Afghanistan Another Target For India’s Raw Material Hunt

India has shown a growing interest in Mongolia’s natural resources. Media reports suggest that a consortium of four state-owned Indian companies comprising SAIL, Nalco, Hindustan Copper and Mineral Exploration Corp. was shortlisted last month to invest in new gold and copper deposits in Afghanistan.

Two private players — Monnet Ispat & Energy and Jindal Steel & Power — have also made the cut, opening up the possibility of a public-private partnership for a strategic bid by the Indian metals majors.

The Indian companies are among the 25 chosen out of 41 firms from the US, UK, Australia, Canada, UAE, Turkey and Afghanistan. Expressions of interest for individual or all four blocks in Afghanistan are expected by July 2012. Many believe Afghanistan has vast untapped mineral riches.

Indian companies are trying hard to enhance domestic steel production and all these efforts by the Indian steel companies follow that vein. India plans to expand steel production from the current 80 million metric tons to 200 million tons by 2020 and is looking to secure coking coal supplies since there are few quality domestic coking coal mines.

Domestic steel companies are struggling to get sufficient coal supply to run their plants because there is a wide demand/supply gap for coal in India right now.

Domestic steel mills are also facing a huge shortage of basic raw material iron ore because of a ban on mining activities in southern state Karnataka, which accounts for 25 percent of all iron ore supplies to Indian steel mills.

But now, steel mills have some good news with the Supreme Court order allowing 45 iron ore mines to resume operations.

The Court had banned mining operations in Karnataka following the Central Empowered Committee (CEC)’s recommendations last July. On April 18, the CEC recommended resumption of operations in leases that fall under the "A" category, subject to the fulfillment of certain conditions.

SAIL is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power generation, railway, automotive and defense industries and for sale in export markets.

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels.

SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. The company has the distinction of being India’s second-largest producer of iron ore and having the country’s second-largest mining network.

BY TC Malhotra