Afghanistan’s government is inviting bids from international companies to develop a major iron ore deposit as well as an associated steel mill.
The Hajigak deposit, 130km west of the capital Kabul, has an estimated 2 billion tonne iron ore resource, making it the largest in Asia.
The tender process for the mine and mill complex, which is estimated to cost about $12 billion to develop, will begin shortly.
The deposit was first drilled by the Soviets in the 1960s and geological information is sketchy at best. The Afghan government will allow all interested parties to make site visits and undertake their own assessments of Hajigak.
The government had previously shortlisted seven Asian companies as potential buyers but the process was put on hold due to the global recession. The interested companies included Saudi Arabia’s Al-Tuwairqi, Metallurgical Corporation of China (MCC) and Vedanta Resources.
A major difference between Hajigak and established iron-ore sources is believed to be grade as it only has an iron content of about 62% whereas Brazilian and Australian ores are on average 65% or higher.
Other hurdles include power and other infrastructure, and skills. Afghan Mines Minister Wahidullah Sharani says abundant water resources in the region could be converted to hydro power.
He says safety isn’t a concern for the project. “In certain parts of Afghanistan security is a constraint. The iron ore deposit is situated in one of the most secure areas of the country, security is not an issue there.”
Wahidullah Sharani says the government is trying to woo investors into its mining and agricultural sectors so the country can wean itself off first-world hand outs.
Already, MCC is building the $4.4 billion Aynak copper mine which is due to start producing in three to four years.

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