Despite a spike in tension in Afghanistan and uncertainty over the future once foreign combat forces leave in 2014, India was committed to developing the Hajigak mines and a 6 million ton steel plant alongside, CS Verma, chairman of Steel Authority of India, told Reuters in an interview.
A contract is to be signed in two months in what will be the biggest foreign investment in Afghanistan's resources sector, larger than the $4.4 billion the Chinese are investing in the Aynak copper mine.
Mining work is expected to begin in late 2014 just when Afghan security forces take over security responsibilities and it remains a big concern whether they will be able to tackle a Taliban insurgency at its worst.
For the Indians, the challenge of transporting the ore out of the landlocked country is an additional issue given they have no direct access.
Pakistan is the obvious route and the alternative is a longer way westwards to Iran and then shipping it through the port of Chabahar that India has promoted to reduce Afghanistan's dependence on Pakistan.
But Verma told Reuters that the consortium made up of seven state and private firms was looking to move the ore along Pakistani roads crossing over to India, believing the benefits far outweighed 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."
The Hajigak deposit contains an estimated 1.8 billion tons of ore, with an iron concentration of anything between 61 percent to 64 percent. "Where will you find such high grade ore? People have invested in mines elsewhere in the world with much less ferrous content," Verma said.
India, he said, would pursue the Pakistani option both as a way to truck the ore out and a route to build a slurry pipeline. "We are very bullish and believe that over the longer term this will be a productive investment. Not just for us, but others in the region including Pakistan. There are license fees, logistics, etc."
Loggerheads
Pakistan and India have been at loggerheads over Afghanistan for years with Pakistan suspicious of India's extensive aid and reconstruction efforts there, and fearing a loss of influence.
But as India has powered its way into one of the world's fastest growing economies and added political heft, Pakistan's economy has slipped further back and is unable to match the scale of its investment in Afghanistan.
Pakistani businessmen have urged the country's military and political leaders to open up trade with India, arguing that they only way the economy can climb out of a low growth path is to do business with its giant neighbour to the east.
Pakistan has agreed to grant India Most Favoured Nation to promote trade and the two sides while still poles apart on political issues, are taking steps to expand the trade basket. Later this week, officials will hold talks on trade in petroleum products.
More crucially for Afghanistan, Pakistan has begun implementing a trade and transit treaty that allows Afghan exporters to send goods to the giant markets of India.
"Pakistan has been very clear that its red lines are security issues, things like training of forces etc," an Indian diplomat said in New Delhi.
"On other fronts, there is less of resistance. They are allowing goods from Afghanistan to go through, it’s a start."
He recalled how apples from Afghanistan's Wardak province were flown in the hold of state-carrier Air India in 2009 because Pakistan wouldn't allow the farmers to truck them to the Indian market.
Verma said seven of India's biggest companies in the steel sector were involved in the Afghan venture. "We know its difficult terrain, we have never done anything like this before, but we are bringing all our resources."
The other members of the consortium are: state-run miner NMDC Ltd and steelmaker Rashtriya Ispat Nigam Ltd (RINL), and private sector steelmakers JSW Steel Ltd, JSW Ispat Steel Ltd, Jindal Steel & Power Ltd and Monnet Ispat & Energy Ltd.
COMMENTS (70)
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@Singh: the final decision will be of GHQ (PAK ARMY) and u bettr know their final decision hahaha
@Anjaan Well dear anjaan tell me about the plan B...plzz share with me the second option which you have other than pakistan???????
@Phajja NAI: Come what may India will never change. It is right now a police state. It kills people with impunity. It has conducted thousands of pogroms on Muslims in India which it calls riots. They are not riots but organised killing by the police and state agencies. It has massacred people in Kashmir just because they demanded right of self determination. If India is democratic it should offer the democratic solution to the people of Kashmir. Why does it want to rule over them? A billion people are not enough to rule over them?
