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Afghans ready to exploit country’s massive mineral wealth

Stratrisks

Afghanistan plans to put four or five oil and gas extraction and minerals mining projects out to tender for development this year, as the strife-ridden country reaches out to investors to help develop its vast resources.

The projects involves the exploration and development of oil, natural gas, iron ore, copper and gold, the country’s minister of mines, Wahidullah Shahrani, said last week.

“We plan to put out tenders in two new basins for oil and gas exploration this year and two more next year or 2015,” he said. “Afghanistan has the potential to be more than self-sufficient in oil and gas.”

Afghanistan aims to raise the contribution of the resources industry to the nation’s economic output to 45 per cent by 2024, up from 3 per cent last year, Shahrani said.

The nation, which has suffered decades of strife since the 1970s, including two civil wars, also plans to put one or two lithium and rare earth projects out to tender this year, he said. The minerals are used by battery and electronic product manufacturers.

While the country is currently one of the poorest in the world judged by GDP per capita, the US Geological Survey estimated in 2010 that Afghanistan’s mineral resources were worth some US$1 trillion.

But under-developed infrastructure, corruption and security problems have kept most Western firms away from investing in the nation, leaving Chinese and Indian state-backed firms as Afghanistan’s biggest infrastructure builders and resources developers.

The state-owned China National Petroleum Corp (CNPC), the parent of the listed company PetroChina and the mainland’s largest oil and gas producer, committed last year to investing US$600 million to explore and develop areas previously explored by Russian firms more than four decades ago.

Shahrani said commercial production is expected to start this year, with the output destined for domestic consumption.

Kabul is in negotiations with a consortium consisting of the state-backed company Turkish Petroleum, Dragon Oil, which is based in Dubai, and the independent oil and gas firm Kuwait Energy on an oil and gas exploration and development deal worth more than US$1 billion, Shahrani said.

Metallurgical Corporation of China joined Jiangxi Copper in 2007 to sign a deal to develop the Aynak copper mine near Kabul. The two companies committed to spend US$3 billion to US$4 billion to develop the mine, subject to the completion of feasibility studies.

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