Afghanistan President Hamid Karzai will push for a $11-billion investment deal with a consortium of six Indian firms for mining iron ore in the mineral-rich Hajigak region when he visits New Delhi later this week.
Diplomatic sources told FE that the Afghan president is bringing with him concrete proposals with assurance on safety and security of the investments and a specific time-frame for the passage of a new mining legislation that is key for the deal to go through as it would specify the conditions under which overseas companies could extract natural resources of the country.
A consortium of six Indian companies led by state-run steel major SAIL, and including Rashtriya Ispat Nigam, NMDC, JSW Steel, Jindal Steel and Power and Monnet Ispat and Energy, was offered three iron ore blocks in Hajigak region, 100 km west of Kabul, by the Karzai government in 2011.
But since then the proposal has remained just on paper with the Afghan Iron and Steel Consortium (name of the Indian company consortium) reluctant to commit investments for fear of worsening security issues after withdrawal of the US-led Nator forces next year and delays in passage of the new mining Bill.
?We are yet to hear about the any timeline for the passage of the Afghan mining legislation by its Parliament. This is integral part of the investment understanding reached between us and the government there,? said SAIL chairman CS Verma, expressing ignorance on the possibilities of any talk with the consortium during Karzai’s visit.
A senior official of another consortium partner said the decision to sign a firm agreement would be taken based on the level of assurance given by governments of Afghanistan and India.
Karzai will meet PM Manmohan Singh and is expected to seek his support to salvage the deal besides holding talks with other stakeholders.
In addition to this, the Afghan side is also expected to push for the clearance of interest-free loan and aid in favour of the consortium by the Indian government, which is pending for several months now.
Afghanistan’s new law on mines and minerals has been ratified by its cabinet but is yet to be passed by the Parliament.
At the time of offering the mining blocks to the Indian consortium, the government promised that this would be done in few months time.
?There are several issues that needs to addressed. If we get satisfactory response, then the investments would flow but it would be gradual,? said the official quoted earlier.
Hajigak, a series of rugged mountain ridges in the Bamyan province, holds an estimated 1.8 billion tonne of ore.