India has a history of armed violent aggression. It invaded with tanks, went and occupied a peaceful state of Hyderabad, having earlier illegally blockaded a land locked country for an year, then occupied Kashmir, Junagadh and Daman and Diu. It teaches concocted and constructed history in Indian curriculum. India cannot be trusted by any means. People are very good but the Brahmin mind has to be fought tooth and nail.
They have no regard for international law. All these were actions against international law. And India wants a seat in UNO Security Council.
NATO experience cannot be applied though to this. You cannot block Afghanistan the sea route as per international law. It is better we restore it lest we are forced to by a UN resolution.
But India must change its mindset. Give people the right of self determination and then we can think of even removing the visas between the two countries. Till then no.
@Bashir: " Pakistan needs to forget India and move on. Let India take care of itself and leave Pakistan alone. Pakistan has many countries and options to expand business with. "
I agree with you 100%. There is too much of trust deficit and this is not going to resolve with trade.It will resolve Politically before other things can happen. They can find whatever Business partners they can find and leave each other alone. Take time to resolve outstanding issues and keep minimum contacts. Nothing more than that will work for Pakistan. This trade with India and specially trade of India through Pakistan is not a feasible Option until other issues are addressed. If Not and both should find whatever is best for them. China and India's Border disputes and trade is a different Matter. Both nations have same size of Population and have different History. That Model will not work with Pakistan. We have seen the result of permitting NATO supplies VIA Pakistan and it was a trade of Loss and it redicalized several groups within Pakistan who did not want that option at all. Therefore, It's better for India to find other route and leave Pakistan alone. We will wish them all the best with their trade VIA Iran or whoever country they may choose. Many people giving EU example here as a Model for pakistan and India. It's not a correct comparision because almost all EU nations are small nations and that's the reason they did not allow Russia to Join this Union. They whole Purprose of that was to create a trade block of small nations together so that it converts into a sizable trading Block whose common interests are best served as collective bargain. India, Pakistan and Bangladesh as a Block doesn't make any sense as India's Size is way bigger than Pakistan. It's not feasible to have such a Union. On the other hand, Central Asian nations , Iran , Afghanistan and Pakistan joining together along with Turkey will make a significant trading Block whose commonalities in their culture due to religion and FARSI(except Turkey) will make it a better trading block on EU type Model. It can then compete economically better with its neighbors and benefit better from this trade.
@aew12: Sir you don't make decisions on such lines but on national priorities. The world needs steel and always will. If Afghanistan takes a few decisions right everything will be in place. It is the national objectives and hence the policies that eventually matter. Cost is just one of the factors. If one thought on lines you have suggested there won't be industries any where. It will be always cheaper to import finished products from China because Chinal subsidises almost every thing. Does it mean we do not put up industries? No. And had Churchil calculated the cost of war UK would never have gone to war.
Pakistan needs to forget India and move on. Let India take care of itself and leave Pakistan alone. Pakistan has many countries and options to expand business with. There are huge problems and issues to resolve with India related with water and Kashmir and until then . . .no trust and no business.
@Mast Malang: Like your name even if i do no agree with what you say
Another opportunity to be fooled and abused. Pakistan does not need India as it is a security risk and Pakistan will be the loser.
@MastMalang: Hehe, let's hope the policy makers who're actually going to make this decision for Pakistan aren't as kiddish as you but more pragmatic.
Trade and economic ties have the potential to break the gridlock between the two countries. Once goods and people can flow freely, these disputes won't last for long. Water for instance: if India is invested in Pakistan, water and power would be as much its concern. And the same goes for Pakistan. When Pakistanis can go to Kashmir as often as they like, annexing it won't be such an obsession. All this is proven in Europe post-WW2.
The region as a whole would prosper. India is hoping for Pakistani decision-makers to step into the 21st Century with this move.
If it doesn't happen, we'll be disappointed because it's another opportunity lost to break the impasse. And in today's world, India doesn't really care for these ridiculous squabbles with Pakistan.
But it's not like the iron mine or supply route won't happen. Just that the beneficiary will be Iran. The US is pushing India to go with Pakistan instead, but if it's people like you making decisions, Iran it will be.
