KABUL: An Australian billionaire is looking to invest in Afghanistan’s mining sector, which is rich in untapped minerals and worth an estimated $1 trillion, a government official told Arab News on Saturday.
It follows a video phone call between Andrew Forrest, head of Fortescue Metals Group, and President Ashraf Ghani earlier this month, with the two discussing the potential opportunities for the mining sector in the war-ravaged country.
“He (Forrest) could be part of the team heading to Afghanistan later this year for face-to-face talks with Afghan authorities. He has shown interest in the mining sector as Afghanistan is rich in natural resources,” Qadeer Khan Mutfi, spokesman for the Ministry of Mines and Petroleum, said.
He added that it was unclear which field Fortescue was considering investing in as the country has “world-class deposits of iron ore, copper, gold, and lithium.”
Fortescue was unavailable for comment when contacted by Arab News.
Afghanistan has extensive mineral resources in every province of the country, with an assessment by the US Geological Survey and the ministry placing their value at $1 trillion.
In 2007, China became the first major investor in the country after signing a multibillion-dollar deal for a copper project in the Logar province south of Kabul.
However, due to inadequate security measures, legal issues and the area being an important cultural site, the group failed to make any progress on the scheme.
After four decades of war, and facing an uncertain future due to a delay in talks between the government and the Taliban, Afghanistan is in urgent need of foreign investment as it has for long relied on overseas aid to bankroll its economy.
However, Mutfi vowed to provide “good opportunities and specified roadmaps” for international investors.
“The ultimate goal of the government, through foreign investment in any field, particularly in the mining sector, is to generate revenues and create jobs for its people,” he said.
Torek Farhadi, an adviser to the previous government and to the International Monetary Fund, said that apart from corruption, “security was a major challenge for foreign investment” in the country.
However, foreign investors were becoming aware of the country’s mining potential, he said.
“Fortescue’s interest in Afghanistan is proof that the country’s mineral resources have the potential to pave the way for financial independence,” he told Arab News.
“For Afghans, four points will be key: The contract must be transparent in clauses and pricing as per international best practices. The local population’s environment should be respected, and they should be compensated for the negative effects of mining; Afghanistan should negotiate a portion of its minerals for its extraction, and Afghan people should be trained and employed for extraction and management of the operation,” Farhadi said.
He added that “those with guns and in power were best positioned to earn more wealth” through foreign investment under the current circumstances, and that “peace needs to be a top priority” before any agreement is signed.
Atta Nasib, head of the Afghanistan Investment Facility Unit, said that Kabul needs to “review its existing laws,” which pose a challenge for investment.
“Laws and procedures have been major challenges to attracting investment. However, the urgency to streamline mining law has generated interest from potential big investors,” he told Arab News.
Foreign investors were discouraged by “convoluted procedures, insecurity, lack of business guarantees, incentives and cooperation” from government agencies, Nasib said.
“With a renewed focus on mining, Afghanistan can remove many stumbling blocks and showcase Afghans mining industry to the world to invest,” he added.