Country Report Afghanistan January 2011

Economic policy: The government has plans for mining development

The minister of mines, Wahiddulah Sharani, has been talking up the prospects for Afghanistan's mining sector. Over the course of the next 12 months the Afghan government will open tendering processes for a gold mine and for oilfields in Kashbasi and Mazar-i-Sharif. It is also continuing exploration of the Balkhab copper deposit. There has already been some interest from foreign mining companies, for example, US-based Newmont Mining. However, it is unclear how and when these potential opportunities will actually materialise, given the long and tortuous bidding process for the Hajigak iron ore mine. Bids were originally accepted until February 2010, but the bidding process was reopened in late September after Mr Shahrani was appointed minister of mines; his predecessor had left the post amid allegations of corruption. The mine could provide US$300m annually in tax revenue for the Afghan government, and US$1.5bn in indirect income. The contract is expected to be awarded at the end of 2011.

In addition to the tender notices, the government has outlined plans for the expansion of rail networks from Kandahar to Chaman in Pakistan and from Pakistan through Mazar-i-Sharif to Turkmenistan. However, these have not yet been tendered and it will be years before they are completed. Mr Shahrani is also concerned about the perception that the practice of awarding contracts is rife with corruption; he says he is shaking up the Ministry of Mines and has created its first business plan.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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