Another thing that's funny to me is how Pakistanis keep singing China's praises regardless of how brutally they treat their Muslims. Hypocritical much? Given this, let's admit that this India obsession is less about Muslim rights, and more because you're brainwashed with hatred?
@Bilal:
"Pakistan should make this deal dependent to water issues."
Yes, Pakistan could put this condition but does it have any leverage to implement this condition?
As you must know, the Indians have already connected Afghanistan to Iran's Chabahar port through road/rail network. Of course, it would be easier and perhaps cheaper to transport the ore through Pakistan, but that is not a big advantage if you consider that China and Japan transport ore from South America, Africa and India over the sea and are still able to make steel competitively.
As for water issues, it is really not an issue as all of Pakistan's objections have been overruled by international arbitrage courts. Pakistan still gets the same quantum of water that it has been getting since 1947, but the only difference is that per capita this has fallen to 1/4th due to four fold increase in population.
Importantly, if Pakistan refuses for trans-border transportation, who do you think stands to lose the billions of dollars of transit fees? The way I see it, the Indians have all the ace cards in their hands while Pakistan has none. Patriotic jingoism is not going to put food on the table.
@ all nay sayers, India already has big investments in an Iranian route (sea and land based), so it's not like the Pakistani overland route is the be all and end all of it. I suspect India is trying to push this through not only for some economic gains, but more importantly, as a way to build confidence and improve relations with Pakistan. Of course, this move will most definitely generate some much needed revenues for the Pakistani economy if Pakistan chooses to participate.
@Phajja NAI:
Someone spending 11 billion dollars will have many alternate ways, my friend. They are not going to be just dephending on Pakistan. If they were that stupid they wouldn't have 11 billion dollars to spend, which is about 70% of the foreign reserve of a country with 180 million inhabitants. So be so high and mighty and loose the economic benefits. India is not exporting anything to Afghanistasn thru your land, so there is some alternate already exists and have existed for more than 11 yrs, may be you are oblivious. So don't worry about India's investements.
@missed opportunities: Spot On most of the bloggers are affluent they can talk big
@Ather:
Demands? I don't think Pakistan is being courted here. This will be a mutually beneficial route - Pakistan gets royalties, India gets its route. If Pak looks at it as a plea or a favor, screw it. Better to go with Iran.
Regarding your "demands", you can put them in a pipe and smoke them.
Many Pakistanis think that before there is any trade and economic activitry, first political rhetoric needs resolution. In fact we shouldforget kashmir for next 100 years, and ensure all subcontinent countries singlemindedly work for upliftment of the teeming poor. So easy for bloggers to talk about kashmir, and deprive the poor about fresh job and other opportunities. Great project. Must get everyones support.
@Phajja NAI: I hope that GOP listens to you. The day Pakistanis start eating grass, I will personally build a monument of you.
three demand of pakistan:1.stop interfering in balochistan . 2.make mutual honorable solution to kashmir issue with people of kashmir. 2. give proper share of earning from it. if these met why not.
@Phajja NAI: You are advised to read the part of article again.."But as India has powered its way into one of the world’s fastest growing economies and added political heft, Pakistan’s economy has slipped further back and is unable to match the scale of its investment in Afghanistan"..
Wonder why?? it's because of people like you..India is too big to be bogged down by Pakistan..It has already Plan B..just a bit of additional cost overheads.."Pakistan is the obvious route and the alternative is a longer way westwards to Iran and then shipping it through the port of Chabahar that India has promoted to reduce Afghanistan’s dependence on Pakistan"..
@ Phajja NAI, Hey buddy are you in some decision making body? Firstly you should ask proper power/rail/PIA uninterrupted facilities from GOP. Then comment. GOP will not ask you for your opinion when it come to sign on dotted line. ZAB did it in 1971.
