Afghan government approves gold mine deal

Despite the crackle of gunfire in the mountains of northern Afghanistan, the wealth of gold beneath will be mined under a multimillion-dollar contract that government officials have approved.

Last Updated: Dec 14, 2010, 12:12 PM IST

Kabul: Despite the crackle of gunfire in the
mountains of northern Afghanistan, the wealth of gold beneath
will be mined under a multimillion-dollar contract that
government officials have approved.

The deal is the first mining project in Afghanistan
backed by private investors in the West. Afghan and US
officials hope many more deals will follow to help jump-start
the economy of this impoverished nation in its 10 year of war.

"This project is an important step forward for
Afghanistan`s economic sovereignty," US deputy undersecretary
of defense Paul A Brinkley said in a statement yesterday. "It
represents a turning point in the history of international
investment into Afghanistan."

Brinkley, who directs the defense department`s Task Force
for Business and Stability Operations, said the gold mine deal
is evidence that Western investors are showing confidence in
Afghanistan`s economic future.

About 10 investors, most of them from the United States
and Britain are investing an estimated USD 50 million in the
gold project in Dushi district of Baghlan province, about 84
miles (135 kilometres) northwest of Kabul, according to
Wahidullah Shahrani, Afghanistan`s minister of mines.

The only other gold mine in Afghanistan is in
neighbouring Takhar province.

Shahrani said he hoped that getting the deal approved by
the Inter-Ministerial Council, which comprises the
government`s top finance and economic officials, will send a
strong signal to global mining companies that there are
investment opportunities in Afghanistan, especially in the
mining sector.

Geologists have known for decades about Afghanistan`s
vast deposits of iron, copper, cobalt, gold and other prized
minerals.
In June, the US Defense Department put a startling USD 1
trillion price tag on the reserves, but Shahrani called that a
conservative estimate. He said he`s seen geological
assessments and industry reports estimating the nation`s
mineral wealth at USD 3 trillion or more.

For Afghanistan, a violent, landlocked country with
virtually no exports, the minerals are a potential windfall,
although formidable obstacles remain, including lack of
investment, infrastructure and adequate security in most of
the nation.
In late 2007, a USD 3 billion contract was awarded to
China Metallurgical Group Corp to mine copper at Aynak, 21
miles (35 kilometers) southeast of Kabul.

The mine is thought to hold one of the world`s largest
unexploited copper reserves. Mining the copper could produce
4,000 to 5,000 Afghan jobs in the next five years and hundreds
of millions of dollars a year to the government treasury,
Shahrani said.

Bureau Report