KABUL (Pajhwok): The government is going to sign the Badakhshan gold mine contract and Balkhab copper mine license at a lower royalty rate in the United States on Friday, a watchdog said, calling the move in violation of the mining law.
The Integrity Watch Afghanistan (IWA said awarding contracts of the two mega natural deposits at the lower rate was tantamount to looting the minerals.
According to reports, the Balkab copper and Badakhshan’s gold mines draft contracts were finalized in 2013 and landed in the Cabinet for approval in 2014, but the draft suffered delay after the inception of the unity government and lack of capacity in the Ministry of Petroleum and Mining (MoPM) and a debate regarding the clash of interest in the draft.
Finally, the document regarding the Badkahshan gold and Balkhab copper mines was presented at the High Economic Council (HEC) on August 22 in 2016 and was rejected after long a debate.
But recently, the National Procurement Commission (HPC) has finalized the draft contracts of Badakhshan gold and Balkhab copper mines with the High Central Corporation of Afghan Gold Minerals Company.
Balkhab Copper Mine:
This natural reservoir is spread over 457 square kilometres area in Pae Meer Syed Murad locality of Balkhab district in northern Sar-i-Pul province. The mine is situated 150 kilometres from Sar-i-Pul City, the provincial capital, and is one of the largest natural resources in the world.
The Balkhab copper mine was discovered in 1972 and contains 1.66 percent pure copper with 400 metres width and 5,000 metres length.
Besides the Balkhab copper mine, there is a river and a coalmine which increases the value and importance of the mine.
Badakhshan Gold Mine
This mine is situated 50 kilometres north of Faizabad, the capital of northeastern Badakhshan province in Ragh district. The gold of this mine is said to be of high quality. This mine is two metres wide and 350 metres long but there is no information about the volume of gold the deposits contains.
The IWA, which has repeatedly expressed its worries regarding illegal miming of natural resources, on Friday said the government wanted to illegally ink the contracts today in Washington.
IWA chief Syed Akram Afzali told reporters that Petroleum Minister Nargis Nehan, Finance Minister Hummayon Qayyumi and other concerned officials were in Washington to ink the contracts on Friday (October 5).
He said the signing of these contracts would mean looting of the natural reservoirs and international conspiracy.
He said the Afghan government, especially President Ashraf Ghani, was somehow making a politically bargaining on the contracts, which was an alarming warning for the future of the country’s mining sector.
He said the two contracts were being signed after British and the US governments influenced some officials in the Afghan government and all the profit of the contracts would go to the contractors.
He said the Afghan mining company, Crestal and the Afghan gold mining company registered in the United States and the United Kingdom, had illegally obtained these two contracts under pressure from the US and British embassies in Kabul in five years.
About resignation of Syed Saadat Mansour Naderi, a former Urban Development and Housing minister, Afzali said said Naderi was one of the main shareholders of the two companies, who himself had contravened the law in order to get these contracts. After finalizing these two contracts, he resigned some time ago.
New contracts violate the mining law
Article 16, clause two of the mining law says the president, his deputies, ministers, head and members of the Supreme Court, Attorney General Office, members of the parliament, heads and members of the independent commissions and their relatives could not obtain permission for the license under this law.
Also article 16, clause five of the mining law explains the above individuals could only get the mining license after five years of leaving their job.
The two contracts are clearly in conflict with article 16 of the mining law. Afzali said the president and his aides had clearly violated the mining law.
He claimed some government officials, including Presidential Advisor AjmalAhmadi, had facilitated the signing of the contracts and even attempted to change the law so that President Ashraf Ghani may not Naderi’s vote bank.
Pajhwok strived to get the view point of Ajmal Ahmadi in this regard, but could not succeed.
“The government often talks about transparency, but the biggest mining contract are being inked in violation of the law, this is an alarming and dangerous for the future of mining sector in the country.”
Yaseen Setez, member of the Environment and Natural Resource Monitoring Network (ENRMN), said government officials were committing ‘a legal burglary’ by signing the contracts, which he said should be prevented.
He said the government proved in practice it has not intension to stop violation of the mining law.
