Tatas and Jindals get together with Govt to bid for mines in Afghanistan

For the first time, two leading private sector groups, the Tatas and Jindals, have joined hands with state-owned undertakings to jointly bid for iron ore blocks in Afghanistan’s Hajigak mines. Tata Steel, Sajjan Jindal’s JSW and Navin Jindal’s JSPL have picked up 16 per cent stake each in the joint venture. Steel maharatna SAIL leads the pack with 18 per cent; the other two PSUs RINL and NMDC hold 17 per cent each.

The Hamid Karzai government in Afghanistan had invited expressions of interest (EoIs) for granting multiple exploration concessions for the Hajigak mines located in the mountainous Bamiyan province, 130 kms west of Kabul. SAIL has been asked by the Indian government to lead the consortium for the mines which have estimated reserves of 1.8 billion tonne.

Foreign Secretary Ranjan Mathai ascertained the progress in the bidding process today and said that the consortium put out a concerted bid. Majority of the partners are understood to be interested only in exploration. SAIL chairman C S Verma, however, told Afghan Mines Minister Wahidullah Shahrani during his New Delhi visit earlier this year that his company would be keen to set up a steel plant in Afghanistan if it provides infrastructural support and raw material sources.

The Afghan government’s bid documents require the bidders to submit a refundable bid bond for $5,00,000 (Rs 2.5 crore each). All royalties, cess and duties will be paid by the bidders. Those wishing to bid for more than one block have to submit separate bids for each block. The last date for bidding is September 3. The Karzai government would commence negotiations with bidders in October and award the contract by December.

The annual investment is estimated to be to the tune of Rs 22.5 crore and given that the contracted exploration period will be 30 years, the total estimated investment is expected to be about Rs 700 crore, besides the expenditure to be incurred in developing infrastructure and evacuation mechanisms, a government official said.

Today’s meeting chaired by Mathai deliberated on a possible mechanism to evacuate iron ore from Hajigak. The options being considered are: through Pakistan and through the Bandar Abbas Port in Iran. In any case, the consortium would have to execute infrastructure projects to build rail-road connectivity to evacuate the produce, the official said.