MAC: Mines and Communities

Hindalco joins race for Afghan copper deposit

Published by MAC on 2006-11-27

Hindalco joins race for Afghan copper deposit



27th November 2006

MUMBAI: HINDALCO Industries has bid for rights to develop Afghanistan's Aynak copper deposits, which has proven reserves of 240 million tonnes. The project, which will require investments of $1billion over five years, is part of the government's plan to revive the mining industry in the Afghanistan which took a hit during the Taliban regime.

Hindalco will have to compete with eight others, including Canadian Hunter Dickinson, China Metallurgical Group, US-based Phelps Dodge Corporation and Russian state-controlled foreign trade company Tyazhpromexport. Sources said that the companies were shortlisted by Afghanistan's Ministry of Mines and Industries last week and the results will be announced in two months. "Extraction from the mines is expected to begin in two years," they said. "It is premature to comment," said a Hindalco spokesperson.

The move significance in the backdrop of Hindalco closing one of its smelters at its Dahej unit following raw material shortage. Hindalco had said that due to disruption of production in some mines globally, availability of concentrate in international markets has become scarce. Copper deposits in India are negligible.

Political and economic risks are high in Afghanistan and Indians working there have recently been targeted by the Taliban. Earlier this year, a telecom engineer from Hyderabad was kidnapped and killed by Taliban. last year, a driver with India's Border Roads Organisation, which is helping Afghanistan rebuild its infrastructure, became a victim.

But Aynak is believed to be "safer" than most of the other 200 mining sites in the country. The deposit site, situated 30 km south of Kabul, was earlier an Al-Qaeda terrorist training camp. It was first explored by the erstwhile Soviet Union in the 1970s and is Afghanistan's biggest mine. Afghanistan is believed to be rich in iron ore, natural gas, coal and petroleum.

If successful, Hindalco will need to invest at least $200 million initially to put the machinery in place, but experts say mining costs could be low as the copper ores are located near the surface and "thus easy to mine." An industry analyst added: "Deposits of this size can produce up to 2,20,000 tonne of copper over 20 years."

Hindalco's Dahej facility has a capacity of 5,00,000 tonne a year and more than half of its copper concentrate requirement is met from its captive mines in Australia, which it acquired in 2003. The company's latest initiative aims to make itself fully self-reliant in raw material needs. The Aditya Birla Group, say sources, is also looking at similar opportunities in Africa.

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