A document seen by TOLOnews indicates that the Afghan government has signed a five-year “framework agreement” with an Australian company, giving it access to gold, copper, iron, lithium, and other rare mineral resources in the country, but critics say the document places too many obligations on the government while failing to specify the Australian firm’s obligations.
Despite some optimism about bringing in a company like Fortescue, which is a major international mining entity with a market capitalization of almost A$70B (US$56 billion), some analysts question the way the agreement has been negotiated and awarded to the Australian firm.
The "framework agreement" was signed in September 2020 with the Australian Fortescue Future Industries Pty Ltd company, the document shows.
Based on the document, the Afghan government has committed to not allow any other company or individual to have access to those mineral resources in the country in the next five years.
According to the document seen by TOLOnews, the Afghan government has invited Fortescue Future Industries “to invest in mineral exploration and the development of mining in Afghanistan.”
The document shows that the Australian company has agreed “to invest its resources in undertaking studies and exploration for the development of mining projects.”
Regarding its projects, the document says that the Afghan government will ensure that until surrendered in writing by Fortescue, “no other person or entity is invited or permitted to undertake similar studies or in any way engage in activities to interfere with the activities of the project studies and development being undertaken by Fortescue or its affiliates, consultants or contractors.”
In clause 1.3, the agreement says the parties for the agreement intend to be binding but to be replaced with a more specific agreement relevant to each project which will be on the same terms as this agreement but restated in more formal documentation.
The company also seeks “exclusive rights” from the Afghan government to enter and utilize such land within its ownership or control to undertake studies as may be identified by Fortescue.
When it comes to the obligations of Fortescue Future Industries, the agreement says that the company agrees that it shall undertake such studies in respect of each project with ta view to ensure the following benefits to the Afghan government:
Local workforce development and training and industrial development, capacity and competency building in Afghanistan.
Some representatives of the private sector and a former advisor to the mines ministry said they doubt the benefit of the agreement to the country same as other big mining projects signed in the last 19 years.
They argue that they see secrecy by the Administrative Office of the President regarding the agreement.
“Technical, legal and comprehensive issues should be considered in which obligations and commitments of both sides are reflected so that in case of any problem, we can push contractor to fulfill its commitments,” said Abdul Wase Haidari, a former adviser to the Ministry of Mines and Petroleum.
According to analysts, the agreement leaves no room for negotiating for the government. But when it comes to Fortescue, the company is not obligated to fulfill any of its obligations under the framework agreement.
The Afghanistan Investment Facilitation Unit that operates under the Administrative Office of the President and facilitates and follow-ups such agreements did not comment on TOLOnews' questions regarding the agreement. Meanwhile, the Ministry of Mines refrained from providing details on the document.
“Unfortunately, over the last one year, many contracts are done at the Administrative Office of the President,” said Simin Barikzai, an MP.
“We support big investments, not like Aynak copper deposit, Hajigak mineral deposit and dozens of other deposits that were contracted with foreigners but they did not benefit the people of Afghanistan so far,” said Sakhi Ahmad Paiman, head of the chamber mines and industries in Kabul.
But overall, some other representatives of the private sector have some optimism regarding the agreement, calling it a big step towards more investments in Afghanistan.
“In terms of economy, it is important so that Afghanistan can attract mining investment from abroad and can help us in building the trust for international investors to come to Afghanistan and invest,” said Hujjat Fazli, CEO of International Chamber of Commerce in Kabul.
President Ashraf Ghani, Attaullah Nasib, the head of the Investment Facilitation Unit of the Administration Office of the President, as well as Haroon Chakhansuri, the minister of mines and petroleum, have signed the document. Dr. Andrew Forrest, the owner of the company and Julie Shuttleworth, a member of the company, have also signed the document.
Based on the agreement, the sites identified in the document for prospecting copper and/or iron include Bamiyan, Panjshir, Herat, Badakhshan, Kandahar, Helmand, Kabul, Logar, Balkh and Takhar; and lithium and rare earth metals in Nuristan, Kunar, Laghman, Parwan, Badakhshan, Daikundi, Herat, Nimroz, Ghazni and Helmand.