SAIL-led consortium may invest USD 11 bn in Afghanistan

The SAIL-led consortium that has bagged rights to three iron ore mines in Afghanistan today said it may invest around USD 11 billion on the entire project, including infrastructure creation, mining and setting up a 6-mtpa steel plant and 1,000-MW thermal power plant.

Establishment of the steel plant -- which will be situated approximately 200 kilometres away from the three Hajigak mines awarded to the Indian consortium - would, however, depend on the availability of other inputs like coking coal and limestone, which are to be ensured by the Afghan government, Steel Authority of India Chairman CS Verma said.

"Now, if we consider everything is in place like we get the coking coal and limestone mines, then the total investment in the entire project would be USD 11 billion, which would be spent over a period of 10 years," he added.

There are enough reserves for coking coal and limestone in Afghanistan and Verma indicated that getting such mines would not be very difficult for the consortium. Sources said the consortium had expressed its intent to set up the steel plant much before it was awarded the mines.

In fact, that commitment proved to be instrumental in the seven-member team bagging the mining rights in Afghanistan. The immediate plan, however, is to carry out a geological study of the mines over a three-year period at an investment of USD 75 million, Verma said, adding that the cumulative reserves of the three assets is around 1.28 billion tonne.

Given the restrictions imposed on Indian financial institutions with respect to providing funds to a venture in Afghanistan - a country that falls in the negative list - the consortium has already written to the government seeking sovereign funds.