By Shihoko Goto — Exclusive to Copper Investing News
Interest in Afghanistan's rich resources extends beyond the US, including amongst Afghans themselves. A delegation from the Afghan Ministry of Mines will be touring Australia later this month to woo mining companies and to learn from their business practices, according to the leading national daily The Australian.Afghan Mines Minister Wahidullah Shahrani told the daily this month that the government expects mines revenues to reach “at least $1.5 billion” by 2016. The government has created a Mines Protection Unit that will protect all mining projects at the state's expense whilst educating the local population about the importance of multinational mining groups in ensuring economic stability for the nation. Investing in Afghan copper mines There are undoubtedly considerable challenges to investing in Afghanistan's copper mines. One is the political unrest that is expected to intensify after 2014, when NATO forces retreat and the Afghan government becomes solely responsible for the nation's security. Yet Chinese mining giant Jiangxi Copper Company Ltd. (HKG: 0358) stated in late March that it expects its copper mining project in Afghanistan to begin production by 2016. The company had expected to start output by 2015, but progress was delayed “due to various politics and legal issues,” said Jiangxi's chairman, Li Yihuang. Jiangxi owns 25 percent of Afghanistan's Aynak project, located southwest of Kabul, while the remaining 75 percent is held by Metallurgical Corporation of China Ltd. (HKG: 1618). Progress on the mine slowed when Buddhist remains were found on the site in 2010. Indian companies too are interested in investing in Afghanistan. A consortium from Hindustan Copper Ltd. (NSE: HINDCOPPER) and the Steel Authority of India Ltd. (NSE: SAIL) will be seeking sovereign funding from the Indian government if they are successful in securing their bids for four copper and gold reserves in the country. “Since participation of Indian companies in the Afghan mineral resource sector was part of India-Afghanistan bilateral economic cooperation agreement, we will seek Indian government funding because development of reserves would also include investments in infrastructure and logistics to support mineral exploitation,” an Indian government official said, according to Mining Weekly. While there are considerable unknown factors in Afghanistan - in particular political stability in the nation once the government becomes solely responsible for national security - there is no doubt that the country is rich in mineral wealth. Its resource potential is eagerly embraced not only by Afghan authorities, but also by overseas investors large and small, and the potential for junior miners to get ahead in the market is high.