SAIL led consortium mulls $11 billion investment in Afghan mines

Steel Authority of India (SAIL) led seven-member consortium, after winning the bid for Hajigak iron ore mines in Afghanistan, is mulling an investment aggregating to worth of about $11 billion for the development of the project over the next 8 to 10 years. The consortium proposes to set up a 6 million tonne per annum steel plant in two phases of 3 mpta each with an investment of $7-7.5 billion. However, the steel plant will only materialize if the Afghanistan Government provides the company with linkages for coking coal and limestone.

Also, since the Afghanistan is in the negative list, no international banks or lending institutions would be willing to have an exposure to the project. Hence, the company will be seeking financial assistance from Steel Ministry besides requesting for sovereign guarantees from the Government of India and certain facilitation agreement from the Afghanistan Government.

For the immediate future, the consortium proposes to invest $75 million (Rs 386 crore) to carry out exploration and geological studies of the 1.28 billion tonne deposits over the next three years. However, the management set-up of the consortium would be finalized over the next week after discussing with the other members, who are expected to contribute in proportion to their shareholding for the initial investment of $75 million. The consortium, which is led by public sector companies SAIL, NMDC and RINL, also consists of private sector players include JSW Steel, JSW Ispat, Jindal Steel and Power and Monnet Ispat and Energy.

In additional development, the company besides developing the required infrastructure also proposes to set up a 1,000-MW power plant and a road-rail link of about 200 km from the mines to the plant site.