, it would not be possible to finance the exercise. “Instead the syndicate members should explore pooling in their investible surpluses to execute the venture”.
The consortium wanted an assistance of about Rs 3,000 crore from the government either through a credit line or in the form of a soft loan (for a 30-40 year period). It had also sought a grants-in-aid of about Rs 8,200 crore for building a 2x400 MW power plant and 200 km road network. The syndicate also
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