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SAIL resumes negotiations to setup $1.14b steel plant in Afghanistan

August 9, 2014 

The approval of the new Afghan mining law has paved the way for the resumption of negotiations by the Steel Authority of India Ltd-led Afghan Iron and Steel Consortium (AIFSCO) for the set up of $1.14 billion steel plant in Afghanistan. 

According to the officials aware of the development, AFISCO will soon re-commence negotiations with the Afghan government to set up a plant with a capacity of 1.5 million tonnes per annum. The officials further added that final agreement will take place once the law is passed by the Afghan president, as per the constitution of Afghanistan. 

The mining law of Afghanistan was approved by the parliament of Afghanistan around two months ago, and is currently pending the signing of the Afghan president. In the meantime, officials in India-led steel consortium – SAIL, have said that they will resume negotiations once the law is cleared. 

AIFSCO is comprised of public sector firms SAIL, RINL and NMDC, which is holding a combined 56 per cent stake, while other private players such as JSW, JSPL and Monnet Ispat & Energy are holding the remaining share of the iron mines. 

AIFSCO following the award of three iron ore mines at Hajigak by the government of Afghanistan in November 2011, had announced to invest $10.8 billion to set up a 6.1 mtpa steel plant in two equal phases along with a 800 MW power plant, besides creating necessary infrastructure. 

However, later it decided to scale down the original plan by around 75 per cent, with consortium members deciding to set up a steel plant of 1.25 million tonne per annum (mtpa) and a 120 MW captive power plant with $2.9 billion investment.