‘Viability gap’ slows work for SAIL-led consortium on Afghan ore project

Jayanta Mallick Kolkata | Updated on March 12, 2018 Published on January 27, 2013

SAIL-led consortium focusing on tendered iron ore mines

Afisco, the SAIL-led consortium, is going slow on the proposed $10.8-billion integrated Hajigak project in Afghanistan.

Instead, it is currently focusing on the mining project. SAIL Chairman C.S. Verma said: “We are taking a step-by-step approach.” At present, the focus is on developing tendered mines, which according to rough estimates, could cost the consortium some $2 billion.

In November 2011, the consortium of three State-run and four private Indian players was chosen as the preferred bidder for three unexplored Hajigak iron-ore blocks, located in Bamiyan province of Afghanistan.

Further, a memorandum of understanding was signed in April last year for the comprehensive project, which included a 2.6-million-tonne-a-year (mtpa) steel-making facility based on the mined ores.

During the past 10 months of negotiations, the Afghan Government also promised, sources said, to provide some 6 million tonnes of coking coal, around 5 mtpa thermal coal and around 3 mtpa of flux including limestone.

The consortium members, according to Afisco sources, at the review meeting on December 21 were apprehensive about the viability of the mining project. Members are also understood to have sought Government support.

Verma, however, denied that there was any “viability gap” in the mining project. SAIL Chairman said that the mining agreement details, clause by clause, were being worked on. “The date for the agreement has not yet been fixed. It could be signed soon,” Verma said.

Last month, the Afghanistan Mines Minister had told Business Line that a comprehensive agreement was expected to be signed this month.

The Hajigak blocks are estimated to have reserves of around 1.28 billion tonnes of high-grade magnetite ore.

Afisco sources, however, said that the Ministry had asked the consortium leader to arrive at the viability-gap figure and to articulate the components of the “support” — financial and otherwise — Afisco needed for the Hajigak mining project.

Apart from SAIL, other members of the consortium are RINL, NMDC, JSW, JSW Ispat, Jindal Steel and Power Ltd, and Monnet Ispat.

Another Indian consortium for gold mining, also led by SAIL, had unsuccessfully bid for deposits in Shaida in Heart province.

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Published on January 27, 2013
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