NEW DELHI – (Reuters) – A consortium led by the Steel Authority of India (SAIL) (SAIL.NS) has yet to decide how much it will commit to an iron ore project in Afghanistan that was originally supposed to be a $10.8 billion investment, SAIL’s chairman said on Monday.
The steel ministry said in December that the group had proposed new terms and planned to invest about $2 billion in three iron ore mines and a steel plant.
But SAIL Chairman C.S. Verma said the consortium had not signed a final deal and total investments could only be decided after having a detailed project report.
“Conditions are quite difficult,” he said, referring to security problems and a lack of infrastructure in the area. “We are keeping all our options open.” “Only time will tell how we are able to take up this proposal,” he said after announcing SAIL’s April-June quarter results.
The consortium also includes Indian companies such as NMDC (NMDC.NS), Rashtriya Ispat Nigam, JSW Steel (JSTL.NS), Jindal Steel & Power (JNSP.NS) and Monnet Ispat & Energy (MNET.NS). As part of its investment, it could spend $75 million to $100 million on the initial exploration of the mines, Verma said.
The original proposal called for investment in three blocks at Hajigak in Afghanistan and in a 6 million-tonne-per-year (MTPA) steel plant. Under the new proposed terms, the size of the plant would fall to 1.2 MTPA, the steel ministry had said.
However, Verma said building a steel plant there was contingent upon Afghanistan providing the consortium with coal, dolomite and limestone needed to make the alloy.
“And then there has to be rail and road network also. All the enablers will have to be given by them,” he said.
Abdul Jamil Hares, Afghanistan’s deputy mines minister, said on Friday that his country would work with foreign partners to build a railway connecting the northern and southern parts of the country.
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