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TORONTO — As Afghanistan seeks to attract investors and rebuild its economy after decades of war, its government is looking to Canada to help bring its mining sector to life.
The Eurasian country is counting on its vast deposits of iron ore, copper, gold, lithium and other minerals to lure capital and technology from around the world and form the cornerstone of its economic expansion. The government forecasts mining will represent 25 per cent of gross domestic product by 2016 and 45 per cent to 50 per cent by 2024.
Afghanistan’s mineral reserves could eventually be worth as much as $1-trillion, according to estimates by the Pentagon and U.S. geologists, though the amount remains far from proven.
A crucial test for Afghanistan is Friday’s deadline for companies to express their interest in bidding for licences to explore and develop four key gold and copper mining properties.
Canadian companies are taking on leading roles advising Afghanistan’s Ministry of Mines on the process: Vancouver-based Canaccord Financial Inc. (CF-T8.940.273.11%) on financing, SRK Consulting of Vancouver for geological matters and Toronto’s Heenan Blaikie LLP for legal issues. Afghanistan is also emulating Canadian standards for reporting mineral reserves.
“Canada has been one of the most successful and largest mining countries,” Afghan Minister of Mines Wahidullah Shahrani said in an interview this week in Toronto, where he attended the annual convention of the Prospectors and Developers Association of Canada, a major gathering for the global mining industry.
Mr. Shahrani acknowledged that a big part of his job is to show foreign investors that business is even possible in Afghanistan. Roadside bombs and suicide attacks continue to plague parts of the country, which ranks among the poorest and most corrupt in the world. Afghanistan is the largest recipient of Canadian foreign aid.
“The biggest challenge we have been facing is the international perception of Afghanistan,” Mr. Shahrani said. “We’re paying a heavy price.”
That could be changing. A London-based metals-and-mining team of Canaccord that is advising his ministry has estimated five or 10 groups would be interested in this round of licences. On Monday, estimates were in the mid-20s, and by Tuesday it was looking more like 30 groups would be interested.
“The best pickings come to those who come first,” said Alexander van Hoeken, president and chief executive officer of Toronto-listed Kilo Goldmines Ltd. (KGL-X0.21—-%) “A pleasant surprise to me is how much interest there is.”
Kilo, whose main gold operation is in the Democratic Republic of the Congo, is considering whether to bid for a new tender in Afghanistan as part of a group, said Mr. Hoeken.
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