Steel consortium slashes Afghan ore plant plan

NEW DELHI/KABUL Tue Dec 31, 2013 10:07pm IST

Related Topics

Stocks

   
Kishore Pandey, 82, lies on a bed as his daughter, Usha Tiwari, holds him and a priest stands by them (L) at Mukti Bhavan (Salvation House) in Varanasi, in the northern Indian state of Uttar Pradesh, June 19, 2014. REUTERS/Danish Siddiqui

Waiting to die at Salvation House

The city of Varanasi is Hinduism's holiest city and many Hindus believe that dying there and having their remains scattered in the Ganges allows their soul to escape a cycle of death and rebirth.  Slideshow 

NEW DELHI/KABUL (Reuters) - An Indian consortium has slashed a planned $10.8 billion iron ore investment in Afghanistan by 80 percent because it has been unable to get funding for the project.

The consortium has proposed new terms which would see just 130.57 billion rupees invested, according to figures released on Tuesday in India's steel ministry year-end report.

Led by state-owned Steel Authority of India Ltd (SAIL) (SAIL.NS), the group was forced to renegotiate the terms of the deal with the Afghan government after India's finance ministry refused to fund the project.

The original proposal called for investment in three iron ore blocks at Hajigak in Afghanistan and in a 6 million-tonne-per-year (MTPA) steel plant.

But the finance ministry told the consortium, according to an official involved, to draw up a fresh viability study.

Under the new proposed terms, the size of the plant would fall to 1.2 MTPA.

Afghanistan's Ministry of Mines said the final sum had not been agreed and it had not been notified by the consortium.

"They have not sent any official letter to us about changing the investment money from $10 billion to $2 billion," a ministry spokesman said, adding that negotiations were under way.

"The negotiation is in progress and every day we see good results," he said.

The Indian steel ministry confirmed that talks were under way.

SAIL, along with partners NMDC Ltd (NMDC.NS), Rashtriya Ispat Nigam Ltd, JSW Steel Ltd (JSTL.NS), Jindal Steel & Power Ltd (JNSP.NS) and Monnet Ispat & Energy Ltd (MNET.NS), won a bid in late 2011 to explore the three iron ore blocks with reserves of 1.28 billion tonnes of ore.

If a final deal is sealed, the consortium expects to produce 2.5 million tonnes of iron ore per year from the blocks in the Hajigak deposit.

It is located in mountainous Bamiyan, where Afghanistan's famous ancient Buddha statues once stood in the cliffs before their destruction by the Taliban.

Afghanistan is looking to mining to help wean the country off international aid after more than 12 years of war.

But despite the lure of untapped natural resources estimated to be worth more than $1 trillion by the U.S. government, only a handful of major projects have been signed and most have ground to a halt over the past year.

In August, the government said that Chinese firms were demanding a review of a landmark deal to produce copper in Afghanistan agreed in 2007.

The Chinese group was to start producing copper by 2014, but the venture is now not expected to begin production until 2019, according to an independent monitor.

Once production starts, the mine will generate at least $250 million per year and create around 75,000 jobs, according to the World Bank. (Reporting by Krishna N Das and Jessica Donati, editing by William Hardy and Jason Neely)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Hyundai Motor Results

Hyundai Motor Results

Hyundai Motor Q2 profit slips as firmer won, U.S. discounts hurt  Full Article 

Nokia Results

Nokia Results

Nokia raises networks outlook after Q2 profit beats estimates  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage