SAIL to sell Afghan ore to China, Iran

It’s not India but China and Iran that Steel Authority of India Ltd (SAIL) might be serving initially from the iron ore mine at Hajigak in Afghanistan for which negotiations are at a final stage and signing of the project likely to happen in January.

While setting up of a 6 million tonne steel plant has been built into the $10 billion integrated iron ore mine, and steel and power project in Afghanistan, the SAIL-led consortium might be required to send initially the iron ore to China well as Afghanistan's central Asian neighbours like Iran, Afghanistan mines minister Wahidullah Shahrani said Wednesday.

To facilitate the export of ore to these countries, India and Afghanistan has already initiated talks to set up a 600 km long railway corridor, the minister said.

"The Hajigak project would be shipping part of the iron ore through Chinese railway line which is being laid for their Aynak copper project. India is one of the largest exporter of iron ore to China.

And we are discussing with the government of India at the highest level to develop jointly a special rail corridor 600 km long that will join Central Afghanistan all the way to Iranian border. The rail corridor will connect Herat (in west) and Bamiyan (in central Afghanistan). These are the options that we are discussing with the counterpart in India.

The technical team looking after the project has assessed domestic demand of iron ore as well as demand in our immediate neighbouring countries like Iran, China and, of course, India," Shahrani told told reporters on the sidelines of the Global Mining Summit.

China is building their own railway line linking Kabul to Uzbekistan for their Aynak project, the second largest copper project in the world, and initially Hajigak project would be linked to that to evacuate ore to China and also to central Asia.

The rail corridor will cover part of the Hajigak project but in the longer term India would benefit as Afghanistan has identified a number of iron ore and also lead and zinc deposits that lay along the corridor which can be handed over to it, the minister said.

The minister expressed hope that the SAIL-led consortium, AFISCO (Afghan Iron and Stee Consortium) would sort out the issues that it had raised with the Afghanistan government over some conditions put into the agreement.

SAIL has objected to two conditions which forces the consortium to commence mining within six months of being granted the licence or face cancellation of licence, and also restrictions on ore exports.

"All these things have been raised during the negotiations and negotiations are moving on. I don't see any major difficulty in moving forward. Almost 90% of the issues have been resolved and our President and the Cabinet are being briefed regularly about the progress of the negotiations with the SAIL-led consortium. In 10 years the investment would be around $10 billion and the project would be a complex one. When such a complex project is involved, negotiations are lengthy as negotiators need to deal with a number of issues and it also needs opinion of the legal team. So delays in such cases are not surprising. But now we have set a date to conclude the negotiations," the minister said.

A SAIL delegation is arriving in mid-December to Kabul, he said. "We are expecting that we will conclude negotiations. And in some point in January the Cabinet as per our mining regulation would authorise the mines ministry to sign the concession."

Regarding the award of Shaida copper deposit project in which an Indian consortium with Hindustan Copper and Nalco as partners shown interest, the minister said the bids would be opened "pretty soon, in a matter of days".