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Afghanistan cancels contract to US gold, copper miner

Mining in Afghanistan. (Image courtesy of CENTAR Limited).

Afghanistan’s news agency Khaama Press informed this weekend that President Mohammad Ashraf Ghani cancelled the contracts held by the Turkish Afghan Mining Company TAMC and the Afghan Gold and Mineral Company AGMC, which allowed them to exploit the Badakhshan gold mine and the Balkhab copper mine in the northern Sar-e-Pul province.

Both TAMC and AGMC are JVs formed by US-based Central Asian Resources Limited, better known as CENTAR.

According to the news report, the country’s economic council, which is chaired by the president, made the decision arguing the companies have not fulfilled their contractual commitments.

Work conducted by the US Geological Survey and funded by the US Department of Defense and USAID has estimated the potential value of Afghanistan’s minerals, including gold, gemstones, lithium and
rare earths, at as much as $1 trillion

However, in a letter sent to the Large-Scale Mining Committee of Afghanistan to which Khaama Press got access, TAMC and AGMC said that they have fulfilled four key obligations in their contracts.

In the missive, the companies say they have completed a baseline environmental and social survey for the Badakhshan gold project area; developed an exploration plan for Badakhshan 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; designed an environmental impact mitigation plan related to the activities proposed in the exploration plan; and outlined an environmental remediation plan related to the activities proposed in the exploration plan and their impacts.

The one thing the miners haven’t done is the provision of a performance bond. In their correspondence, they say this is due to the unknown political situation in Afghanistan, where people are still waiting for the delayed results of the September 28th presidential election.

Within this context, TAMC and AGMC asked for a six-month extension to provide the bond.

“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,” CENTAR’s CEO, Bradley Barnett, wrote in the letter, according to Khaama.

The mining companies involved in the projects since the signing of the final contract in October 2018 have said that they had planned to start exploring before the end of 2019.

For decades, the 1,000-square-kilometre Badakhshan gold project has been the source of the yellow metal for hundreds of artisanal miners. In the 1970s, Russian geologists documented a series of gold-bearing occurrences on the site and generated a small indicated resource.

The Balkhab copper project, on the other hand, is an early-stage exploration project covering a 500-square-kilometre area. It is marked by occurrences of sulfide and oxide copper ores, the latter of which has a history of mining and processing at the site that stretches back an estimated 3,000 years.