Afghanistan terminates contracts of two major mining companies

Afghanistan terminates contracts of two major mining companies

KABUL: Afghan President Ashraf Ghani has ordered the termination of the contracts of two mining companies tasked with the extraction of gold and copper deposits in the north of the country, an official confirmed to Arab News on Monday.

“They failed to fulfil their financial commitments and other terms of the contracts and we needed real investment, that is why the contracts have been terminated,” Abdul Qadir Mutfi, a spokesman for the Ministry of Mines and Petroleum said, adding that the government would have generated millions of dollars from the extraction of the two deposits annually if the same had not been the case.

The decision on the cancelation of the contracts — for the Balkh Aab copper deposit in Sar-e-Pul province and for the gold deposit of Badakhshan — was taken during a High Economic Council meeting last week.

On the basis of the contracts signed in October last year, the Afghan Gold and Mineral Company (AISA) was tasked with extracting copper in a 250 sq km area of Sar-e-Pul while the Turkish Afghan Mining Company (TAMC) was assigned the gold in Badakhshan, covering a region of 250 sq km, a government spokesman said.

Remote and rugged Badakhshan has one of the richest gold reserves in Afghanistan.

Both provinces have become restive in recent years due to Taliban advances and have been subject to illegal mining by both regional commanders as well as armed men linked to the Taliban.

The Afghan Cabinet will decide when the mines will next go for bidding, Mufti said. Officials from the two mining firms could not be reached for comment when contacted by Arab News.

However, a local online agency, Khama Press, on Sunday said that it had obtained a letter from them, saying that they had fulfilled the four key obligations of the contracts.

Mutfi confirmed that Sayed Mansoor Naderi, a former minister, owned a share in both mines, but rejected allegations that the termination of the contracts was based on Naderi’s decision to drop his support for Ghani during the September presidential elections and back his arch rival instead. 

The offer of the contracts drew criticism from some lawmakers and experts last year. Bari Salaam, a former senior official with a foreign-funded think tank, Independent Joint Anti-Corruption Monitoring and Evaluation Committee, said that the cancelation of the contracts may be due to political reasons linked to Naderi’s decision not to support Ghani in the polls.

“Unfortunately, the signing of the contract, apart from economic aspects, had its political reasons too and so are the reasons for terminating them now,” Salaam told Arab News.

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