Afghanistan keen to ink mining contract with India: Afghan minister

Afghanistan is keen to sign the contract with India for the Hajigak iron ore mines near Kabul which was offered to a consortium led by Steel Authority of India Ltd (SAIL) two years ago, an Afghan minister has said.

According to Afghanistan Agriculture Minister Asif Rahimi, his government is "very interested" in signing the contract with the Indian consortium. Rahimi, a cabinet minister who was in India recently for a business event, said the delay in inking the contract was because the country's new law of mines and minerals has to be passed by the Afghan parliament, which he assured would be done in a few months.

In November 2011, President Hamid Karzai's government offered the SAIL-led consortium mining rights in three mines in Hajigak. The consortium, known as Afghan Iron and Steel Consortium, comprises of NMDC Ltd, Rashtriya Ispat Nigam Ltd, JSW Steel Ltd, Jindal Steel and Power Ltd, among others.

SAIL plans to set up a 6 million tonne (mt) steel plant at Hajigak, a power plant and road and rail infrastructure and transmission lines, which would work out to a $11-12 billion project.

But despite several meetings between both sides, the final contract between the two sides has not been signed. Rahimi said his government is keen on going ahead.

"This will be the largest investment in Afghanistan - $11 billion. This will create work, create jobs, bring income to Afghanistan, taxes.. We are interested and the Indians are interested too," Rahimi told IANS in an interview.

The minister said "Hopefully, we are going to have a new mining law in the country that supports private investments, protect the interests of the foreign investments in the mining sector in the country. But I believe the Indian investors have been advised to wait for a few more months to get this new law endorsed by the parliament and gazetted by the government so that they will be more assured of the long term profitability of their investments," he said.

Rahimi also said that his government was improving the infrastructure in the country. "New roads are being built, highways are getting improved, electricity plants are being established, electricity is being imported from other countries, so this is a work in progress," he said.

Hajigak, a series of rugged mountain ridges 100 km west of Kabul located in Bamyan province, holds an estimated 1.8 billion metric tons of ore. The costs of developing mines will be increased by the need to build paved roads or rail lines to connect the site to potential markets.

The minister dismissed reports that China was also angling for the mining rights.

"I am not aware of the Chinese, they are in the Aynak copper mine, but not in the Hajigak" he said.

Besides tapping its mineral wealth, of which it is believed to hold an estimated $3 trillion worth of deposits that include copper and iron ore, oil and gas, niobium, cobalt, gold, molybdenum, silver and lithium, Afghanistan is keen to welcome investors in its agriculture sector too.

The Afghan government is planning to develop 50,000 hectares of land near Kabul into a commercial agricultural site, which would grow crops, saffron, have a poultry and dairy sector and also a cold chain for preservation of the food products.

Rahimi said the project is in the initial stage of planning. "After approval a tender will be floated for companies to come, to go grow food, for agricultural products, for export as well as using in Kabul markets," he said.

With irrigation not yet well developed, the minister said the government is working to build large water reservoirs and use appropriate technology to irrigate the lands.

(Ranjana Narayan can be contacted at ranjana.n@ians.in)