Clash of Interest:
The Balkhab copper and Badakhshan Gold contracts were revoked in 2014 for being not in the national interest.
One of the reasons to revoke the contract with the Afghan Gold Minerals and Central Companies back in 2014 was a conflict in interest.
Syed Mansour Naderi served as minister of mining and petroleum from 2015 till 2018 and additionally headed the Afghan Crystal Company and has shares in the Afghan Central Gold Minerals.
Finding of Pajhwok Afghan News show DLA Piper played a key role in the award of the contract because this company helped in formation of the new draft law with another company.
A statement from the Presidential Palace 10 days back stated that the contracts of Balkhab copper and Badakhshan Gold were presented by the MoPM and all concerns — financial commitments, guarantees and clash of interest had been removed.
A source, wishing to go unnamed, said the DLA Piper company, which helps the Afghan government in legal matters, has prepared the new draft contract in cooperation with the Kargar Advisory Company.
According to the source, the Kargar Advosory Company, which also serves as defense lawyer for Mansour Naderi, has convinced the Afghan government that the signing of Balkhab copper and Badakhshan gold contracts were not in conflict with the national interest of the country.
The source said this opportunity was provided by Ajmal Ahmadi, the presidential advisor in financial and banking affairs, to draw all matters in the best interest of the two companies and bring less benefit to the government.
The source said that during consultative meetings on amending the mining law, efforts were made to keep the royalty of the contract open because it was changeable keeping in mind the location and other specialties of the natural reservoir, but the Ajmal Ahmadi Company, officials of the DAL Piper Company and Kawon Kakar strived to determine the royalty and bring it down.
Royalty
Royalty is a financial responsibility on the contract holder or license holder. It is a specific percentage calculated from the gross product and transferred to the government. The Royalty percentage is managed separately in each contract.
Document shows that the royalty which the government is supposed to get from above companies is 7.5 percent but the draft documents of the same contract during Hamid Karzai’s presidency in 2013 put the royalty rate at 11 percent.
The IWA says in the new law, the royalty has been declined and according to the contracts, the royalty of Balkhab and Badakhshan mines is 7.5 percent.
Afzali said the previous mining law was more comprehensive, but a specific circle in the Presidential Palace amended the law to serve their own interest.
He said the royalty which the government set in these two contracts was a small one and the contracts served the interest of the companies not the state of Afghanistan.
Firm’s failure on similar project
On January10, 2011, the Afghan Crystal Natural Resource Company, signed a contract for the exploration and extraction of Qara-i-Zaghan gold mine in the Doshi district of Baghlan.
Under the agreement, the firm should have invested $50 million in the mine, but it failed to do so. The company should have completed survey steps in the first three years instead of extracting gold from the mine.
Integrity Watch Afghanistan had expressed concern at that time, saying the company carried out illegal activities in the area, which caused the loss of resources and income of the government.
Later on, differences surfaced within the cabinet. Based on a suggestion from former minister of mines and petroleum Dawood Shah Saba, the contract was abolished on November 17, 2015.
On September 21, Nargis Nehan, acting minister of mines, officials of the Silk Road Company signed in Delhi a contract for the exploration and extraction of the Shaida copper mine in Herat province.
CEO Dr. Abdullah, acting finance minister Humayoon Qayumi, Hussain Dad Shafayee, head of the general directorate of geological survey and India officials were also present on the occasion.
The Silk Road Company is a private entity with domestic and foreign investors in Afghanistan, supported by Canada. Under the agreement, the initial investment should be $20-30 million in three years of exploration. The firm it will extract copper over the next 30 years.
However, experts termed the exploration and extraction of copper and the contract with an unknown company against the national interest. They said the deal had been done under foreign pressure to further the interests of some politicians.
The Herat copper mine, spread on 250 square kilometres, is considered one of the largest mines in the province. It is located in Chist-i-Sharif district, 65 kilometres southeast of Herat City, and is estimated to contain about 5 million tonnes of copper.
A study of this mine was carried out between 1339 and 1351 solar years by Russian, German and American experts.
nh/sa/mud
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