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Indian Consortium Wins Preferred Bidder Status for Hajigak Deposit
12/01/2011 - The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium) has won the status of “preferred bidder” for blocks B, C, and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content).
The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of “preferred bidder” for blocks B, C, and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content).
The consortium will now have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after formal negotiations, and will receive a license to further explore, develop, and exploit the Hajigak iron ore deposits. Hajigak has an estimated reserve of 1.7 billion tonnes of iron ore.
The bid submitted by AFISCO proposed the development of the Hajigak iron ore deposits to carry out commercial production of iron ore. The consortium also proposed setting up a 6.12 million tonnes per annum (MTPA) steel plant in Afghanistan in two phases of 3.06 MT each, subject to Afghanistan government making available linkages for coking coal and limestone in requisite volumes. In addition, the plan envisages installation of an 800-MW power plant in two phases of 400 MW each to cater to the operations of the mine and steel plant.
As part of building necessary internal infrastructural support, the consortium plans to build 200 km each of rail, road, and transmission line network for the mine and steel project. To undertake peripheral development activities and meet its social responsibility, the consortium plans to set aside 1% of profit before tax for establishing educational and medical facilities. The total investment by AFISCO is estimated to be US$10.8 billion in phases, subject to negotiations.
"It is a huge achievement for the SAIL-led consortium of Indian companies to have won the mining bid for the Hajigak iron ore deposits in Afghanistan. This is the first time that Indian public and private sector companies have come together to jointly bid for an iron ore asset abroad, and we are very bullish about this," said C.S. Verma, Chairman of Steel Authority of India Ltd. (SAIL).
Verma added that an immediate investment of US$75 million, mainly for geological and exploration study of the mines, will be met internally by the consortium members in the same proportion of their partnership. This study is expected to take nearly three years for completion, and the entire project, comprising the steel plant, power plant, and road/rail network, is planned for completion in 8-12 years, depending on approvals, security of project, and availability of raw materials.
The consortium will request for sovereign guarantees for providing financial assistance by way of interest-free long-term loans, grant-in-aids, etc. for steel-, infrastructure-, and port-related projects, according to Verma.
The Indian consortium has majority stake by public sector companies, with SAIL, NMDC, and RINL holding a combined stake of 56%. SAIL being the lead partner holds an equity stake of 20% while NMDC and RINL hold 18% each. Among private players, JSW and JSPL hold 16% each, while JSW Ispat and Monnet Ispat & Energy hold 8% and 4% stake, respectively.
