Five Indian metals and mining companies are in the race for acquiring mining rights for the largest iron ore deposit in war-torn Afghanistan. The government has shortlisted Vedanta group's Sesa Goa, Essar Minerals, Ispat Industries, JSW Steel and Rashtriya Ispat Nigam for a bid for the 1.8 billion tonne Hajigak iron ore deposit.
China's MCC and Tuwairqi Steel Mills of Pakistan are the two other firms shortlisted among the seven, Hafizullah Afzaly, executive officer of the project management unit at the ministry told Afghan media.
The ministry of mines had offered mining rights to the Hajigak deposits, 130 km west of the capital, Kabul, and surrounding areas through a tender process in April.
Asked about the bid, an Essar Steel spokesperson said, "As a group, we keep looking at growth opportunities. However, it is not our policy to comment on any specific issue."
Vedanta and JSW Steel sources confirmed their plans to explore opportunities in Afghanistan. "The quality of mines is better in Afghanistan and the exploration cost is relatively cheap. The proximity to Afghanistan will help us bring the iron ore to India. Our only concern is security," said officials.
The ore here has a high iron content of 62 per cent, and the deposits are suitable for open pit mining, according to ministry documents. There are 16 ore bodies, extending for 5 km and to depths of over 550 metres. The estimated value of the deposit would be nearly $10 billion.
Analysts said a maximum of 60 per cent of ore could be recoverable but there are veins of ore reaching down the side of a hill so there is potential for more deposits in the surrounding area. Nearby seams of coking coal would make it possible to set up an integrated iron and steel complex with a blast furnace, they added.
Although the deposits are not far from Kabul, the terrain is remote and mountainous. It is also situated on the edge of an area that has seen a sharp rise in insurgent activity over the last three years, as the government struggles to fight a growing Taliban offensive.
A recent US Geological Survey (USGS) said Afghanistan might hold far higher amounts of minerals than previously thought, with iron deposits alone estimated at between five and six billion tonnes.
Minister Mohammad Ibrahim Adel urged foreign firms to invest in the sector and expressed hope that the security situation would not deter them.
China's top integrated copper producers, Jiangxi Copper Co and China Metallurgical Group Corp, are developing the vast Aynak Copper Mine south of Kabul after they won the contract to develop it last year.