Business Standard: India eyes $1trillion fortune in Afghan mining hotbed

Industry News 2010-06-18 08:14:15

 Mumbai June 17-2010

Business Standard :

 

Nature’s gift to Kabul — the mining hotbed — could further strengthen the relation with its natural ally, New Delhi.
An “unscheduled” meeting between Afghanistan Mining Minister Wahidullah Shahrani and his Indian counterpart B K Handique in the capital yesterday gathers significance as it came just a day after the Pentagon —the headquarters of the US defense department — made a sensational disclosure that Afghanistan has nearly $1 trillion in untapped mineral deposits.
The revelation is enough to turn the country into the hottest mining destination in the world and India is not far behind.
 
Yes, we had a meeting for the first time,” Handique told Business Standard. “The mining industry is in a nascent stage in Afghanistan and they want to grow it. Everybody is now talking of the potential in Afghanistan. We are also equally keen to tap that opportunity. And India is a natural partner for them.”
Indian companies are helping to rebuild critical infrastructure in Afghanistan. From a 200-km highway to power transmission lines, telecom infrastructure and even dams for hydel power.
But Handique said while there is genuine potential, the issue of security of Indian workers is a concern in the war-ravaged nation. Post Tuesday's meeting, he has already spoken to the top Geological Survey of India (GSI) officials who he says were willing to venture out but had asked for security cover.
 
Most of these veins of mineral deposits are close to the Pakistan border, an area controlled by the Taliban.
But the ball has been set in motion. In July, officials and geologists from Kabul will be visiting Jaipur for a joint workshop with the GSI officials. For GSI, the bond with Afghanistan is over 100 years old, when they came up with the first detailed geological mapping of the country in the late 19th century. The map is still used as the basis for any cartographic exercise.
Afghanistan, say mining ministry officials, want Indian companies to tap five key minerals: coal, iron ore, copper, cobalt and gold. “The minister told us that India is a major importer of copper ore and concentrate. And Afghanistan has major reserves which we should tap,” said the official.
 
Hindalco, for example has a 15 per cent shortfall in copper ore and is exploring options of either buying a mining asset to bridge the gap or reopen a mine in Australia, where it had shut shop due to high operating costs.
Kabul is very keen to have Indian private sector steel makers extract iron ore and set up steel units in Afghanistan. Such value additions can also help in employment opportunities for the local population and with such massive rebuilding going on, a ready market already exists right next to the Indian border.
 
Indian steel makers, however, are cautiously optimistic. In 2008, three Indian steel companies alongwith two from China had bid for iron ore mines in Afghanistan, but Kabul cancelled them at the last minute. “The problem with Afghanistan is that it is land-locked. The prospects of consumption within the country is quite limited, so for any initiative to really take off, we need access to Pakistan’s ports and that remains a big question mark,” said the managing director of a steel company.
 
A roadshow on investment opportunity in the Afghan steel and iron ore sector has been planned in London on June 25 where 200 global companies have been invited. India too is planning to have a steel delegation with representatives from the private sector, PSUs and the mines ministry.
Cooperation on coal is the other big frontier. Afghanistan is willing to allow coal imports for India’s growing power needs. Of course it would also like power plants to be set up locally with Indian help, a move that has started.
 
Interestingly enough, the talks between the two ministers did not harp too much about lithium, an essential raw material for batteries for laptops and Blackberrys. Pentagon officials are already calling Afghanistan “the Saudi Arabia of lithium.”
But will it again end up as just a dialogue and an intention that will get lost in bureaucracy? “We have a protocol when it comes to international engagement. I told the minister that we would like to take this forward with a memorandum of understanding (MoU). I have told him that we have recently signed one with Namibia, Columbia. Similar MoUs are being planned for Chile, Peru. In our meeting, they did not make any commitments, but heard us out,” said Handique.
 

 

 

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