Afghanistan awards 3 blocks at Hajigak to Indian group

KABUL: The Afghan government has awarded the rights to develop three blocks of the huge Hajigak iron ore concession in central Afghanistan to a consortium led by the Steel Authority of India, an official at the Ministry of Mines said on Monday.

Policy director Abdul Jalil Jumriany said rights to a fourth block at the deposit had been won by Canada's Kilo Goldmines Ltd , which is chiefly active in Africa and has previously worked in joint venture with Rio Tinto Mining and Exploration.

"B, C and D blocks have been awarded to the Indian consortium, and block A has been awarded to the Canadians," Jumriany told Reuters.

The AFISCO consortium of Indian steel and mining firms led by SAIL announced in September it was bidding for the Hajigak concession, which has the potential to be Afghanistan's single biggest foreign investment project.

SAIL chairman C.S. Verma said he had heard from media reports the consortium had received three out of four blocks, but had no official confirmation of the news.

He said the estimated iron ore reserves in A, B and C blocks were about 484, 930 and 357 million tonnes, respectively, while D block had "small reserves."

The Ministry of Mines said it was still finalising contract details with the chosen bidders.

"The development of the Hajigak (project) by Kilo and AFISCO is expected to bring billions of dollars in mining investment and thousands of new jobs to Afghanistan," it said in a statement.

"The companies have also pledged substantial support for railway, power, and other infrastructure development within the country, as well as major support for education and training programs."

The SAIL group could invest up to $6 billion in the mine, railroads and a steel plant, and the site could employ as many as 20,000 people.

The Hajigak deposit contains an estimated 1.8 billion tonnes of iron ore, with an iron concentration of 64 percent, the ministry said in a statement. The figures are based on a survey carried out in the 1960s.

Afghanistan has an estimated $3 trillion worth of mineral reserves, including iron ore, copper, precious stones, oil, gas and gold, but mining is a tough proposition given the perilous security situation and poor infrastructure.

The United Nations said this year violence across Afghanistan is at its worst since the Taliban regime was toppled 10 years ago, although the NATO-led alliance of foreign troops says attacks on its forces by insurgents are now falling.

The huge investment necessary to develop Hajigak will be welcomed by the cash-strapped Afghan government, but the deal could cause problems with neighbouring Pakistan, which fears closer cooperation between India and Afghanistan.

India is Afghanistan's biggest regional aid donor and has already pledged $2 billion in infrastructure and development projects, including erecting a new parliament building.

Copyright Reuters, 2011