Afghanistan welcomes Iranian mining investment

In a meeting with senior members of Iran Chamber of Commerce, Industries, Mines, and Agriculture (ICCIMA) earlier this week Afghan President Mohammad Ashraf Ghani pledged to offer every possible help for mining investments in his country.

He ordered his minister of finance to identify the obstacles on the way of Iranian investment in Afghanistan and take necessary steps to remove them, Eghtesadnews reported.

President Ghani’s promising comments come as the two governments have, for six decades, underscored the necessity of expanding bilateral economic ties while nothing much has happened so far. But the recent visit to Tehran by Ghani bodes well for Iranian private sector mining firms.

“The issue of mining collaboration between the two countries is really serious this time and will enable the Iranian mining companies to exploit huge mineral resources in the neighboring country,” said Ala’ Mirmohammad-Sadeqi, the chairman of Iran Mine House (IMH).

Mining experts describe the Sangan iron ore mine, located in the east of Iran, and the Hajigak iron ore reserves in Afghanistan as conjoined twins as they offer great opportunity for joint mining activities in exploration, extraction, and processing phases.

Challenges Ahead
The Iranian mining sector has not been able to enter Afghanistan so far to use the huge untapped mineral resources there. This is while China and India have already begun exploiting the enormous mineral reserves in Afghanistan. The Afghan mining sector players blame unclear mining contracts by the Iranian sides for the lack of satisfactory mining cooperation. This is while the Iranian private mining firms complain about the absence of government support.

Geological Commonality
The IMH chairman assures the private sector financiers that they can now make profitable investments in Afghan mines as “Kabul is keen to develop mining ties considering the common geological characteristics of the two neighboring countries”.

Based on negotiations between Afghan officials and the ICCIMA, the Iran-Afghanistan Chamber of Commerce has agreed to play a more role by facilitating the presence of Iranian active companies in Afghanistan, which is home to abundant iron and copper ores reserves, Mirmohammad-Sadeqi added.

Chabahar Potential
Numerous solutions have been proposed to help Iran realize its 2025 Vision Plan which requires the country’s steel industry to produce at least 55 million metric tons of crude steel within the next decade. One way is to seize the opportunity to extract iron ore in Afghanistan and transport it to the southeastern port city of Chabahar by railway, where a number of steel plants are being constructed. This way the steel plants can receive the iron ore as input to either process it to materials with more value added such as iron ore concentrate and iron ore pellet or produce steel.

The proximity of Chabahar to the Indian Ocean enables the country to export steel with minimum transportation costs. A considerable portion of the manufactured steel can also be used by the auto manufacturing companies being constructed in Chabahr, making the region the biggest car manufacturing hub in Iran.
In line with the 2025 Vision Plan, the Rouhani government has started vast exploration operations in Sangan region since last year, which have so far resulted in the discovery of at least 250 million tons of iron ore as well as 150 million tons of coal. The exploration operations, mainly through aerial geophysical surveys, could be extended to mineral-rich areas in Afghanistan once the mining collaborations develop further.

Iranian mining companies should waste no time in seizing the opportunity. After all, countries such as the UK, Italy, South Korea, China, and India already have a foot in the door to exploit Afghanistan’s estimated $1 trillion untapped mineral wealth. Apart from iron ore, Afghanistan is also home to considerable reserves of copper, gold, uranium and precious stones such as emeralds.

By Financial Tribune