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Afghan Mining Opportunity

Afghan Mining Opportunity. Mining Sector Overview. Afghan Opportunity. Afghanistan has substantial mineral and petroleum deposits: Copper (Aynak = 11.3 million tons) Iron (Hajigak = 1.8 billion tons) Oil and Gas estimated at 36 trillion cubic feet and 3.6 billion barrels respectively

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Afghan Mining Opportunity

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  1. Afghan Mining Opportunity Mining Sector Overview Afghan Opportunity • Afghanistan has substantial mineral and petroleum deposits: • Copper (Aynak = 11.3 million tons) • Iron (Hajigak = 1.8 billion tons) • Oil and Gas estimated at 36 trillion cubic feet and 3.6 billion barrels respectively • Precious Stones (over 120 occurrences) • Precious Metals (112 gold occurrences) • Other (aggregates, etc.) • In 2002, the US Geological Society (USGS) compiled a list of 1,079 Afghan mine and mineral occurrences • Still under explored – High probability of finding significant additional reserves • Currently mining is less than $100 million in Afghan GDP (<1%) • Opportunity to more than double Afghan national revenue in mid-term • 2009/10 total government revenue = $1 billion • Up to $1 trillion in mining reserves (according to President Karzai) – Not including extraction • Aynak and Hajigak alone could eventually create revenues of $1 billion+ annually • All minerals located on or under the surface are the sole property of the government • Significant generator of jobs and economic development • Value chain and building aggregates can have near-term COIN impact Significant enabler of Afghan self sufficiency

  2. Primary Mining Sectors Copper Iron • Current interest is focused on Anyak, the Darband, and the Jawkhar prospects in southeastern Afghanistan. • Aynak is estimated at 11.3 million tons and is expected to employ up to 40,000 people (directly and indirectly) when fully operational. • Expected to generate $350+ million in taxes to GIRoA annually. • Previously, copper has been mined from the following Provinces: Heart, Farah, Kapisa, Kandahar and Zabul. Aynak • Hajigak iron ore deposit located over 100km west of Kabul is the best known deposit. • 1.8 billion ton of iron ore with a concentration of approximately 62%. • World class opportunity (primary ore accounts for 80% of the ore). • Bloomberg – “Afghanistan Invites New Iron Mine Bids Over Transparency Issues”. Hajigak Source: Ministry of Mines Source: Ministry of Mines Oil and Gas Precious Stones and Metals • Gas fields have been identified in several locations including yateem Taq, Khwaja Gogardak, Khwafa Bolan, Zigdeli, Bayan Ghor and the outskirts of Sherber Ghan. • 500 total fields (8 identified having the geological capacity 0f 180 billion cubic meters of gas). • Sar-e-pul oil reserves has been identified (44.5) million tons with the extractable reserves reaching 14.5 metric tons. • Gemstone varieties include emerald, sapphire, aquamarine, tourmaline, kunzite, ruby, lapis lazuli, spinal and more. Gold is another precious metal opportunity. • Opportunity to grow to gemstones from $3 million to $300 million per year (as per USAID) with improved extraction and processing (85% exported for processing). • Marble is another key focus area. Source: British Geological Survey and Ministry of Mines Source: USGS

  3. Opportunities Blanket The Country Copper Iron Source: Ministry of Mines Source: British Geological Survey and Ministry of Mines Oil and Gas Precious Stones and Metals Source: British Geological Survey and Ministry of Mines Source: USGS

  4. TFBSO Prioritized Mineral Sites TBD 16 18 TBD 17 TBD TBD 1 11 15 7 8 12 TBD 20 5 4 13 14 2 19 3 9 6 10 5

  5. Recent Mining Progress/Issues • Recently-gazetted laws and new mining regulations approved by the cabinet on December 14 should improve the regulatory environment • New Mining Minister Shahrani • Afghanistan’s 24th Minister of Mines • First with an economic and business background • Keenly interested in developing sector with an eye on investment promotion • Creation of Infrastructure and Economic Development cluster • Chaired by Minister Shahrani • Key priority is to prepare Afghanistan for large scale investment in extractive industries • Mining sector will receive heightened level of focus • Issues: • Hajigak tender delayed, per newspaper reports, to ensure transparency • Aynak production delayed • Lack of established “value-chain” infrastructure

  6. IJC Mining Considerations • Continue to support Deputy Undersecretary Brinkley’s business support task force, which will begin investment support activities for industrial minerals operations in 2010 • Synchronize with USAID is assessing the “mines to market” value chain • Creation of Afghan business associations • Product finishing training • Technology development and equipment supply • Public private partnerships, market linkages, and industry infrastructure strengthening • Work with IPA and PRTs to analyze potential needs at the provincial and district levels • Explore CERP opportunities accordingly • Leverage shorter term COIN opportunities to set the stage for exploitation of this sector in the future • Develop a positive I/O campaign to communicate the value of this important market Bottom Line: Mining is one of the most important sectors in Afghanistan and should be pursued to the greatest extent possible

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