Mubadala seeks Afghan deals

Mubadala Development is weighing a move to tap the US$1 trillion worth of minerals and mining deposits in Afghanistan as part of plans to expand into the war-torn country.

Mubadala Development is weighing a move to tap the US$1 trillion (Dh3.67tn) worth of minerals and mining deposits in Afghanistan as part of plans to expand into the war-torn country.

Mubadala, a strategic investment company owned by the Abu Dhabi Government, is also considering investing in the country's oil and gas sector, said Khaled al Rashedi, the senior manager of business development at the industry unit of Mubadala.

"It's in exploration phase right now and it's interesting to see the size of potential," he said, on the sidelines of the inaugural Afghanistan International Investment Conference in Dubai.

"There is an appetite and we are representing the Government but let's see what develops."

Afghanistan is striving to attract foreign investment as it pushes ahead with its economic and social rehabilitation after years of conflict and neglect left its infrastructure dilapidated and its economy in stagnation.

Agriculture, which accounts for half of Afghanistan's GDP, along with construction and oil and gas, are all sectors to which the country is keen to attract foreign investment.

But officials believe the key to unlocking the highest financial rewards and spearheading the country's economic transition is tapping its rich mineral reserves.

A US taskforce in June concluded Afghanistan may have untapped mineral deposits valued at more than $1tn.

Recent US studies revealed deposits of iron, copper, cobalt, gold and lithium that were much larger than previously estimated. Lithium is an important industrial component in the manufacture of batteries for a range of electronic goods such as laptops and mobile phones.

Speaking at the conference on Tuesday, Zalmai Rassoul, the minister of foreign affairs for Afghanistan, said it was likely the country would require "substantial long-term strategic investment" to access the reserves.

Chinese companies have been among the early foreign entrants to Afghanistan's burgeoning mining sector.

The metals and mining industry represents one of the sectors within Mubadala's investment remit. As recently as October, Mubadala said it planned to invest $7 billion in Malaysia's aluminium sector as part a strategic partnership deal with 1Malaysia Development Berhad (1MDB).

Mr Rashedi said it was likely any investment in Afghanistan would be in a joint venture agreement.

The country's growth has accelerated sharply this year as the security situation improved. Proposals to try to stamp out corruption and boost transparency have also tempted foreign investors. The country's GDP is expected by the IMF to rise 8.9 per cent this year.

UAE companies have already played a pivotal role in the $7bn of investment that has poured into the economy since US-led hostilities against the Taliban began in 2001.

Etisalat has attracted more than three million subscribers since it began operating in the country three years ago. Last month, it expanded its network into remoter rural areas to include 29 provinces.

In the same month, the carrier Air Arabia, based in Sharjah, said it would begin flights to Kabul from December 16, joining flydubai, which began operating routes to the city in May. Aviation links are credited with supporting bilateral trade between the two countries.

"We are looking forward to expand our investment in different sectors," said Khalid al Ghaith, the Assistant Foreign Minister of Economic Affairs at the UAE Ministry of Foreign Affairs.

"We are encouraging other sectors such as oil and gas, mining, and there is a very strong foundation for legalities and privilege is being given to private sectors."

Gulf states collectively are already the largest international investors in Afghanistan, with UAE investment in the country standing at between $600m and $700m, said Hazrat Omar Zakhilwal, the finance minister of Afghanistan.