Tuesday, October 21, 2014

19th Session of the Commission on Sustainable Development High-Level Segment Roundtable 4

Statement by  H.E. Abdul Hadi Arghandehwal

Minister of Economy  Islamic Republic of Afghanistan

19th Session of the Commission on Sustainable Development

High-Level Segment Roundtable 4

Mining


بسم الله الرحمن الرحیم

Mr. Chairman,

Afghanistan aligns itself with the position of the G77 and China. We thank the panelists for their excellent presentations, and express our appreciation to the Secretary-General for his Report on mines, which will certainly play an important role for our deliberations.

Mr. Co-chairs,

Although Afghanistan is one of the world’s poorest countries, it has significant mining production potential in natural resources. Afghanistan’s mineral deposits are largely untapped and are estimated to be worth up to 3 trillion dollars according to a recent survey by the United States Geological Survey (USGS). Most of these deposits include significant reserves of iron ore, copper, cobalt, gold and industrial production metals such as lithium. Studies also suggest that Afghanistan has large deposits of niobium (a soft metal used in superconducting steel production) and other rare earth elements. The deposits are large enough to make Afghanistan a major global producer of these minerals.

The USGS also estimates that there are around 700 billion cubic meters of gas and 300 million tons of oil across several Northern provinces.  Further, a survey conducted during soviet times estimated that there are more than two billion tons of high-grade iron reserves in just one deposit alone. Afghanistan’s mining potential has already attracted significant foreign direct investment flows. In May 2008, the Government signed a $3.3 billion deal with the MCC Company to explore and process Aynak copper deposits situated in Logar province. The MCC is still undertaking the pre-production feasibility study which is likely to be completed by early 2011. This investment also includes the construction of more than 600 km of railroad and a 400 MW power plant.

The Government currently receives US$20-25 million annually in mining revenues. According to IMF projections, the mining sector is expected to contribute an average of $11 billion annum over the five years between 2014/15 to 2019/20 and is expected to rise to a projected average of $17 billion per annum in the 10 years between 2020/21 to 2029/30. If managed well, the net foreign exchange and tax revenue wind fall generated by mining sector growth can be used to power overall economic growth, and to finance the delivery of social services (such as health and education) and poverty reduction programs. In 5 years time, the expected government revenue will be at least $1.5 billion annually. Sound macroeconomic policies would be employed to maximize the economic return from expected revenue windfalls from the mining sector. The Government can use additional mining revenues to build up foreign exchange reserves. This will ensure that the revenues are not all spent at once, but that they are invested in diverse income bearing assets and for the benefit of future generations. The revenues can also be used to upgrade the productive capacity of the economy (in particular exports) and the strategic growth of infrastructure for production, which includes power generation, roads and irrigation along with enhancing the quality of human resources through investment in higher education.

Achievements so far:

1. A mining law that strengthens the role of the state as “regulator” and aims to attract and retain private investment is in progress.

2. Our world class deposits of Aynak (copper), Hajigak(iron ore), Sherbegon (gas) and other potential discoveries, through our new exploration.

3. In 2006/2007, the government launched the first tender for the Aynack copper deposit. The award was granted to the MCC-Jiangxi Copper MJAM consortium.

4. The ministry of Mines is procuring an international engineering firm to monitor contractual and regulatory compliance, including environmental/social standards.

5. Establishment of a cadastre department to oversee and register issuance and maintenance of various mining titles is in progress.

6. Training and equipment is also being provided to the Department of Mines Inspection and the Afghanistan Geological survey.

7. Afghanistan now has an environmental law with requirements on the preparation and approval of Environmental impact Assessments and Social Impact Assessments.

8. The ministry of mines and the ministry of finance have developed a competitive taxation and fiscal package for mining sector investments.

9. On the transparency side, we are committed to the ELTL and we fully comply by March 2012.

Important challenges ahead:

Although some progress has been achieved, it is evident that much work needs to be done to ensure that the mining sector delivers on its potential to reduce poverty, foster sustainable economic growth, and improve the quality of life for the majority of Afghans. In that sense there are important challenges ahead: Firstly, the development of the mining sector in Afghanistan is a process that will take a longer time and relatively higher capital investment and operating cost.

