Indian consortium undecided on size of Afghan iron ore investment

JSW Ispat Special Products

11/08/2014 14:35

By Krishna N Das 
    NEW DELHI, Aug 11 (Reuters) - An Indian consortium led by 
the Steel Authority of India (SAIL)  SAIL.NS  has yet to decide 
how much it will commit to an iron ore project in Afghanistan 
that was originally supposed to be a $10.8 billion investment, 
SAIL's chairman said on Monday. 
    India's steel ministry said in December that the group had 
proposed new terms and planned to invest about $2 billion in 
three iron ore mines and a steel plant.  
    But SAIL Chairman C.S. Verma said the consortium had not 
signed a final deal and total investments could only be decided 
after having a detailed project report. 
    "Conditions are quite difficult," he said, referring to 
security problems and a lack of infrastructure in the area. "We 
are keeping all our options open."  ID:nWNBS00LOQ  
    "Only time will tell how we are able to take up this 
proposal," he said after announcing SAIL's April-June quarter 
results. 
    The consortium also includes Indian companies such as NMDC 
 NMDC.NS , Rashtriya Ispat Nigam, JSW Steel  JSTL.NS , Jindal 
Steel & Power  JNSP.NS  and Monnet Ispat & Energy  MNET.NS . As 
part of its investment, it could spend $75 million to $100 
million on the initial exploration of the mines, Verma said. 
    The original proposal called for investment in three blocks 
at Hajigak in Afghanistan and in a 6 million-tonne-per-year 
(MTPA) steel plant. Under the new proposed terms, the size of 
the plant would fall to 1.2 MTPA, the steel ministry had said. 
    However, Verma said building a steel plant there was 
contingent upon Afghanistan providing the consortium with coal, 
dolomite and limestone needed to make the alloy. 
    "And then there has to be rail and road network also. All 
the enablers will have to be given by them," he said. 
    Abdul Jamil Hares, Afghanistan's deputy mines minister, said 
on Friday that his country would work with foreign partners to 
build a railway connecting the northern and southern parts of 
the country. 
    That network will then be connected with the mining areas, 
including Hajigak, he said on the sidelines of a mining 
conference in New Delhi. 
    The Indian consortium won a bid in late 2011 to explore the 
three blocks with reserves of 1.28 billion tonnes of ore. It 
expects to produce 2.5 million tonnes of ore per year from those 
blocks. 
    The Hajigak deposit is located in mountainous Bamiyan, where 
Afghanistan's famous ancient Buddha statues once stood in the 
cliffs before their destruction by the Taliban. 
    The Indian group is also open to transporting iron ore from 
Afghanistan to India, said Verma. His company is expanding its 
steel capacity by 34 percent to 23.46 million tonnes by next 
fiscal year ending March 31, 2016 - which would mean its need 
for raw materials like iron ore would surge.  ID:nWNBS00LOV  
    But the shortest route to get iron from Afghanistan to India 
would be through Pakistan, with whom India has a frosty 
relationship. 
    Minister Hares said there could be other alternatives. 
    "Afghanistan is not just connected to Pakistan. We have Iran 
and other countries, OK?" 
 
 (Editing by Pravin Char) 
 ((Krishna.Das@thomsonreuters.com; +91-11-4178-1023, 
+91-98711-18314; Reuters Messaging: 
Krishna.Das.thomsonreuters.com@reuters.net, Twitter handle: 
@Krishnadas56)) 
 
Keywords: INDIA AFGHANISTAN/IRONORE