MoU On Iron Ore Investments Signed Between India and Afghanistan

Developing economy India has forged a memorandum of understanding (MoU) with Afghanistan which outlines a cooperation for the development of the war-torn country's iron and steel sector.

Indian steel minister Shri Beni Prasad Verma went to Kabul to sign the MoU on Monday with Afghan mines minister Wahidullah Shahrani.

In a press conference, both Verma and Shahrani said the MoU permits Indian state and private firms to mine iron ore as well as invest in future steel production in Afghanistan. Shahrani hoped the Indian state and private firms will be likewise willing to invest and provide vocational training for Afghan workers in ore extraction and steel technologies, Radio Free Europe/Radio Liberty reported.

Verma noted in the same press conference that India is likewise interested to invest in natural gas and oil in Afghanistan.

The MoU signified India's strong desire in joining a global race to secure mineral assets, such as iron ore, and more lately, gold and copper in Afghanistan. In November, Kabul awarded to a consortium of seven Indian companies, led by state-owned Steel Authority of India (SAIL), the mining rights to develop the huge Hajigak deposit in Central Afghanistan.

Located in Bamyan Province, the iron ore rich Hajigak mine holds the best known and largest iron oxide deposit in Afghanistan. It extends over 32 kilometres and covers 16 separate zones, up to 5 kilometres in length, 380 metres wide and extending 550 metres down. The mine could give up to $6 billion to the government's coffers.

On May, the SAIL consortium and Afghanistan government are expected to sign a final agreement that will pave the way for the development of the Hajigak iron ore mine, including building a steel and power plant there.

"The negotiations on Hajigak's contract details, which include building of rail road, steel industry, power plant and others, would be finalized at the end of May and the final contract may be signed in May this year," Shahrani said.

The Afghan government, eager to rebuild its nation as well as attract foreign direct investment, had been proclaiming it holds an estimated $3 trillion in natural resources. The deposits, which yield copper and iron ore, oil and gas, niobium, cobalt, gold, molybdenum, silver and lithium, could lift the country's coffers by some $3.5 billion a year.

The Hajigak mine holds an estimated two billion tonnes of iron ore deposits and is expected to begin by 2015.

India is among the world's largest steel producers.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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