October 14, 2012 / 3:37 PM / 7 years ago

Afghanistan publishes mining contracts in anti-graft fight

KABUL (Reuters) - Afghanistan’s government released on Sunday the details of scores of mining and energy contracts, including a major Chinese deal, in an effort to counter rampant corruption and bribery of officials worrying resource investors and donors alike.

Afghan Mining Minister Wahidullah Shahrani speaks during an interview in Kabul September 29, 2012. REUTERS/Mohammad Ismail

As the government finalizes new laws designed to attract more foreign mining investment, officials made public 210 previously awarded contracts, including one signed in 2011 with China National Petroleum Corp to develop three oil and gas blocks in the Amu Darya basin.

“For the first time in the history of the country, we have been able to publish the details of the awarded contracts on the website of the ministry of mines,” Mines Minister Wahidullah Shahrani told reporters in Kabul.

Shahrani told Reuters in an interview last month that contracts would be published on the mining ministry’s website, as well as newspapers, to safeguard delivery of $16 billion in aid promised by foreign donors over four years and tied to stronger anti-graft measures.

Chinese and Indian companies are already scrambling to access to Afghanistan’s estimated $1 trillion worth of untapped mineral wealth. The country has large deposits of gold, copper, iron ore and oil, as well as lithium and rare earths used in high-tech manufacturing.

Chinese firms are leading the race, with China Metallurgical Group (MCC) and Jiangxi Copper winning a 2007 deal to exploit the giant $3 billion Aynak copper mine southeast of the capital Kabul.

The Amu Darya contract, covering an estimated 80 million barrels of oil, revealed that CNPC would allocate the first 15 percent of extracted hydrocarbons in any month to the government as royalties, and pay income tax of 30 percent.

The company would also be required to use Afghan labor and materials where possible, although CNPC could be free to import hundreds of Chinese or other foreign workers given the difficulty of finding skilled labor in Afghanistan.

“The contractor undertakes to give priority to Afghan nationals with equivalent qualifications and experience, and actively search for Afghan nationals in order to meet the training and employment obligations,” the contract said.

In making the contracts public, the government risks more public opposition to mining projects at a time when it is relying of resource income to replace diminishing development aid now accounting for 90 percent of the national budget.

Shahrani’s ministry will soon resubmit to President Hamid Karzai’s cabinet mining laws that Afghan officials and Western donors hope will persuade foreign firms to invest in the country’s resources, but which were rejected in July over concerns they were too generous to miners.

The new draft, backed by Western donors and the World Bank, would remove a 2009 clause separating exploration from an automatic license to exploit finds, a law which led miners to question why they were spending their money on expensive and risky exploration if they could not be assured of profiting.

Shahrani acknowledged that many contracts awarded in the past had been either technically or legally flawed, with some given to companies with no mining background or experience.

“An importer of oil and rice has been awarded a major contract,” Shahrani said. “We have opened a very important chapter to demonstrate the highest degree of transparency in managing our national resources.”

Both Chinese-operated sites at Amu Darya and Aynak have been delayed by attacks by Taliban insurgents aiming to destabilize government revenues and frighten off fresh investment ahead of a pullout by most NATO combat troops in 2014.

China recently agreed to train 300 Afghan police to safeguard Amu Darya, while staff at the $3 billion Aynak mine appear to have been spooked by Taliban attacks and have left the country, leaving only a skeleton team to guard equipment.

Editing by Jon Hemming

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