India is hoping to bury the hatchet with its historical rival Pakistan, at least enough for both sides to benefit from a massive iron ore deposit in Afghanistan.
In November a consortium of Indian companies led by SAIL was awarded a multi-billion-dollar contract (the steel plant, power plant and 200km of rail, road and power lines are estimated to cost $10.8 billion) to mine the huge Hajigak iron ore deposit in Afghanistan — considered one of the largest iron deposits in the world at 1.8 billion tonnes graded around 60% iron.
The other companies were state-run Rashtriya Ispat Nigam Ltd., private-sector firms JSW Steel Ltd., Jindal Steel & Power Ltd., JSW Ispat Steel Ltd., Monnet Ispat & Energy Ltd., and Canada’s Kilo Goldmines.
Reuters reports that India is exploring an overland route through Pakistan to truck iron ore from the Hajigak mine to India. A slurry pipeline is also likely to follow the same route. The alternative would be to ship the ore through a longer route westward through the Iranian port of Chabahar.
While skepticism is high that India and Pakistan can cooperate given that Pakistan is suspicious of India’s extensive aid and reconstruction in Afghanistan and fears a loss of influence, many Pakistanis believe that economic ties with India are a way to build up the country’s flagging economy. Reuters explains:
Pakistani businessmen have urged the country’s military and political leaders to open up trade with India, arguing that the only way the economy can climb out of a low growth path is to do business with its giant neighbour to the east.
SAIL Chairman C.S. Verma was quoted by Reuters saying “this will be a productive investment” and that the benefits outweigh political hostility between the two countries:
“What we have here is a gold mine, more than just an iron mine. I believe this is what everyone else will eventually realise. Ultimately the economic interests of everyone in the region including Pakistan will take precedence.”
Combat forces are scheduled to leave Afghanistan in 2014, the same year the consortium hopes to develop the Hajigak mine.
2 Comments
sayed Hashemeyan
Thank you for e-mailing interesting economic and political news on Afghanistan. please continue this cooperation. Thanks again. Sayed Hashemeyan.
sayed Hashemeyan
In general India is a good partner for Afghanistan.The business transaction in Hajigak would also benefit Pakistan, because Pakistan gets transit fees for the transfer of iron from Hajgak to India through Pakistan.. Such business deal would also improve political differences between India and Pakistan. The new government in Kabul in 2014 would encourage foreign investments, regardless of who wins.the political chair.
Sayed hashemeyan – December 6 -2012