Afghanistan approves gold mining project

Afghan government officials have approved a multimillion-dollar contract to mine the wealth of gold under the mountains of northern Afghanistan.

Afghan government officials have approved a multimillion-dollar contract to mine the wealth of gold under the mountains of northern Afghanistan.

The deal is the first mining project in Afghanistan backed by private investors in the West. Afghan and US officials hope many more deals will follow to help jump-start the economy of this impoverished nation in its 10 years of war.

"This project is an important step forward for Afghanistan's economic sovereignty," US deputy under secretary of defence Paul A Brinkley said in a statement. "It represents a turning point in the history of international investment into Afghanistan."

Mr Brinkley, who directs the defence department's Task Force for Business and Stability Operations, said the gold mine deal is evidence that Western investors are showing confidence in Afghanistan's economic future.

About 10 investors - most of them from the US and Britain - are investing an estimated $50m (€37.21) in the gold project in Dushi district of Baghlan province, about 84 miles north west of Kabul, according to Wahidullah Shahrani, Afghanistan's minister of mines.

The only other gold mine in Afghanistan is in neighbouring Takhar province.

Mr Shahrani said he hoped that getting the deal approved by the Inter-Ministerial Council, which comprises the government's top finance and economic officials, would send a strong signal to global mining companies that there are investment opportunities in Afghanistan, especially in the mining sector.

Geologists have known for decades about Afghanistan's vast deposits of iron, copper, cobalt, gold and other prized minerals. In June, the US Defence Department put a startling trillion dollar (€744.2bn) price tag on the reserves, but Mr Shahrani called that a conservative estimate. He said he has seen geological assessments and industry reports estimating the nation's mineral wealth at three times that figure.

For Afghanistan, the minerals are a potential windfall, although formidable obstacles remain, including lack of investment, infrastructure and adequate security in most of the nation.

In late 2007, a $3bn (€2.2bn) contract was awarded to China Metallurgical Group to mine copper at Aynak, 21 miles south east of Kabul.

The mine is thought to hold one of the world's largest unexploited copper reserves. Mining the copper could produce 4,000 to 5,000 Afghan jobs in the next five years and hundreds of millions of dollars a year to the government treasury, Mr Shahrani said.

Afghanistan's gold deposits are more modest. Mr Shahrani said that Soviet-era studies valued Afghanistan's gold deposits at up to $25bn (€18.6bn).

He said the estimate was conservative and added that new gold discoveries have been made. Afghanistan's gold is found across the country, but the heaviest known deposits are in Badakhshan, Takhar, Bamiyan, Ghazni and Zabul.

"There is growing global demand for gold and right now the price of gold has reached the highest point in the history of mankind," Mr Shahrani said. "Investing in gold is very attractive."

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