SAIL-led group plans $11 b investment in Afghan mines

Vishwanath Kulkarni New Delhi | Updated on March 12, 2018

Mr C.S. Verma, Chairman, Steel Authoirty of India, addressing a press conference along-with Rakesh Kulshreshtha, Executive Director, SAIL (L), in New Delhi on Wednesday. Photo: Kamal Narang   -  Business Line

SAIL Chairman, Mr C.S. Verma. (file photo)

The SAIL-led consortium, which has won the bid for Hajigak iron ore mines in Afghanistan, may have to invest a total of about $11 billion in developing the project over the next eight 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, said the SAIL Chairman, Mr C.S. Verma.

It 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 besides developing the required infrastructure.

“The steel plant will materialise only if the Afghanistan Government provides us linkages for coking coal and limestone,” Mr Verma said.

In 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, he said.

The consortium consists of public sector companies led by SAIL, NMDC and RINL, whereas the private sector players include JSW Steel, JSW Ispat, Jindal Steel and Power Ltd and Monnet Ispat and Energy Ltd.

Mr Verma said the management set-up of the consortium would be finalised 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.

“As Afghanistan is in the negative list, no international banks or lending institutions would be willing to have an exposure to the project. So we have asked for financial assistance from the Steel Ministry besides seeking sovereign guarantees from the Government of India and certain facilitation agreement from the Afghanistan Government for the project,” Mr Verma said.

He also said a grant-in-aid has to be provided by the Government for the development of the requisite infrastructure at the project.

“We will be finalising an agreement with the Government of Afghanistan on the proposed project in about a month's time,’’ the Chairman said without disclosing the financials such as royalty and upfront payment to Afghanistan.

On concerns in the war-torn country, Mr Verma said the Afghanistan Government has assured to provide security for the personnel working on the project, which may create some 8,000 direct and about 40,000 indirect jobs. The Indian companies may have to send technical workforce of about 1,000-1,500 people to execute the project, he said.

Published on November 30, 2011

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