Remarks at Afghanistan Minerals Roadshow

Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs 
New York City
September 29, 2010

Good morning. I’m delighted to join H.E. Omar Zakhilwal, Minister of Finance, H. E. Waheedullah Shahrani, Minister of Mines, and H.E. Noorullah Delawari, President & CEO Afghanistan Investment Support Agency, as well as the rest of the delegation in promoting the tremendous opportunities for investment in the Afghan mining industry.

Afghanistan is at the precipice of great change. Recently, the country has made strides in improving security. We’ve seen promising developments on the economic front, including the ratification the Afghanistan-Pakistan Transit Trade Agreement (APTTA). Steps taken to improve good governance within the banking industry are also boosting international investors’ confidence in the Afghan Government and Afghan central bank.

Today, we take a moment to recognize the tremendous opportunities that now exist in the Afghanistan mining sector. It has the potential to transform Afghanistan by increasing employment, enhancing economic growth, and improving tax revenues.

In the months and years to come, exploration in the mining sector will play an important in putting Afghanistan’s path to economic progress.

The U.S. Geological Survey estimates that Afghanistan’s soil may contain up to $800 billion in sedimentary iron, $200 to $400 billion in copper, $10 billion in tin/tungsten, $1 billion in bauxite, $1 billion in gold, $200 billion in marble, and $400 billion in hydrocarbons to include oil, gas, coal, lignite, and peat. The Department of Defense’s Task Force for Business and Stability Operations (TFBSO), working with USGS believes that Afghanistan's mineral wealth could top $1 trillion.

In fact, one of the largest unexploited iron ore deposits in Asia is the Hajigak mine in Bamiyan Province.

The Ministry of Mines has also announced that Badakhstan gold deposit will go to tender later this year and the Balkap copper deposit tender will open in 2011. The Afghan Government and international community are working to develop a road and rail infrastructure to support these tenders and facilitate extraction.

Projects like the ones in Hajigak and Balkap are good examples of what we can expect in the near future, as far as tenders.

We expect the Ministry of Mines and Ministry of Finance, among others, to continue strengthening the regulatory environment which will prove attractive to investors. That means cutting red tape, clarifying rules, and working with the international community to deploy shared best practices in the mining industry.

One of the most critical steps the country is taking is to improve transparency within the extractive industry. The Extractives Industry Transparency Initiative, or EITI, secretariat is in place within the country and they are working with the World Bank towards compliance status.

The EITI was established in 2002 as a coalition of governments, civil society organizations and companies to set global standards in transparency and accountability in the extractives sector in resource-rich countries. The aim of the coalition is to encourage and establish procedures for the publication and external verification of company payments and government revenues from the oil, gas and mining industries.

EITI has set up standards of membership for governments, companies and representatives of civil society in order to foster cooperation and ensure transparency.

The United States stands shoulder to shoulder with Afghanistan as a partner in developing the country’s economic potential. USAID and other USG organizations are providing technical assistance and helping to mitigate potential risks in the mining industry. For example:

  • USAID is funding the Economic Governance and Growth Initiative (EGGI) to promote economic and institutional reform across key Afghan government sectors. One EGGI focus is the building of the Afghan Ministry of Mine’s ability to promote private sector growth and champion economic and regulatory policies.
  • EGGI provides technical advisory support to the Afghan Central Business Registry (ACBR) one-stop-shop business registration program and mentors and trains staff on commercial laws.
  • The U.S. Government fully supports the expansion and strengthening of the Afghan Central Business Registry (ACBR). We look forward to your support to reflect needs in its budget, to supporting a full-time Director, and expansion of services nationwide.
  • In addition, the Overseas Private Investment Corporation (OPIC) is helping make current and future tenders more attractive to prospective investors through political-risk insurance and lending support.

We’re also taking an active role in promoting trade facilitation. The Trade and Accession Facilitation for Afghanistan (TAFA) project that I mentioned earlier works with the Directorate of International Trade to build the capacities within the ministry to promote WTO accession and the implementation of the South Asia Free Trade Agreement (SAFTA) and the Afghanistan-Pakistan Transit Trade Agreement (APTTA).

Most recently, the TAFA scope of work was amended to include a component to work with various ministries, the Afghan Investment Support Agency (AISA), and the private sector to structure, finance and implement Public-Private Partnerships which expand trade.

An assessment of AISA for direct financing is nearly complete and we are starting to inventory the Government of Afghanistan assets for inclusion in a short-list of possible public private partnerships.

Indeed, there are challenges to working in Afghanistan, but the extractive industry in every nation has challenges. But we will work the Afghan people as well as the international community in turning these challenges into opportunities.

While we do so, we hope that U.S. companies will explore these and other investments in the Afghan mining industry which we believe may provide returns not only for themselves but for the people of Afghanistan as well. Thank you.