@Phajja NAI: By just insisting that all the trucks and their staff will be Pakistani u can shut out any Col Purohit from entering Pakistan .Benifits to Pakistan taxes( permits , customs duty, octroi and income tax payable by the truck companies)& employment in the truck companies. Choice is yours
@Phajja NAI, -- Pakistanis like you have destroyed Pakistan. you should be ashamed of yourself. You can talk all nonsense, it does not in any way, shape or form affect India. We will do what we have to do for our self interest. We have done that in past and we will do again.
I hope for once Pakistanis think about their poor common people and act in their interest and not just blow hot air. History will tell them how they never utilized their geographical location to benefit themselves.
@Zalmai: Dude, You guys can come up with all Billions gave you mantra .. but please know how UNHCR works at least .. They were giving food, blankets etc with little money giving out through their centers directly to the refugees when Zia was alive and the cold war was at its peak. If that much money was growing on trees then Zia & US would have never decided to fund that war by using Heroine money Don't consider world sole super power to be throwing away their money blindly. Zia didn't grow opium rather it was done by Hizb e Islami's Hekmatyar was the front man at that time for the whole operation. Whatever Pakistan was receiving was disbursement (in form of military equipments) at a time when Pakistan was hub in the region for the CIA and they were over seeing everything. Yes, Pakistan had other motives but it was not done for the sake of money. And lets not forget Soviet's have left two and half decades ago in 1989 .. So what about this time .. Pakistan has not seen a penny for whatever it has done for your whole generation now. Read Dean Henderson's Big Oil & Their Bankers (Chapter Project Frankenstein: Afghanistan)
@Syed Shah:
Did you read the article?. They are putting up a 6 million ton steel facility adjacent to the mine.
I would rather want my country be swamped by products made by Brown people rather than Chinese
I think India should never do business with Pakistan until Pakistan hand-over POK, if we do trade with Pakistan it will comeback to bite us as the profits will be funded to raise Pakistan "born and bred" foreign actors.
@Zalmai
Would you allow such mass level of refugees for billions of dollars? Yes or No.
@hina: do you have anything in your country to make anyone use you.......seriously even delusions have some limits.We are talking of Afghanistan...
Pakistan was actively pushing the IPI pipeline where it would earn transit charges for gas transported to India through Pakistan. If that was not against Pak national interests, why would it be against Pak national interest to allow iron ore to move from Afghanistan to India as long as India paid appropriate transit fees?
The article clearly mentions in the second paragraph that a 6 million ton steel plant will be built alongside the mine. This will probably be for local consumption.
@Rich: "Say India find alternative route through Iran by putting railway line will mean total loss of this business "
Go Find an Alternate Route?What you are waiting for? See? these are the stupid and idiotic way of talking that takes you no where with PaK as the same way US never went with Afghans by talking crap. Go and find the alternate route and let us know when you find it. Good Luck!!! It is not that Easy that India come today and ask for opening the entire country for it's transportation while the Hindu State Media spitting allegations everyday against its neighbor. When 100,000 Muslims has been killed and a continuous terrorism against the kashmiri Muslim is in progress and other territorial disputes are unresolved, PAk can never risk that in the thin veil of Trade Hundred of thousands f State Sponsored Hindu terrorists like Terrorist Col. Prohit slip into PAK. No, Thanks , You better find another route or resolve these issues. Things can not go 100% your way. Do not lie the idea? Go find other route. No one is begging you to go through PAK.
@Babloo: "" The project is doomed if its based on the assumption that Pakistan will act rationally in its own economic interest. ""
Oh WOW. What would be a rational decision that PAK will let you do whatever you want in PAK? Why? Had you been our friend all these years? Samjhota Express's Hindu terrorist was not Indian? What's going on in Kashmir? Should PAK accept that 100,000 missing or Dead is Just fine? Don't we have had Indian State Sponsored Terrorism in 1971 or current Indian Sponsored terrorism in Balochistan? No, Sir No Nation will give you route through it IF this is your History as a nation. Clean up your slate first and then come back. If not , then go somewhere else,. We do not want thousands of Hindu Terrorist like Col. Prohits to Wonder PAK Streets and Planting Bombs which they are doing in Balchistan these days. Your nation is the proven Security threat. Show some progress and PAK might think in that direction. But No One will accept your logic if you as a Nation are the Sponsor of the terrorist activities in this region.
