Steel consortium to draft plans to fund Afghan project

Next week will see the heads of seven domestic steel makers meeting to chalk out ways to fund the $10.8 billion Hajigak project in Afghanistan before discussing the financing issue with Kabul later.

The consortium led by state-owned Steel Authority of India (SAIL), that holds 20 per cent stake in the consortium, had bagged the mining rights for three iron ore mines in Hajigak in November.

It plans to invest $10.8 billion over 8-10 years to develop the mines as well as set up a 6.12 million tonnes per annum steel plant and a 800-MW power plant.

Consortium leader SAIL has convened a meeting of the chief executive officers (CEOs) of member companies on March 20 ahead of the meeting with ministry of mines in Kabul to discuss the financing issues of the  Hajigak project.

The Hajigak deposit has a resource base of approximately 1.8 billion tonnes with 62 per cent iron content. The Indian consortium proposes to fund $75 million for prospecting and geological exploration of the mine.

The meeting among the member companies including three public and four private sector firms assumes significance as this would help the Afghan-bound delegation to portray the most crucial aspect of the project during its visit likely to take place sometime between April and May.

The future of the project hinges on ensuring the Afghan government the ways and means of assured funding by the Indian consortium.

The consortium had earlier sought state funding but the chance of getting such a convenient and an easy source is out of question at the moment as India does not have such mechanism and there is no proposal to create one like that of China to the cash-starved government. The consortium has been in the process of documentation since long and the assured source of funding for the project would be instrumental for inking the final documents with the Afghan government for taking the project ahead.