We're very bullish on the project': SAIL Chairman on winning Hajigak mining bid

Press Release
New Delhi

 "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, " stated Mr C.S. Verma, Chairman of Steel Authority of India Limited (SAIL), while talking to mediapersons at Ispat Bhavan here today.

The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, having an estimated reserve of 1.7 billion tonnes of iron ore, 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 c onsortium 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.

The bid submitted by AFISCO to the Ministry of Mines, the Islamic Republic of Afghanistan proposed the development of the Hajigak iron ore deposits to carry out commercial production of iron-ore. Further, the consortium also proposed setting up of 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. Besides, 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 kms each of rail, road and transmission line network for the mine and steel project. In order 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 on all of the above is estimated to be US$ 10. 8 billion in phases, subject to negotiations.

Mr Verma informed 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 will take nearly three years for completion, and the entire project, comprising the steel plant, power plant and road/rail network, will be completed in 8-12 years, depending on approvals, security of project and availability of raw materials.

Dispelling doubts on the financial viability of the project, Mr Verma said, "In a business, higher the risks, higher the gains". He said that the consortium will request for sovereign guarantees for providing financial assistance to the consortium by way of interest-free long-term loan, grant-in-aid, etc., for steel, infrastructure and port related projects.

Quoting from the letter received by AFISCO from Ministry of Mines, Islamic Republic of Afghanistan announcing the winning bidders for Hajigak, Mr Verma read: "AFISCO brings a tremendous array of expertise; technical, financial and physical resources; mining and steel production experience developed over more than 100 years in India and internationally. In their bid, the consortium has proposed setting up of mines and steel plant as well as proposed the possible benefits to the people and country of Afghanistan as a while, and have also committed to environmentally and socially responsible operations."

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.

'We're very bullish on the project':SAIL Chairman on winning Hajigak mining bid

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