KOLKATA (miningweekly.com) - India and Afghanistan have called off all talks on a proposed $11-billion iron-ore mining and steel mill project by a consortium of Indian metal companies.

According to a senior government official, the Indian government, which had been supporting the Indian consortium through bilateral talks with the Afghan government, had decided that it would be futile to hold any further negotiations to advance the project in view of spread of Taliban control close to the proposed iron-ore reserves and steel mill site at Hajigak.

He said that the Afghan government appreciated the issues raised by the Indian government in deciding not to negotiate further and even acknowledge that the Taliban forces were recipient of revenues from small unorganised mining in the region and the security concerns of prospective investors.

The project was first conceived in 2011 after India bagged the iron-ore mining rights at Hajigak. Even though several rounds of government-to-government talks on furthering the project did not yield any positive results, resulting in the project being placed on the backburner, both governments have now conceded that mere governmental-level talks would not change the ground realities.

According to an official of Steel Authority of India Limited (SAIL), the main consortium member, the steel major had halted work at the project although it had not officially scrapped it.

At the same time, the tripartite transit agreement between India, Afghanistan and Iran had also failed to fructify, which would have offered transportation and logistical facilities to the project through the Iranian port of Chabahar.

As per an agreement between the India and Afghanistan in 2011, the Indian consortium, Afghan Iron and Steel Company Limited (Afisco), would invest $11-billion for construction of a one-million-tonne-a-year steel mill and develop the 1.8-billion-tonne iron-ore reserves at Hajigak, partly to supply to the steel plant and export the balance to India.

The Indian consortium isled by SAIL and included iron-ore miner NMDC Limited and other steel producers, including JSW Steel, Jindal Steel & Power Limited and Monnet Ispat.