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FeatureAfghanistan to open up its mining sectorCoal Insights BureauWith Afghanistan opening up its mining sector, thecountry is all set to float tenders to give exploitationlicences of mineral resources worth $10 billion, amajor initiative to allow private sector companies to enter intothe state-controlled mining sector.The tenders for exploitation licences will be floated nextyear and that the last date of responding to the expressionof interest already floated is January 13, 2011, informed thecountry’s minister of mines, Wahidullah Shahrani, whowas in Kolkata recently to attend the International Mining& Machinery Exhibition (IMME) 2010, In fact, four leadingIndian conglomerates – Essar, Ispat, Tatas and Vedanta –have also showed interest in participating in the country’supcoming mineral mining projects in Afghanistan, Shahranisaid.Recent discoveries show that Afghanistan has hugereserves of minerals, estimated at about $3 trillion, within itsgeographic territory. He said: “This (estimate) is only for 30percent of the territory. For the remaining 70 percent, we donot know what reserves are there.”After inviting bids for the Hajigak iron ore project, theAfghan government is going to float global tenders for Aynakcopper mine and Badakhshan gold mine in the comingmonths. Shahrani said bids will be invited for the northernpart of the Aynak copper mine later this year. The remainingpart of this mine had already been given to a Chinese companyon contract three years ago.Besides, the government will also float tenders for theBadakhshan gold mine, bordering Tajikistan, sometimenext year, he said. The government is expecting around $2-4billion investment in each of these two projects. Meanwhile,the submission of bids against the tender for Hajigak iron oredeposit, which was floated in late September, would be closedin January.“We expect good response for this tender, given the hugedeposit of iron ore the mine has. In fact, we have alreadybeen approached by a number of major mining companiesfrom all over the world who showed their keen interest inparticipating in the development of our mines,” the ministersaid.In fact, the huge mining reserves in Afghanistan couldcontribute as much as 50 percent of Afghanistan’s GDP by2025, Shahrani has said. “We expect the share of the miningsector to go up to 25-30 percent of GDP by the next five toseven years. By the next 15 years, this share may go up to 50percent,” Shahrani said. The government, in order to exploitthe huge mineral reserves, has undertaken the ExtractionIndustries Excellence Programme and National & RegionalResources Corridors Programme, he added.The Afghanistan government has decided to train 7000troops to be deployed for security at mining projects, Shahranisaid. “The government takes full responsibility for providingsecurity at mines. We will train 7000 troops and also involvethe local community,” he said. Citing the instance of Aynakcopper mine, awarded to Chinese company MCC threeyears ago, he claimed: “There has not been a single securityincident there.” The Afghanistan government has decidednot to involve any state owned companies in new miningprojects.“The government is going to liquidate some stateownedcompanies. There will be no government companiesinvolved in the mining projects,” Shahrani said. He saidthe government would not make any distinction betweendomestic and foreign companies showing interest in Afghanmining projects.Asked about security concerns, he said, “Don’t look intothe negative issues of political uncertainty and instability.Look into the positive aspects of exploiting the miningpotential.” Afghanistan has $3 trillion worth of reserves underproven category and the reserves under inferred categoryare yet to be valued. “We actually intend that the companies,which get exploitation licences, also conduct explorationthrough procuring licences via the bidding route and helpAfghanistan, still a virgin area for mining companies, unleashits mining potential,” said Shahrani.Afghanistan has reserves of metals like gold, copper,chromite, iron ore, borates and rare minerals like lithiumand cobalt. In fact, Afghanistan has so far got governmentaids like India’s $1.2 billion to reconstruct the country afterthe war. It is now looking for private sector investment andwill immediately require $5-6 billion worth of investment todevelop Hajigak, an iron ore rich area north-west of Kabul,Indian ambassador to Afghanistan, Gautam Mukhopadhyay,said.“We want investment to develop transportation, powerand other infrastructural facilities at Hajigak so that exploitingiron ore there becomes feasible. Indian companies can formconsortiums to bring in investment at Hajigak,” Shahrani said,adding that his government could consider allowing Indianconsortiums invest in the region escaping the tender route andmaking it a government to government affair. Even a partialexploration of this huge natural treasure hidden under thecountry’s soil, would help generate an immense amount offoreign investment, apart from creating thousands of jobs inthe country.It has been known for a long time that Afghanistanharbours huge deposits of iron and copper. In fact, the Sovietshad mapped the country’s vast mineral wealth way back inthe 1980’s, but after that, it remained largely unexplored.COAL INSIGHTS 35 November 2010