Afghanistan seeks foreign investments in minerals to develop $3 trillion industry

Country announced 43 projects open for bidding to international and domestic investors

DUBAI, UNITED ARAB EMIRATES - Nargis Nehan, Afghanistan's Minister of Mines at USAID Invest event announcing new project open to private sector.  Leslie Pableo for The National for Deena Kamel's story
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Afghanistan offered 43 commodities projects for bidding on Monday as the country pushes to attract international investment, crack down on corruption and address security risks to doing business.

Afghanistan's acting minister of mines and petroleum Nargis Nehan announced the projects in Dubai amid meetings with prospective international investors. The tenders will open for projects ranging from marble, gemstones, talc and cement to oil and gas, located across 16 of the country's 34 provinces.

"Overall we have seen there is interest because everybody knows about the mineral resources of the country and they're interested to invest, it's just that since they haven't seen any deals in the sector for four and half years," Ms Nehan said in an interview with The National. "It will take us sometime to build trust and show them action and then we're hoping they'll come forward with their proposals."

Afghanistan's mineral industry is valued at about $3 trillion (Dh11tn) and currently contributes seven to ten per cent to the country's gross domestic product, according to the ministry. Plagued by decades of conflict, Afghanistan could unlock great wealth from mining materials such as marble and talc but development has stalled due to poor infrastructure, security risks and lack of transparency. Foreign companies currently operate in the country's mining and hydrocarbons sector - including from China, US, Iran, UAE, Turkey and India - and the ministry is seeking to attract new private sector investments. Companies include Steel Authority of India, Turkish Petroleum, Siemens and Dragon Oil.

Afghanistan is offering 14 of the projects for bidding to international investors while the remainder are small-scale projects open for domestic companies.

Tenders will open within a month for the first batch of projects, Ms Nehan said. The first set of projects will be awarded in six months. Following the tenders, the ministry estimates $100 million will be spent on initial assessments, exploration and evaluation work over the next year.

The government has not set restrictions on the structure of partnerships between foreign companies and local partners who will decide on the appropriate form, she said.

To attract investments, the government has offered international companies incentives including royalty rates ranging from 7.5 per cent to 2.5 per cent, exemptions on custom tariffs for machinery used for work on the projects and licensing costs of under $2, Ms Nehan said. A new minerals law, transparent regulations and clear procedures are in place to encourage investors to seek new opportunities.

Afghanistan is working to develop its mining industry as it seeks to find export markets and fulfill domestic demand.

It has seen interest from Europe and Asia, specifically Indonesia and China, for its talc products that are used in powders, cosmetics and painting materials, Ms Nehan said. Potential export markets for marble could include China and Central Asia for construction. Gemstones may be exported to the jewelry markets of UAE, India and China. It sees domestic demand for iron ore and cement amid reconstruction efforts.

Ms Nehan said the ministry is addressing the private sectors' concerns about corruption by providing companies easy access to ministry officials for queries, offering information and tender applications online and setting up a confidential complaint system.