Afghanistan invites bids for Hajigak iron deposit

KABUL, Jan 19 (Reuters) - Afghanistan on Wednesday invited 22 companies, including 15 from India, to bid for its giant Hajigak iron ore deposit despite concerns over a worsening insurgency.

The country’s Mines Ministry set Aug. 3, 2011 as the deadline for bids for what it says is the largest unmined iron deposit in Asia. It said it expected exploration to begin in 2012, pressing ahead with the project despite security concerns weighing on investors.

The Hajigak deposit straddles Bamiyan, Parwan and Wardak provinces, with only Bamiyan relatively peaceful. The ministry estimates the worth of its reserves at as much as $350 billion.

The United States has trumpeted Afghanistan’s rich mineral deposits as the key to future prosperity, but experts say the bounty is years, even decades away and point to massive security and infrastructure challenges for potential investors.

Violence in Afghanistan is at it worst since U.S-backed forces overthrew the Taliban in late 2001 with record casualties on all sides and a raging insurgency spreading to once-peaceful areas of the country.

The government has a specially trained force to protect mines and other infrastructure, with many of its members drawn from villages surrounding the asset under guard.

The ministry said the interested companies included India’s Jindal Steel and Power Ltd , JSW Steel , Tata Steel , NMDC , Steel Authority of India and Ispat Industries . UK-based Stemcor was also named, as well as Canadian-based Kilo Goldmines Ltd .

“The development of Hajigak will involve major infrastructure improvements and will stimulate the local economy and improve and lives of the citizens of Bamiyan province and beyond,” Mines Minister Wahidullah Shahrani said in a statement.

United Mining and Minerals Co. was the only Chinese company on the list, the ministry said.

China’s top integrated copper producer, Jiangxi Copper Co , and Metallurgical Corp of China are developing the vast Aynak copper mine south of Kabul after they were handed the contract in 2007. The $4 billion project is the biggest non-military investment in the country so far.

Metallurgical Corp pulled out of an earlier tender for Hajigak in 2009 following accusations it had won the Aynak contract by giving bribes. The firm denied the charges.

The Mines Ministry cancelled the tender, blaming the cancellation on the global recession and changes in the world market structure for iron. (Reporting by Matt Robinson, additional reporting by Hamid Shalizi, editing by Miral Fahmy)

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