The bid submitted by a consortium of Indian steel/mining companies led by Steel Authority of India Limited (SAIL) for mining concessions of the Hajigak Iron Ore Mines located near Bamiyan in Afghanistan was among the six bids opened today by the Ministry of Mines (MoM), Islamic Republic of Afghanistan. NMDC, RINL, JSW, JSPL, JSW Ispat and Monnet Ispat comprise the other members of the Indian consortium. The consortium has bid for all the four blocks at Hajigak offered by MoM, Afghanistan. Announcement of Preferred and Reserved Bidders is expected to be made by MoM, Afghanistan on or about 4 th October 2011.
The five other bids submitted by parties from various countries for the Hajigak mines which are estimated to have a reserve of 1.8 billion tonnes of high-quality magnetite with 62-63 per cent iron content, include ACATAC, LLC of the USA (3 blocks), Behin-Sanate Diba of Iran (4 blocks), Gol-e-Gohar Iron Ore of Iran (1 block), Kilo Goldmines Ltd. of Canada (1 block) and Corporate Ispat Alloys Ltd. of India (1 block).
The Indian consortium has majority stake by public sector companies with SAIL, NMDC and RINL holding a combined stake of 56%. SAIL being the lead partner holds an equity stake of 20% while NMDC and RINL hold 18% each. Among private players JSW and JSPL hold 16% each, while JSW Ispat and Monnet Ispat & Energy hold 8% and 4% stake, respectively.
Upon receiving the news of bid opening, SAIL Chairman Mr. C.S. Verma said: "This is the first time that Indian public and private sector companies have come together to jointly bid for an iron ore asset abroad. With Afghanistan holding strategic interest for India, we hope that our endeavour to obtain mining licenses there will be a stepping stone towards the larger objective of contributing to the much-needed economic growth of the country. This will pave the way for more such collaborative efforts in the future by Indian companies for obtaining raw material assets in other countries."
The SAIL-led consortium is hopeful of being selected as the Preferred Bidder. The Preferred Bidder will have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after carrying out the negotiations, and will receive an exploitation license to further explore, develop and exploit the Hajigak iron ore deposits.
As per the Request for Proposal (RFP) issued by MoM, Afghanistan there will be total and annual exploration expenditure requirements over at least a three-year period with annual minimums of US$5 million or more. Bids will be evaluated on various parameters related to bidding company's credentials and benefits accruing to Afghanistan such as royalty, commitment towards corporate social responsibility, etc. Emphasis has been laid on development plans which proposes expansion from iron mine/processing facilities with transport assets to vertically integrated processes including making steel. However, the weightage assigned to individual parameters has not been disclosed by the MoM, Afghanistan.
The mining concession of Hajigak Deposits would not only provide an opportunity to tap rich iron ore resources but may also lead to access to other scarce resources of the mineral-rich country. The Indian consortium has proposed to set up a steel plant in Afghanistan, the size of which would depend on the raw material quality and linkages, techno-economic viability and approval from the Government of India as may be required for investment by public sector companies. As per the RFP, the Government of Afghanistan will facilitate access to potential resources of coking coal and other raw materials for steel making.