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Indian steel companies including SAIL forge ties with Afghanistan

in Afghan Business

Indian steel companies including SAIL forge ties with Afghanistan

Steel minister Beni Prasad Verma is headed to Kabul to sign a memorandum of understanding, as part of India’s growing economic engagement with Afghanistan. Verma will be accompanied by the heads of the ministry’s two star PSUs – SAIL and NMDC.

The two PSUs are part of Afghan Iron and Steel Company (Afisco), a seven-member Indian consortium that also includes state-owned RINL, and private sector steel players like JSPL, JSW, JSW Ispat and Monnet Steel and Power.

The consortium already had two rounds of talks with Afghan officials. Next month, an agreement for the Hajigak mines with a possible downstream steel plant could also be inked, said a person close to the development.

It is an indicator of the interest with which resource-hungry Indian companies seem to be joining a global race to secure mineral assets, such as iron ore, and more lately, gold and copper in Afghanistan. However, China has already been an early and aggressive player in that country, having secured Aynak, regarded as one of the world’s largest copper deposits, in 2007.

India’s potential investments will help war-torn Afghanistan re-build its economy. Following the successful bid for a chunk of the 1.28-BT iron ore at Hajigak mines in November last year, Indian companies have bid again for the recently tendered gold deposits. Candidates are expected to be shortlisted by late April or early May, and Indian finalists could regroup in yet another public-private venture.

That the Hajigak iron ore deposits sit at a height of 3,800 meters, practically half way up Mt Everest, will be the least of the challenges if the deal is inked. Afisco was chosen preferred bidder for its promise to throw in 1,000 MW power plant, a $7-billion, 6-mtpa steel plant and lay 200-km rail line from mine to plant.

Downstream projects, however, are dependent on Afghanistan granting the team, hopefully at a subsidy, unexplored coking coal reserve at nearby Shabashak limestone deposits or even gas.

“The steel plant, power plant and infrastructure (rail line from mine to plant) were the key component in the evaluation criteria and that was the major reason why Afisco became a preferential bidder. We would be happy if they do more then that,” Abdul Jalil Jumriany, director general for policy and promotion department, Afghanistan had told ET earlier.

Source: India Times

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