Afisco, the SAIL-led consortium, will have a top-level review meeting on March 20 on the proposed $10.8-billion integrated Hijigak project in Afghanistan.
Consortium sources told Business Line that the meeting was significant as for the first time heads of the consortium members would consider the future of the project.
Afisco encountered several hurdles in giving a final shape to the mega investment project.
“Even the economics of the mining project appear uncertain,” said the top official of a consortium member. SAIL Chairman C.S. Verma in January had told
In November 2011, the consortium of three state-run and four private Indian players was chosen as preferred bidder for three unexplored Hajigak iron ore blocks of Afghanistan’s Bamiyan province.
An MoU was signed in April last year for the comprehensive project, which included a 2.6-mtpa steel unit based on the mined ores.
During the past one year of negotiations, the Afghan Government yielded promise of providing access to around 6 million tonnes of coking coal, around 5 mtpa thermal coal and around 3 mtpa of flux assets. According to Afisco sources, apprehension over viability of the integrated project had been raised in the past five months.
“There was a fall in the interest in terms of key issues such as debt funding, security and logistics. Both the Governments showed indications of reduced keenness in the project,” said the chairperson of a steel maker, which is a part of the consortium.
Viability gap
“The junior level officials, who have been handling the negotiations and reviews, had earlier suggested problems in overcoming certain hurdles,” said CEO of another member.
After a review meeting on December 21, the consortium had sought Indian Government’s support to bridge a viability gap, said a director of Afisco member.
The Steel Ministry had asked the consortium leader to arrive at the viability gap figure and articulate the components of the “support” – financial and otherwise – Afisco needed for the Hajigak mining project.
The consortium now also has to consider the details of agreement, yet to be signed with the Afghan authorities.
In December, the Afghanistan Mines Minister had told Business Line that a comprehensive agreement was expected to be signed in January.
The Hajigak blocks are estimated to have reserves of around 1.28 billion tonnes of high-grade magnetite ore.
Apart from SAIL, the other consortium members are RINL, NMDC, JSW, JSW Ispat, Jindal Steel and Power Ltd and Monnet Ispat.