Afghanistan signs major mining deals in development push

KABUL (Reuters) - Afghan officials have signed contracts for two major mining projects in northern Afghanistan, pushing ahead with plans to develop the country’s mineral reserves but drawing criticism over the involvement of a former minister in the project.

The deals were signed in Washington on Friday with mining and investment group Centar and its operating company Afghan Gold and Minerals Co to develop two sites in Badakhshan and Sar-e Pul provinces with potentially major gold and copper deposits.

The deals, reviving projects that have been stalled for years, follow a push by U.S. and Afghan authorities to develop mineral resources estimated to be worth some $1 trillion and seen as vital to building a functioning economy in Afghanistan after four decades of war.

“This investment will be transformative for Afghanistan,” Sadat Naderi, Chairman and President of Afghanistan Gold and Minerals, said in a statement.

“Once we begin mining, the country will benefit from major investments in infrastructure as well as fiscal revenue from our projects,” he said.

Poor security, rampant corruption and a lack of roads, power and other infrastructure, have hampered development of Afghanistan’s mining sector. The few major deals which have been signed, including the vast Mes Aynak copper project signed with China’s state-run China Metallurgical Group Corp, have so far remained largely inactive.


The involvement of Naderi, who served as urban development minister until June this year, has been criticized by campaigners including Integrity Watch Afghanistan, which said it was a “clear breach” of rules barring former ministers from holding concessions after leaving office.

Under Afghan law, ministers may not hold mining contracts for five years after leaving office.

Ikram Afzali, Executive Director of Integrity Watch Afghanistan and a member of the Mining Watch Afghanistan civil society group, said it would send a “very worrying signal” if some of the first major mining contracts it signed had question marks over them.

A spokesman for the ministry of mining in Kabul rejected the criticisms, saying the deal was approved in 2012, before Naderi became a minister, and had been thoroughly vetted and approved.

“These contracts have passed through all legal stages, there is no legal issue. We reject all criticism,” the spokesman said.

Centar also said the bidding project “followed a transparent, standards-based and competitive bidding process supported by international transaction and transparency advisers”.

The copper project in Balkhab district in Sar-e Pul is an early stage exploration project covering 500 square km, with development due to begin in early 2019, Centar said. A spokesman for the ministry of mining in Kabul said the contract would run for 30 years and involve $56 million investment.

The second project, a gold mining operation in Badakhshan in northeastern Afghanistan, will explore and develop an area with known gold deposits that have long been exploited by artisanal miners. Exploration is due to begin next year.

A ministry spokesman in Kabul said the project would also run for 30 years and involve investment of $22 million.

Reporting by James Mackenzie and Abdul Qadir Sediqi; Editing by Paul Tait