Afghans woo firms to develop minerals

LONDON — Afghanistan, sitting on as much as $3 trillion of untapped minerals according to the government, is holding talks with companies on developing mineral and energy deposits.

The country plans to invite bids for deposits in late 2010 or early 2011, Minister of Mines Wahidullah Shahrani said at a briefing Friday for potential investors in London. The minister spent the most time promoting the nation’s Hajigak deposit, site of an estimated 2 billion tons of iron ore.

In an attempt to stabilize President Hamid Karzai’s government and support “economic sovereignty” against the Taliban insurgency, the United States is promoting development of Afghan resources, Deputy Undersecretary of State Paul Brinkley said June 14. At the same time, the Taliban’s growing ability to attack even sites such as the U.S. air base at Bagram is discouraging investment.

In February, Shahrani canceled a tender for Hajigak after the ministry failed to attract major mine operators and only one of seven bidders visited the site 80 miles west of Kabul.

“Security is the main concern but clearly it was one of the first things they talked about and they’ve given it serious consideration,” Michael Lynch-Bell, head of mining and metals at Ernst & Young in London, said in an interview after Friday’s briefing. “I certainly will be going back and talking to a number of my clients” on the tender.

Afghanistan plans tenders for more than five mineral and energy projects by the end of2011, including gold, copper, iron ore, gemstones, marble, lithium, oil and gas, Shahrani said. The nation’s mineral wealth may total $1 trillion to $3 trillion, he said. U.S. officials estimate untapped minerals worth about $1 trillion in the country, The New York Times reported June 14.

The Ministry of Mines and advisers received 14 expressions of interest for Hajigak before the previous tender was canceled, with five companies short-listed, Shahrani said. Metallurgical Corp. of China, which won a tender for the Aynak copper mine after offering an $808 million bonus to the government, was one of the companies that registered interest, he said.

“It’s not necessarily the Chinese, there could be some Australian companies, or South African, Brazilian or Indian companies,” the minister said of a renewed tender.

Talks with Arcelor Mittal included discussions on Hajigak, and Afghanistan representatives will also talk to Rio Tinto about the deposit, he said. Initial expressions of interest are due in September, bids due by July 2011 and the winner likely to be announced the next month, he said. The nation expects first production five years later, Shahrani said.

“There clearly will be Chinese interest,” Lynch-Bell said. “Having said that, there are very few major iron ore projects around the world and there are a lot of companies looking for big projects. The Indians will be interested but I think some of the majors will certainly look at it.”

Shahrani said he met with oil company officials Tuesday interested in a field in the Afghan-Tajik basin that has an estimated 1.6 billion barrels of the fuel. They included Total, British-based explorers Heritage Oil and Sterling Energy, Toronto-listed Tethys Petroleum, and Eni of Italy, he said.

The nation’s only major mining project, at the Aynak copper deposit south of Kabul, may create 4,000 jobs for Afghans, Shahrani said last week. Metallurgical Corp. of China is scheduled to start production there as early as 2014.

The company has built a 10-mile road from the nearest town, and paid to build 65 police posts to guard the deposit, said Afghan Mines Ministry spokesman Jawad Omar. Aynak’s ore is buried in rocky hills 21 miles south of Kabul in a zone where Taliban guerrillas periodically attack government targets.

Since winning the tender in November 2007, the company has carried out exploratory drilling and cleared unexploded land mines laid during the 32 years of civil warfare from areas totaling more than a square mile, Omar said Wednesday.

In other developments, three American servicemen were reported killed Friday and the bodies of 11 men, some beheaded, were found as violence rises in Afghanistan.

Mohammad Khan, deputy police chief in Uruzgan province, said a villager in the Bagh Char area of Khas Uruzgan district spotted the bodies in a field and called police.

“They were killed because the Taliban said they were spying for the government, working for the government,” he said.

The acting Uruzgan governor, Khudia Rahim, said five or six of the 11 victims had been beheaded.

Meanwhile, NATO reported that a U.S. serviceman was killed in an insurgent attack Friday in east Afghanistan and another American died after a roadside bombing in southern Afghanistan on Thursday. NATO did not provide the exact location of the attacks.

A third serviceman died in an explosion Friday in south Afghanistan, NATO said. The U.S. command said he was American.

Their deaths took to 83 the number of international servicemen killed so far in June, which is already the deadliest month of the nearly 9-yearold war. At least 49 were Americans.

Information for this article was contributed by Jesse Riseborough, Cam Simpson and Eltaf Najafizada of Bloomberg News and by Mirwais Khan and Amir Shah of The Associated Press.