A consortium of seven Indian companies, led by state-owned Steel Authority of India (SAIL), has been awarded the mining rights to develop the huge Hajigak deposit in Central Afghanistan.

Afghanistan's Karzai government awarded three of four blocks at the Hajigak ore deposit to the seven companies after it bid with support from India's government, while the fourth and final block was given to Canada's Kilo Goldmines Ltd., Afghanistan's Ministry of Mines said in a statement on Monday.

Located in Bamyan Province, the iron ore rich Hajigak mine holds the best known and largest iron oxide deposit in Afghanistan. It extends over 32 kilometres and covers 16 separate zones, up to 5 kilometres in length, 380 metres wide and extending 550 metres down. The mine could give up to $6 billion to the government's coffers.

"Its development is expected to bring billions of dollars in mining investment and thousands of new jobs to Afghanistan," the ministry said, adding the companies have pledged similar support to construct railway, power and other infrastructure projects in Afghanistan.

The consortium, which also included mineral giant NMDC Ltd., is part of India's government-led initiatives to boost participation in Afghanistan, where India has pledged some $2 billion investments for the country. It has so far undertaken various projects across Afghanistan involving power, roads, agriculture, telecommunications, education and health.

Apart from SAIL and NMDC Ltd., the Indian group also included state-run Rashtriya Ispat Nigam Ltd., and private-sector firms JSW Steel Ltd., Jindal Steel & Power Ltd., JSW Ispat Steel Ltd. and Monnet Ispat & Energy Ltd.

The Afghan government, eager to rebuild its nation as well as attract foreign direct investment, had been proclaiming it holds an estimated $3 trillion in natural resources. The deposits, which yield copper and iron ore, oil and gas, niobium, cobalt, gold, molybdenum, silver and lithium, could lift the country's coffers by some $3.5 billion a year.

The Hajigak mine, which holds an estimated two billion tonnes of iron ore deposits, is expected to begin by 2015.

"The project [execution] is still a long way off. We haven't earmarked any investment specifically for it yet," Sushil Maroo, Jindal Steel Chief Financial Officer, said Tuesday in The Wall Street Journal.

Mining in Afghanistan poses a challenge as it doesn't have proper road and rail infrastructure, aside from the fact that it still suffers from internal conflict.

The SAIL group could invest up to $6 billion in the mine, railroads and a steel plant , and could employ as many as 20,000 people.

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