@Hopeful, Henry Kissinger said once ” Indians are smart people but when it comes to Pakistan, they are dumb”. May be Henry Kissinger whispered those words in your ears , as I have not read that anywhere.
However there is some truth to that. Its very difficult to deal with irrational people. USA too is finding that out. Thats why you can always expect some people to act against its own economic and security interests on some self-conceived notion of ghairiat.
If Indians are allowed transit trade, I warn you, Pakistan will be swamped with Indian products. I do not trust enforcement of the negative/positive trade lists. And I will also tell you - irrespective of what is said in public about India, people will privately seek out Indian products.
There is absolutely no point in doing trade unless Kashmir and water issues are resolved. I do not see this arrangement work. Henry Kissinger said once " Indians are smart people but when it comes to Pakistan, they are dumb". This is exactly what he was referring to, trade through Pakistan. If India wants transit rights, they will have to shun their adversarial attitude towards Pakistan and resolve the outstanding issues.
The consortium o7 7 nations, involved in developing the natural resources of Afganistan are making a dangerous assumption that Pakistan will act rationally. There is absolutely no evidense of that but mountain of evidense contrary to that. The project is doomed if its based on the assumption that Pakistan will act rationally in its own economic interest.
Now Pakistani establishment will get another supply line to blackmail with.
Th truth is that PAK and AFG governments are ineligible and incapable . This is giving an open ground to the nations with strong political system to exploit and abuse and their resources . The result .India will grow and PAK , AFG people will become more deprive , big moment and reason to worry about .
I wish officials in Pakistan especially in decision making positions think with their heads not swayed by emotions of hatred what is good for Pakistan. Losing this business of transporting through your country based on hatred for your neighbour will get you nowhere. Say India find alternative route through Iran by putting railway line will mean total loss of this business but other transporting business. Loss for Pakistan will be permanent and so called your geographical location have gotton you nowhere. I hope common sense prevails for the benefit of Pakistan's economy and her people.
@Syed Shah:
Afghanistan worked out that selling the mines, and letting the steel industry generate employment is a better proposition than, setting up and running steel mills themselves. . Even India with all its socialist leanings, has (recently) exported/ is exporting raw cotton to Bangladesh, iron-ore to China. . Iran sells crude-oil directly to Indian refineries. . Sometimes we can earn more by selling raw material, than by processing and selling finished product. Take an example of the farmers who sell unpolished rice/wheat to wholesalers.
@Syed Shah:
are you really aware of the investments required in setting up of a steel plant?
besides iron ore, coke(that too good quality), limestone, dolomite, power are the most basic requirement. is afghanistan richly endowed in them? moreover, very easily the cost may run into billions of dollars: entire economy of afghanistan is somewhere around that figure. who would like to invest so much in a country, whose tomorrow is not certain. so it's always recommended to invest in mining, mine as long as you can, and if really it's getting very difficult, you can leave, although with losses, but not of that scale?
well-trained engineers, and experts are also required. also there should be a growing market for such a heavy plant to support. do you think those rugged pashtoons are ready yet to live in scy-scrappers, and ready to lay railway line.
@Khan
U.S. and the world gave billions of dollars to Zia ul Haq to host the Afghan refugees. The guns and drugs were part and parcel of Zia's policy in Afghanistan. Don't put the blame on Afghanistan, you have your own bright generals to thank for this menace.
All forward thinking nations never let the raw material go out of the country. I think Afghanistan should have its own steel mill and ban export of any ore out of the country. Raw material is never and should not be sent out. Put up a steel mill and regenerate your economy. Give employment to people and increase prosperity.
I think Pakistanis will shout "no business, unless Kashmir is freed!!!"
They have been shouting this for the last 60 years and gained nothing but misery and misery. I want to ask a question to Pakistanis...what have you ever gained by the Kashmir cause that you have been fighting for the last 60 years?
