The increased security risks feared after the withdrawal of the US led NATO forces next year have forced the Indian consortium of six companies to consider slashing the proposed USD 11 billion investments for mining iron ore in Afghanistan. It is the largest investment proposal in Afghanistan so far. It proposes to harness the Afghan mineral resources estimated at over I trillion dollars according to the US Geological Survey.
The Afghan Iron and Steel Consortium, led by the public enterprise, The Steel Authority of India may bring down the initial outlay to USD 1.5 billion. The alarmed Afghan Mining Ministry is trying hard to assure the consortium to stick to the original proposal. However, neither the Afghan authorities nor Consortium partners are ready to say anything on the subject.
The consortium consists of Rashtriya Ispat Nigam Ltd. and NMDC Ltd., both state- owned, JSW Steel Ltd., Jindal Steel and Power Ltd. and Monnet Ispat and Energy Ltd. besides the Steel Authority of India.
President Hamid Karzai's Government had awarded the mining rights to the Consortium for three out of the four blocks. President Karzai is very keen to put this project through as one of his major achievements, but the dilly dallying on signing the Bilateral Security Agreement (BSA) between Afghanistan and United States has put a spanner in his wishlist.
He has already convened a Loya Jirga (Grand Assembly of Afghan elders and tribal leaders) to consider the proposed BSA with the US on the number of US troops to be retained in Afghanistan after the NATO withdrawal and their prosecution in case of any crimes committed by them.
The perception of risk surrounding the key Hajigak project may cast a shadow on Afghanistan's plan to rebuild its economy as it seeks more than 30 billion dollars in foreign investment for roads, mines and railways.
The US has 52000 troops in Afghanistan and President Obama has announced withdrawal of about 34000 troops early next year and remaining by the end of the next year leaving the security responsibilities to the Afghan Armed Forces. Armed conflict killed 1,319 civilians in Afghanistan in the first half of this year, 14 percent more than the same period last year. A United Nations Assistance Mission in Afghanistan (UNAMA) report in July reported 2533 persons injured, an increase 28 percent.
The slashed plan of the Consortium envisages restricting the project to only setting up a steel mill in Afghanistan to produce 1.5 million metric tons of steel annually. This is just one- fourth of the original plan. It will meet only the domestic demand of Afghanistan.
As per the original plan, apart from the steel mill, an 800 megawatt power plant, power transmission lines and a 900 kilometer railway line from Bamiyan in Afghanistan, to the Chaabahar port in Zahedan province of Iran. The surplus iron ore from the Hajigak site was proposed to be shipped to India to feed the raw material- starved Indian steel companies following the curbs imposed by some court decisions.
The otherwise barren highland mountain ridges in Hajigak tract of Central province of Bamiyan, 100 kilometers west of Kabul are estimated to hold 1.8 billion metric tons of ore. The location is not far from the famous giant Buddha statues sites which were blasted by the Taliban in 2001defying the world opinion.
The fear of increasing violence after the planned withdrawal of U.S. troops is scaring away financiers and the Indian companies. The steel Consortium's, request is pending with the Government of India seeking 7.8 billion dollars in interest-free loans and aid. India has signed a Strategic Partner Agreement with Afghanistan and provided about 2 billion dollars aid for the reconstruction of infrastructure and development projects over the last 12 years.
Apart from constructing the prestigious building to house the Afghan Parliament, India has built strategic highways, laid transmission lines to provide the much needed electricity to the power hungry Afghan capital. India is also constructing multi-purpose Salma Dam in Herat, has provided about 2000 buses to run public transport, vehicles to the Afghan National Army, constructed big educational institutions and hospitals besides providing thousands of scholarships for training in Indian institutions .
India is competing with its arc rival China to harness the Afghanistan's resources. Chinese have already begun work on two projects - Amu Darya oil basin exploitation by China National Petroleum Corp and The Aynak copper deposits being developed by Metallurgical Corporation of China.
Even though the project offers huge benefits in goodwill for India and profits for the participating companies, the companies are forced to rethink due to the heightened risk factor after the US withdrawal. At least they are likely keep the final decision in abeyance till the Loya Jirga decision on the BSA and outcome of the Afghan Presidential elections scheduled to be held in April next.
The views expressed are of the author, G.S. Randhawa, who was the former All ndia Radio Correspondent in Kabul.
