India-based state-run Steel Authority of India Limited (SAIL) is leading a consortium to secure funds of around $75m to $80m for a mining and steel-making project in Afghanistan.

The consortium, Afghan Iron and Steel Company (Afisco), comprises seven Indian mining and mineral companies.

Mining Weekly has quoted a senior federal government official as saying that the government has formulated a high-level government committee that would extend the funds on concessional terms to facilitate the exploration operations on the Afghan project.

The committee is expected to decide the amount of loan and repayment terms by early June 2013, the official added.

Afisco has planned to invest $11bn in Hajigak iron-ore after securing license to develop the project. However, it turned down the project citing the difficult infrastructure and logistical environment at the location.

The consortium has now decided to develop a small steel-making facility of one-million to two-million tons a year.

Afisco has urged Steel Ministry for viability-gap funding claiming that it was necessary in raising long-term debt financing required for construction of infrastructure to evacuate raw materials like iron-ore and finished steel from the Hajigak region.

Through this concessional loan, the company would be able to begin geological surveying and exploratory work of the two billion ton Hajigak iron-ore reserves.