The two major Afghan mining contracts are to be terminated, Afghan president has ordered in a high economic council meeting.
Afghan president Mohammad Ashraf Ghani has ordered to terminate the contracts for Badakhshan gold mine and Balkhab copper mine of Sar-e-Pul on Wednesday.
The decision has been made in the last week’ high economic council, chaired by the president, said Abdul Qadeer Mutfi, the spokesperson for the ministry of mines and petroleum.
The contracting company has not fulfilled its commitments as per the contract documents and therefore the members of Afghanistan’s high economic council have decided to go for the contracts termination process, Mutfi said.
According to the Turkish Afghan Mining Company (TAMC) and its local partner Afghan Gold and Mineral Company (AGMC), the 4 key obligations of the contractor have already been completed before the deadline of November 7, 2019 , but only the last element which is provision of performance bond has not yet provided due to the unknown political situation, and the contractor had appealed for a period extension until the Afghan presidential elections results are announced and the new government is in place.
In a letter dated November 6th 2019 which was addressed to the Large-Scale Mining Committee of Afghanistan, the contractor have said that they have fulfilled the 4 key elements of the contract which includes the following:
- A baseline environmental and social survey for the Badakhshan Gold project area;
- An exploration plan for Badakhshan Gold with a project schedule, detailed description of the proposed activities, a justification for why those activities are being proposed and a detailed budget that corresponds to the schedule and our proposed activities;
- An environmental impact mitigation plan related to the activities proposed in the exploration plan;
- An environmental remediation plan related to the activities proposed in the exploration plan and their impacts.
“Our core focus remains the same as it was when we signed our mining contract in October of 2018, which is: starting exploration activities at the Badakhshan Gold Project as soon as they can occur safely and within the bounds of reasonable risk and cost. We believe this focus is consistent with the goal of helping to develop the mining sector in Afghanistan in general as much as generating success in our own project. Both are goals we share with the Ministry of Mines and Petroleum, among other stakeholders, including the people of Afghanistan”, the letter says.
Several obstacles currently impede our immediate progress, however, we believe these obstacles to be temporary, said the company.
The letter also indicates that the contracting company has requested the government for another six months extension until the political situations get stable and they can fight with the barriers and obstacles including the security issues by then.
Our investors are committed to making this a reality. In order for that to happen, they, like any experienced mining investor will need an environment that is supportive of mining project development. Granting an extension of the performance bond obligation until May of 2020 at this time, will help maintain their belief that Afghanistan still holds the same promise it did when they invested in 2011 and will be a concrete example of the level of support of the Government of Afghanistan, Bradly Barnett, the CEO of the company wrote to the committee.
A founding member and partner of the company told Khaama Press that the decision made in the High Economic Council is political and is in contrast to the discussions they have had with the ministry of mines and petroleum and the large-scale mining committee.
The Afghan partner for this contract is the ex minister of Urban Development and Housing, Sadat Mansoor Naderi who comes from a political sector and supported president Ghani in the 2014 elections, but in the 2019 election his family and political party endorsed Abdullah Abdullah.
These two contracts were signed between the in October 2018 after a 6-year tendering period.
Ian Hannam, a former JPMorgan Chase & Co. banker and the co-owner of Centar Ltd., signed the contracts with the Afghan officials during a ceremony held in the Embassy of Afghanistan in Washington last year on October 5th.
Afghanistan’s acting finance minister Mohammad Humayoun Qayoumi and the minister of mines and petroleum Nargis Nehan had attended the signing ceremony on behalf of the Afghan government.
According to the contractor, the exploration works in the two sites were scheduled to begin this year, covering a 500 square kilometer area for the exploration of copper in Balkhab in North of Afghanistan.
These contracts valued over 600 million dollars which were supposed to initiate with an initial investment of 78 million dollars by the extractors.