Afghanistan opens $1t mineral sector
Afghanistan launched on Monday 43 tenders for natural resource projects as part of a global initiative to attract investment into its mineral sector that has assets estimated to be worth $1 trillion.
Afghan Minister of Mines and Petroleum Nargis Nehan said 14 tenders would be opened for large-scale projects to international companies through a competitive bidding process and the remaining small-scale projects would be awarded to local companies.
Declaring that her country's mining sector is 'open for business,' Nehan said at the Afghanistan Mining Investment Forum in Dubai that the projects have generated interest from the US, European, and Gulf companies.
In her keynote address at the forum convened by Invest, a global initiative of the US Agency for International Development (USAID) to mobilise private investment in partner countries, the minister said the new large and small-scale mining projects available for private sector investment and development span a number of commodities and are situated in 16 of the country's 34 provinces.
"For the first time ever, Afghanistan is opening opportunities for international investors to bid on ruby, emerald and lapis lazuli projects. Many of the commodities, such as marble, travertine and cement, selected for tenders have strong domestic and regional market demand. Others, such as gold, copper talc, iron ore, marble and oil and gas have established international markets," said Nehan.
She said the Afghan government has put in place a new minerals law and transparent regulations and procedures for investors to take advantage of the new opportunities.
After the tendering, an estimated $100 million will likely be spent on initial assessments, exploration and evaluation work for these projects over the next 12 months with investments increasing significantly in following years as projects advance. Tenders will cover a wide range of commodities including oil and gas, gemstones, copper, gold, marble, and talc, said Nehan.
She said due to a previous investor-unfriendly Minerals Law, there has been negligible mineral exploration in Afghanistan for the past decade at a time when mining companies have spent, on average, more than $10 billion each year exploring for minerals worldwide.
The government hopes a royalty rate from 2.5 per cent to 7.5 per cent and an import duty exemption on machinery used to work on the projects will encourage investment. The tenders cover projects in 16 of the country's 34 provinces and the government.
A tender can be awarded within six months and work is expected to start within a further six-month period, the minister said.
The government will invest in some tender-related infrastructure but expects many companies will choose to do it themselves. Security on the projects will only be provided by local forces, Nehan said.