India zeroes in on Afghan coal assets

By: Ajoy K Das
20th June 2012
KOLKATA (miningweekly.com) - After zeroing in on ferrous and non-ferrous metal assets in Afghanistan, India has now shifted its focus to the exploration and development of Afghan coal reserves.

A delegation comprising Coal India Limited (CIL) chairperson S Narsing Rao, Singareni Collieries Company  chairperson Sutirtha Bhattacharya and officials from the Coal Ministry would shortly visit the Afghan capital Kabul, and following discussions and reviews of prospective coal basins, a memorandum of understanding would be signed for bilateral cooperation in developing coal assets, a ministry official said.

The Indian interest in the coal assets was triggered by Afghanistan Mines Minister Wahidullah Shahrani, who, in recent talks with the Indian government, urged the latter to share expertise and technology in developing coal reserves in his country, paving the way for inflow of foreign direct investments into the coal sector.

The Indian foray into the coal sector was a reflection of further consolidation of the country’s strategic interests in minerals and mines in Afghanistan as envisioned in the Strategic Agreement for Cooperation in Minerals and Hydro-carbons, signed between the two countries.

India has very mixed experience in acquisition of mineral, metals and fuel assets overseas. Indian participation in the Afghan coal sector could change that and also ensure long-term energy security for India, an official in Mines Ministry said.

India has already gained a footprint in Afghanistan mineral sector, with the Afghan Iron & Steel Company Limited (Afisco), a consortium led by Steel Authority of India, bagging the rights to develop the 1.8-billion ton Hajigak iron-ore reserve and committing to an investment of $11-billion including construction of a steel production facility, infrastructure and logistics.

Recently, a consortium led by India’s National Aluminium Company and Hindustan Copper was shortlisted by the Afghan government for copper and gold reserves in Badakshan, Zarkhashan and Shaida regions of Afghanistan and due diligence process has commenced.

Indian interest in coal assets in Afghanistan should be viewed against the acute domestic shortage and inability to conclude long-term supply agreement with coal asset owners overseas.

India’s Planning Commission has recommended that 45-million tons of coal be imported by CIL during 2012/13 to ensure 393-million tons of supplies to thermal power producers while coal miner has been set a target of supplying a minimum of 347-million tons, an 11% increase over supplies made by CIL to power plants in the previous year.

Edited by: Esmarie Swanepoel