Tata Steel, JSW among firms in race for Afghan iron ore

Industry News 2011-01-20 14:11:35

Source : Bloomberg

Published on : 19th January 2011

Tata Steel Ltd and JSW Steel Ltd are among 22 companies that will be invited to bid for rights to mine Afghanistan’s richest iron deposit, the the nation’s government said.

The companies, 15 of which are from India, expressed interest after Afghanistan broadened its effort to attract bidders for the 1.8 billion tonnes deposit, according to a statement emailed by mines ministry spokesman Jawad Omar. The government last year cancelled a 2009 tender after only one of seven government-approved bidders visited the Hajigak site.
“While the world’s largest mining companies are absent from the list, the 22 potential bidders represent a success for President Hamid Karzai,” said Saifuddin Saihoon, a professor of political economy at Kabul University. Strong competition for the Hajigak deposit may help broader campaigns by Karzai and the US defence department to attract international investors they say are essential to stabilizing Afghanistan.
Extracting Hajigak’s iron ore will directly and indirectly provide thousands of jobs, will make millions of dollars for Afghanistan and will improve security in provinces northwest of the capital Kabul, Saihoon said in a phone interview. Unemployment has depressed Afghans’ living standards to what the United Nations 2009 Human Development Report ranked as the world’s second-most impoverished.
Hajigak, a string of treeless ridges in the Hindu Kush mountains, 100km west of Kabul, is the biggest mining project on offer in a country that holds $1 trillion in untapped minerals, according to a US estimate last year. The 15 Indian companies are joined by two from Iran and one each from Australia, Canada, China, Turkey, the UK and the US, the ministry statement said.
“We are very happy with the group of companies that have been shortlisted,” mines minister Wahidullah Shahrani said in the statement. They represent the high level of international interest in developing Afghanistan’s mineral wealth.
While Shahrani flew to London in June and India in November to urge companies such as Rio Tinto Plc and ArcelorMittal to bid on Hajigak and other projects, the government has had trouble persuading businesses that war and corruption will not damage investments there.
Afghanistan in 2007 awarded its biggest mining contract, for $808 million plus royalties and taxes, to the Metallurgical Corp. of China Ltd to mine copper at Aynak, south of Kabul. Karzai dismissed the former mines minister, Mohammad Ibrahim Adel, after a news report said he took a $20 million bribe in that deal. Adel denied the story.
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