$3 trillion to dig up

AFGHANISTAN has knocked on Australia’s door to help it unlock an estimated $3 trillion in natural resources at the inaugural Perth Mining Summit.
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Afghanistan is turning to Australia to help it build up its mining potential and shed its war torn tag.

Marion Lopez

Hosted last week by the Australian Afghan Business Council in Perth, the summit painted Afghanistan’s mining potential to Australian companies and government in the hope to forge business relationships and exploit the rich Afghan soils.

According to the Afghanistan Geological Survey, Afghanistan would hold an estimated 1.8 billion tonnes of iron ore, the world’s second largest supply of copper, an abundance of gold and 3.8 billion barrels of oil.

It would also contain a major source of lithium.

However, these resources remain largely untapped due to Afghanistan’s lack of mining expertise.

“No one knows what’s involved , how it works, the laws, the security …” AABC president Bashir Keshtiar told Australia’s Mining Monthly.

“On the one hand, Afghanistan is really rich in natural resources and it would become one of the richest countries if these resources were explored. On the other hand Australia has got expertise. 

“I thought it would be good to take a look at the mining boom in Australia, not so much now but before, to get some expertise and build capacity for Afghan businesses.”

The summit was a success, with Australian companies such as Eclipse Metals and Geohart passing some of their knowledge to Afghan attendees.

The summit also triggered talks of joint ventures and partnerships for new projects, with Afghan diversified company Omran Holding president and CEO Mohammad Naser Ahmadi telling AMM he saw great potential in collaborating with Australia.

“[Now] we’ve got more understanding of the mining capabilities and opportunities in Australia – we met good and expert companies and hope to work as a JV with them in Afghanistan,” he said.

“This is one way to transfer mining knowledge to Afghanistan and use it for sustainably developing this poor country.

“Also we understand there are good opportunities for investment in mining in Australia and hope to invest in the country.”

But despite this potential, Ahmadi said creating business in Afghanistan would depend on whether the new Afghan government could provide adequate support for industry and assure investors they would not be affected by the recent political turmoil.

Keshtiar agreed and said it would work with government to achieve this goal and transform Afghanistan into a promising mining land. 

“Afghanistan cannot forever rely on foreign aid,” he said.

“Mining is a key industry that we need to look into before foreign aid stops in Afghanistan [and] we should be a step ahead and work with the government to make Afghanistan a self-reliant country because we cannot continue like this.

“Government in Afghanistan must find ways to support, encourage and provide incentives for foreigners to come and invest there, and if not that, at least provide opportunities for them to come and see what Afghanistan has to offer.

“That’s the challenge for the Afghan government and that is what we’re going to pursue to see what we can do.”

The Western Australian government came out in support of the AABC, with Mines and Petroleum Minister Bill Marmion attending the summit and saying the state would act as mentor to the Afghan government on how to encourage and create the right mining environment.

“The state government stands ready to advise the Geological Survey of Afghanistan on resources management and successful systems that have helped make Western Australia a global top five investment destination,” Marmion told AMM.

The two countries signed a Comprehensive Long-term Partnership agreement in May 2012 to help Afghanistan sustainably manage its natural resources.

While the recent Afghan political chaos somewhat affected that agreement, with not much work enabled to be done, it is still valid today.

“The aim is to resume geological mapping and resource assessment with modern methods and renewed vigour,” Marmion said.

“Afghanistan’s Ministry of Mining acknowledges there are challenges for developing a strong mining industry. They include improving the regulatory framework, overcoming the lack of infrastructure, and reliance on port facilities in neighbouring countries.

“Western Australia’s experience offers guidance in how to tackle these challenges.”

Marmion suggested the use of state agreements, which are contracts between government and proponents of major projects, to overcome the obstacles of isolation and lack of infrastructure.

“State agreement provisions can only be changed by mutual consent, so they provide greater investor certainty for projects, security of tenure, and reduction of sovereign risk,” he said.

“There are currently 64 agreements in force in WA and they are encouraging responsible and sustainable development of the state’s resources sector.

“Perhaps this is a model for Afghanistan to consider.”

Marmion also took the opportunity to call for more exploration in WA, whether from Afghan, Australian or other countries’ companies.

“Western Australia’s development of its resources sector is more advanced than Afghanistan, but both have vast amounts of mineral wealth still to be discovered, and both need to keep exploration at a high pitch to maximise opportunities,” he said at the summit.

“Discoveries lead to mines and jobs – vital ingredients for sustainable development of resources.”