India SAIL-led consortium sees $11 bln investment in Afghanistan

Wed Nov 30, 2011

* Consortium plans to build 6 mln T steel plant in Afghanistan
* Was awarded rights to develop three blocks of huge Hajigak mines
* Steel plant to cost $7 bln-$7.5 bln-SAIL chair (Adds details)

NEW DELHI, Nov 30 (Reuters) - A consortium of Indian companies led by Steel Authority of India will need a total investment of $11 billion in a planned steel plant and to develop iron ore mines in Afghanistan, the steelmaker's chairman said on Wednesday.

The Afghan government awarded the rights to develop three blocks of the huge Hajigak iron ore concession in central Afghanistan to the consortium, while a fourth block at the deposit was won by Canada's Kilo Goldmines Ltd.

The Indian consortium plans to build a steel plant in Afghanistan with an annual capacity of 6 million tonnes, SAIL Chairman C.S. Verma told reporters in New Delhi, adding the plant would need investment of $7 billion to $7.5 billion and the remainder would be for developing the mines.

State-run SAIL is the biggest steelmaker in India, with an annual capacity of about 15 million tonnes.

The other members of the consortium are: state-run miner NMDC Ltd and steelmaker Rashtriya Ispat Nigam Ltd (RINL), and private sector steelmakers JSW Steel Ltd, JSW Ispat Steel Ltd, Jindal Steel & Power Ltd and Monnet Ispat & Energy Ltd.

"We'll need to borrow some from financial institutions. We'll need some facilities and assistance from both the Indian and Afghan governments," Verma said.

The Hajigak deposit contains an estimated 1.8 billion tonnes of ore, with an iron concentration of 64 percent, the Afghan mines ministry has said. The figures are based on a survey carried out in the 1960s.

The huge investment necessary to develop Hajigak will be welcomed by the cash-strapped Afghan government, but the deal could cause problems with neighbouring Pakistan, which fears closer cooperation between India and Afghanistan.

The United Nations said this year violence across Afghanistan is at its worst since the Taliban regime was toppled 10 years ago, although the NATO-led alliance of foreign troops says attacks on its forces by insurgents are now falling.

(sourced Reuters)