@vasan: Although, I am fully supportive of giving access for trade to any country with all taxes of course but saying the following is totally incorrect,
The biggest favor was and is hosting millions of people from their country at a time when THEY started a civil war on their own which we along with the US joined later on very foolishly. We gave them shelter, free education, free healthcare, and everything that they get got hold of (When UNISECO was giving them just around $47 USD per year per head) and got anarchy, AK47 & heroine culture, inflation. Anyways, closing border for anything but trade is perfect thing to do.
Why is transporting product through Pakistan a big deal. Afghanistan is suppose to be your friend and India has MFN status. Perhaps your pubic posture doesn't represent reality?
@Pakistani: I dont think u realize that Pakistan will gain from permits , customs duty and the business opportunity of so many trucks plying the ore+ employment for the truck staff. The opportunity is immense.
and that was friendship all about , India will grow and Pakistan will become more deprive
It'a a business opportunity for Pakistan.
If they say no, then Iran will gain from it. Pakistan has lost so much in the last 60 years with an irrational enmity towards India. It's about time that it gained something.
Pacifism and genuine peace is the only way.
@GandhiJinnah and Its still the economy stupid:
DITTO
Let bygones be bygones and work towards a brighter future for the coming generations. We can emulate the EU or MERCOSUR and usher in a new phase of rapprochement, which will bring development, trade and tourism benefiting all three nations.
@GandhiJinnah: thats why evil powers are interested in central Asia, with the support of India
@Bilal:
Why don't Pakistan come up with water managment plan instead of making Pakistan's water problem someone eleses. Every international forum Pakistan has complained to have concluded that India has held and are holding up its end of the bargain.
Water issue is created by your politicians as distraction so they can steal more money.
@Bilal: u made a good point
Oh, what dint God give to this blessed region!!
Mighty rivers, high mountains, fertile lands, mineral resources It's only us who are making things worse. For thousands of years, this region(Ind-Af-Pak) had been the goldmine for the entire world. If only we don't let the outsiders take advantage of our differences in the name of friendship, strategic assets, nuclear threats.
I hope this proposal sees the light. This will be biggest favour done by Pakistan not to India but to Afganistan
Pakistan has been fighting all odds to get gas from Iran but without much success so far. Gas Authority of India Ltd is very keen to supply gas to Pakistan;
http://www.firstpost.com/economy/india-solving-pakistans-gas-problem-251656.html
They claim that this can be done within months once green signal is given. hope Pakistan will grab this another opportunity, Like Pakistan, India too can help in many ways. Its a two way traffic.
Pakistan should make this deal dependent to water issues.
Pakistan has claimed of revival of old silk route, exploitation of strategic location etc may be its time to talk of revival of old GT road and transport of Afghan material via Pakistan, India to Bangladesh, Myanmar and china. Train service from Dakha to Tehran and Kabul. Think how many tourist will make use of this journey. It’s still the economy stupid. Let people make a honest days living. People need work not aid.
All out mercenaries will transform as patriots when dealing issues related to India, funny.
Pakistan should come to the aid of India. It is high time we started co-operation with each other and put aside our differences. Look at the rest of the world how they have come together, if an atrocity happens in France, the pain is felt in UK and so on. Why can't we be like them too? The problem is an unwillingness to educate ourselves. What sort of Pakistan are we going to leave to our children?
Let us hope Pakistan grabs this opportunity and joins hands with India in joint ventures in Afghanistan. if that happens, soon we will have a railway line operating from Kabul to Dhaka.
ominous news it can yield great dividends for both countries
No harm in doing it,if the three countries can come up with a plan where Afghanistan is the major beneficiary followed by equal shares for India and Pakistan,then Why not..
Not sure about this one. But one thing is for sure don't like Pakistan being used by both India and Afghanistan yet again!
Good, I hope Pakistani rulers see sense in increasing commerce with India, which in turn will ultimately benefit Pakistani citizens and its economy.