Tenders
1. What assets are included in the tender process?
Badakhshan (gold), Zarkashan (copper / gold), Balkhab (copper), Shaida (copper). These assets have been selected for the current tender process for the following key reasons:
- Resource potential
- Existence of previous drill holes and trench sampling
- Relative security of the area
- Drill ready
2. How long will the tender process be open for?
The initial stage of the tender processes will be open until noon Kabul time on 9 March, 2012, by which time an Expression of Interest has to be submitted. A Pre Qualification Questionnaire (“PQQ”) must be submitted by 16 March. Bidders obtain the PQQ by submitting the Expression of Interest.
Bidders who are considered qualified then proceed to the Bid Stage. This will last three to five months, depending on the asset.
3. What are the security implications for mining companies from 2014 onwards when the US withdraw?
The Afghanistan Government is responsible for the provision of security at its mining operations. The Mines Protection Unit (MPU) is currently successfully deployed around the Aynak Copper Mine Site where 1,500 MPU personnel are involved in the security of the project. The Government plans to increase the number of MPU personnel to 7,000, in order to provide security to all mining projects in the future, including exploration projects.
4. What types of companies are you hoping to attract?
The tender process is open to all those who have the ability to responsibly develop the country’s mineral resources for the benefit of the people of Afghanistan and who can make a positive contribution to the country.
There are few undeveloped mineral regions left in the world. As companies look to the future we believe that Afghanistan, with its rich mineral resources and competitive stable fiscal regime, will attract some of the leading mining companies of the world.
Fiscal Regime
5. What will royalty rates be?
The rates are currently being finalized by the Government. We expect the total effective tax rate to be in line with other countries.
6. How difficult is it to do business in Afghanistan?
The fiscal regime is very attractive for international companies.
- The tax regime is very favourable, with low corporation tax, and no import duties on mining or related equipment.
- Mining companies will have an unlimited loss carry forward
- Depreciation on a straight line basis over 5 years.
- Pre-production expenses can be capitalised and recovered over the shorter of 15 years or the life of the mine.
Safety
7. Is Afghanistan a safe place to do business?
The country is much less risky than the media portrays. Insurgent activities are restricted to limited pockets of the country .
8. What is the ‘Mines Protection Unit’ and how will this address obvious security concerns associated with operating in the country?
The MPU has been designed specifically to ensure the safety of our mineral deposits. The Unit is currently active on the Aynak Copper Mine site with 1500 personnel. There have been no security incidents since the licence was awarded four year ago. The Government plans to increase the total number of personnel up to 7,000 in order to provide security to all mining projects in the future, including exploration.
Infrastructure
9. Is Afghanistan’s poor infrastructure going to be a barrier to entry for companies looking to invest?
We are investing significant effort into developing Afghanistan’s infrastructure so that it is accommodating for foreign companies looking to invest in the country.
For example:
- Road construction is ongoing within the country, with major routes planned both north-south and east-west.
- Railway transport is viewed as a critical factor in the development of Afghanistan’s mining industry. There are several proposed routes indentified in the development study which are key to connect major Afghan cities. The earliest railroads are proposed to be developed over the next 3 years.
- There are power developments ongoing in the country with new transmission lines planned from Kabul south to Kandahar and Helmand provinces.
- Asian Development Bank is acting as advisor for the proposed Trans-Afghanistan Pipeline (TAPI), a natural gas pipeline planned to transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India.
