Bloomberg News

Afghanistan to Offer Four Copper, Gold Deposits for Tender

December 06, 2011

(Updates with minister’s comments from fourth paragraph.)

Dec. 6 (Bloomberg) -- Afghanistan said it’s seeking investors for four mineral deposits containing copper and gold, a week after Indian steel and mining companies announced plans to spend as much as $11 billion in the war-ravaged country.

The government is starting a tender process for deposits in the provinces of Badakhshan, Ghazni, Heart and Sar-I-Pul, and Balkh, according to a statement today. The Badakhshan gold site comprises four license areas of 250 square kilometers (62,000 acres) each, while the Zarkashan copper-gold project in Ghazni province hosts two licenses of 242 square kilometers each.

India and China have so far led foreign investment in the country’s mineral resources. A group of seven Indian steel and mining companies last week said they planned to develop iron-ore mines and build a steel mill and power plant, after winning contracts in the country. The group, led by state-run Steel Authority of India Ltd., won bids for three of four iron-ore blocks offered in the Hajigak region.

The government aims to lure global mining companies to the tender and is meeting with Anglo American Plc in London today, Wahidullah Shahrani, minister of mines, said in an interview.

The tender is expected to lead to licenses for exploration and possibly exploitation, according to the statement. Canaccord Genuity, SRK Consulting and Mayer Brown are advising on the tender, due to close in March, with licenses awarded by July.

Licenses

The Balkhab copper project in Sar-I-Pul and Balkh provinces in north-central Afghanistan has two exploration license areas of 210 square kilometers and 247 square kilometers. The Shaida copper project in the Adraskan District of the Herat province comprises one exploration license of 250 square kilometers.

The Hajigak iron ore project, one of the tenders won by the Indian group of investors last week, is the country’s biggest deposit of the steelmaking raw material. Hajigak, a series of rugged mountain ridges 100 kilometers (60 miles) west of Kabul, holds an estimated 1.8 billion metric tons of ore and is the biggest mining project on offer in a country that the U.S. estimated last year holds $1 trillion of untapped minerals.

State-owned Metallurgical Corp. of China is developing the Aynak copper mine in Afghanistan where production is expected to begin in 2014, according to Shahrani.

Afghanistan is funding a 7,000-person security force to protect mining assets, with 1,500 personnel stationed at the Aynak mine at a cost of about $7 million a year, he said.

“We will provide 100 percent security support to all types of mining projects and the government will be responsible for providing physical security,” Shahrani said. The Hajigak project is located in a “safe and secure” location, he said, and the security force is expected to number about 300 people.

--Editors: Tony Barrett, Randall Hackley

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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