SAIL Consortium may scale down initial capacity of Afghan plant

The SAIL-led consortium plans to scale down the size of its proposed steel plant in Afghanistan in the first phase to 1-2 million tonnes per annum (mtpa) from 3 mtpa to reduce vulnerability of the project.

   

After winning the bid to mine three iron ore mines at Hajigak in November, 2011, Afghan Iron and Steel Consortium (AIFSCO) had said it would invest $ 10.8 billion to  set up a 6.1 mtpa steel plant in two equal phases along with a 800 MW power plant besides creating necessary infrastructure.

     
"We have now decided to trudge slowly and cautiously. The plan is on, but we would like to taste the waters with a small plant of 1-2 mtpa size in the first phase and scale it up as the situation warrants," head of a consortium member said.

     
The main reason for bringing down the size is the project location, a land-locked and incommunicado terrain, he said, adding this would make transportation costlier and the project vulnerable.

     
"At the same time, if we go slow initially, it will help us to taste the waters of the war-torn country. It will also help us to instill faith in the local government which might prove beneficial in our long-term plan in Afghanistan," he added.

     
The consortium has public sector firms SAIL, RINL and NMDC holding a combined 56 % stake. The rest is held by private players such as JSW, JSPL and Monnet Ispat & Energy among others.

     
The member firms, in their meeting in Kabul in March, had conveyed their decision to the Afghan Mines Ministry, which is revising the draft mining contract for the project.

     
Back home, the members would shorty meet to finalise the capital and operating costs for setting up and maintaining the 1-2 mtpa steel plant.

     
The SAIL-led consortium AFISCO had won three blocks, with an estimated reserve of 1.28 billion tonnes of high-grade iron ore, of the Hajigak mine in November, 2011.

     
The plan was to make an immediate investment of $ 75 million, mainly for geological and exploration study of the mines.

The investment will be met internally by the consortium members in the same proportion of their partnership.

While this study was expected to take nearly three years for completion, the entire project, comprising steel plant, power plant and road,rail network, would take 8-12 years to complete.