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Rival Indian firms join hands to bid for Afghanistan iron ore

Sail,Tata,Essar,RINL,Jindal meet Mines Minister; are assured of help for joint ore,steel plant bid

For the first time rivals in the domestic market,steel giants Sail,Tata,Essar,RINL and the Jindal Group,are coming together to jointly bid for iron ore assets and to explore building a steel plant in war-torn Afghanistan.

At a meeting today,the Mines Ministry promised the steel producers “all possible assistance” to facilitate their entry into the “difficult” country.

The Ministry of External Affairs is closely coordinating with the Mines Ministry on the modalities of bidding for mining rights in the Hajigak mines in the Bamiyan province,130 km west of Kabul.

Afghanistan is estimated to be sitting on iron reserves of 1.8 billion tonnes in Hajigak alone,and is issuing an open tender for multiple exploration concessions. The selected bidder will be granted mineral concessions under the Afghan Mineral Law,2010.

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There are potential coking coal reserves near the Hajigak mines,which the Hamid Karzai government hopes will enthuse companies to set up integrated plants.

A Steel Ministry official said the companies were more amenable to invest as a consortium since the stakes are huge. “The investment required is to the tune of Rs 18,000 crore. There is virtually no infrastructure there. Companies will have to build a railway network,roads and power plants,” he said,indicating that a joint effort will help draw from each others’ expertise.

After the three-hour meeting today with representatives of steel companies,where senior MEA and Steel Ministry officials were present,Mines Secretary S Vijay Kumar told The Indian Express that the utilities had expressed their willingness to invest in Afghanistan.

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“We met them to gauge their response to the Expression of interest (EoI) floated by the Afghan government for developing the Hajigak mine. They are interested and we will extend all possible cooperation to them,” he said. The last date for submitting EoIs is January 13.

Afghanistan Mines Minister Wahidullah Shahrani had met his Indian counterpart B K Handique in November last year and expressed Kabul’s desire to enter into a Memorandum of Understanding (MoU) with New Delhi to promote mining and end use industries back home.

Handique has already approved sending a delegation comprising officers from the Geological Survey of India,Indian Bureau of Mines and state-owned mining firms for field visits and discussions.

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If Indian companies are unable to set up steel plants for want of other inputs such as fuel linkage etc,and end up only mining iron ore,they will be facing a tricky situation. Iron ore can only be evacuated from either Pakistan or Iran. While companies would prefer shipping ore via Pakistan,security reasons could lead them to consider using the Bandar Abbas port in Iran. “This will,however,increase costs significantly,besides the threat of piracy,” said a source who attended the meeting.

First published on: 07-01-2011 at 04:10 IST
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