Deep interest

By Soumik Dey
Story Dated: Monday, December 19, 2011 14:4 hrs IST

It was nothing less than a diplomatic coup. Cocking a snook at the rival Chinese, hostile Pakistanis and murderous Taliban, and beating American and Iranian bidders, an Indian consortium has bagged three of the world's richest iron ore mines in the Bamiyan mountains of Afghanistan. The bid is awaiting a cabinet clearance for a $7.5 billion assistance from the Indian government.

The Hajigak mines in Bamiyan district, famous for the 6th century Buddha statues that the Taliban destroyed in 2001, store about 1.7 billion tonnes of high-grade iron ore. The consortium, called Afghan Iron and Steel Company and led by public sector steel giant SAIL, will get more than 1.28 billion tonnes of it. Exploiting blocks B, C and D in the mines would require a net investment of $10.8 billion over the next three years.

The consortium has sought a soft loan to set up mining facilities in Hajigak. “This would likely amount to $1.5 billion,” said a steel ministry official. Another soft loan of $6 billion is being sought to set up a 6.2-million-tonne capacity steel plant, a 800MW power plant and a 200km railroad link to an Iranian port.

SAIL and public sector companies NMDC Ltd and Rashtriya Ispat Nigam Ltd will hold 56 per cent stake in the project, and private players JSW, Jindal Steel and Power, JSW Ispat and Monnet Ispat and Steel the remaining. A team of experts from SAIL, NMDC and JSW will visit the project site this month. Mining will start next year, and the money will be needed over the next three years.

Once the consortium gets the nod, it will raise $75 million on its own to geologically map the three mining blocks. The steel ministry has already okayed the proposal and is awaiting formal clearance from the ministries of finance and external affairs. “We are expecting a cabinet note on this very soon, after which the finance ministry would specify the terms and conditions for the soft loan,” said a steel ministry official.

The project can change the fortunes of the war-torn area. About one per cent of the profit is to be earmarked for setting up medical and education facilities for the local people. “Negotiations are also going on with the Afghanistan government for fixing royalty contracts for mining iron ore in the area,” said C.S. Verma, chairman, SAIL. “They are optimistic and are very hopeful of the project creating a large number of employment opportunities.”

Once a hotbed of Taliban activities, Bamiyan is safer now and is inhabited by the Hazara tribes who have been friendly towards India. Most of these people were part of the Northern Alliance which fought against the Taliban and had received medical help from India. Hundreds of Hazara fighters have been treated in the Farkhor military hospital that India had set up on the Tajik-Afghan border. The Afghanistan government has also promised that it would engage the NATO forces, the India-trained Afghan Mines Protection forces and the Afghan National Police to provide security.

The consortium, however, is not willing to take any chances. It has demanded that the Indian government bear all damage costs in case of any adverse event at the project site. In its charter for aids, the consortium has also sought immediate relief from the government to minimise production losses or delays in execution of the high-value project.

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