Calcutta, June 5: Public sector enterprise Steel Authority of India is looking to form a consortium of Indian steel makers and bid for the Hajigak iron ore mine in Afghanistan.

SAIL chairman C.S. Verma told The Telegraph that a memorandum of understanding was likely to be signed within the next two weeks among the steel makers.

“We have time till August for making the bid. But the contours of the consortium will be finalised now,” Verma said.

The SAIL initiative is a rare instance of public and private sector companies joining forces to bid for an overseas raw material asset.

Industry observers said the move was because of the nature of the asset.

The security threat from the Taliban in the region is high, and Indian companies are worried about the safety of their workforce and investment. Consequently, they are afraid to go solo in a project such as the Hajigak, which has the world’s largest iron ore deposits, observers pointed out.

Hajigak, in the Bamiyan province, is close to the district of Wardak, which has frequently witnessed attacks from the Taliban.

Apart from SAIL, Tata Steel, JSW Steel, public sector NMDC are likely to be some of the prominent members of the consortium.

“Yes we are looking at the asset,” a Tata Steel official said.

An official of an Indian steel making company, which is also likely to be part of the consortium, said partnering a US or an European group in the consortium would make sense given the heavy military deployment by the western powers in Afghanistan.

Verma said the consortium would depend on the Afghan government for security.

“During our recent visit to the country, we have made it clear that the local authority has to take care of the safety of our people and the security of the investment,” he said.

The Hajigak deposit, 100km east of Kabul, might contain ore worth as much as $350 billion, according to figures provided by the Afghan government.

The project may attract investment worth $6 billion over the years. It can generate around 10 million tonne ore a year.

According to Afghanistan’s mines ministry, Naveen Jindal-led Jindal Steel & Power, Sajjan Jindal’s JSW Steel and Ispat, Tata group’s Tata Steel, public sector NMDC and SAIL have shown interest.

“The development of Hajigak will involve major infrastructure improvements and will stimulate the local economy and improve the lives of the citizens,” mines minister Wahidullah Shahrani had recently said in a statement.

Industry is worried about transporting the mineral from the land-locked country. One possible option is to use the railway line being built by China Metallurgical Group.

The 921-kilometre-long railroad connects a copper mine in Aynak to Central Asia and China and passes through Bamiyan.

China Metallurgical had won a bid to develop the mine in 2007.