Secondly, a major mine development will also require the development of infrastructure to support operations (water, power generation), capacity building, and the transportation links to domestic and international markets (roads railways, pipelines).  This is well incorporated in the newly developed program called National & Regional Resource Corridors Initiative.

And thirdly, it is crucial that the Afghan government and its development partners continue on with the preparation and implementation of a set of effective policies for revenue management, benefits sharing, and public-private partnerships for infrastructure development.

Dear ladies and gentlemen,

The long term vision in Afghanistan is to develop an economically vibrant mineral sector which creates jobs, develops infrastructure, generates domestic revenue and ensures inclusive economic growth for the benefit of all Afghans. Simply put, mining in Afghanistan has the potential to be a driver of a poverty reduction and sustained growth, if managed properly.

Achieving these developments will enquire strategic actions and a long-term vision in order to create an enabling environment for private sector investments that includes field security, good governance and transparency.

The Afghan government is conscious of the resource curse challenges and has already taken important steps to address them. These steps include actions to improve the implementation of legal frameworks for effective environmental, social and fiscal regimes; the provision of training and capacity building in relevant ministries and agencies; and the overall improvement of the country’s security situation.

At the end, I would like to once again, take this opportunity to express my gratitude to the organizers of CSD 19.

Minister of Economy Abdul Hadi Arghandehwal Addresses UN Commission on Sustainable Development Roundtables on Mining and Transportation

H.E.,  the Minister of Economy of the Islamic Republic of Afghanistan Mr. Abdul Hadi Arghandehwal has addressed the 19th Session of the United Nations Commission on Sustainable Development, which brings together ministers as well as government high officials and representatives of international organizations and civil society to discuss the way forward in national and international development.

During his address on mining, Minister Arghandehwal emphasized the significant production potential of Afghanistan’s mineral resources.  He explained how Afghanistan’s mineral deposits remain largely untapped, and that a recent United States Geological Survey (USGS) study estimated Afghanistan’s mineral reserves to be worth up to 3 trillion dollars.   He shared that “Most of these deposits include significant reserves of iron ore, copper, cobalt, gold and industrial production metals such as lithium. Studies also suggest that Afghanistan has large deposits of niobium and other rare earth elements. The deposits are large enough to make Afghanistan a major global producer of these minerals.”

Focusing on the production potential of these mineral reserves, Minister Arghandehwal told of the significant foreign direct investment flows Afghanistan has already attracted, particularly with the MCC company for the exploration and processing of Aynak copper deposits.  Of note, he shared that this MCC investment will include the construction of more than 600 km of railroad and a 400 MW power plant.

The Minister of Economy went on to highlight current contributions to the Government of Afghanistan from mining revenues.  He noted that the Government currently receives US$20-25 million annually in mining revenues.  Further, he explained that according to IMF projections, the mining sector is expected to contribute an average of $11 billion per annum over the five years between 2014/15 to 2019/20, and that this is expected to rise to a projected average of $17 billion per annum in the 10 years between 2020/21 to 2029/30.

In addition, he addressed the challenges that lie ahead, including higher capital investments and operating costs required for the development of Afghanistan’s mining sector, the development of infrastructure for support operations, capacity building, establishing a connected transportation system to enable trade, and the establishment of effective policies for revenue management, benefit sharing, and public-private partnerships for infrastructure development.

The Minister also shared Afghanistan’s long-term vision, “To develop an economically vibrant mineral sector which creates jobs, develops infrastructure, generates domestic revenue and ensures inclusive economic growth for the benefit of all Afghans.” He added that “Mining in Afghanistan has the potential to be a driver of a poverty reduction and sustained growth, if managed properly.” Further, Minister Arghandehwal acknowledged that these developments will require strategic action and vision in order to create an enabling environment for private sector investments, including field security, good governance, and overall transparency.

During his address on transportation, Minister Arghandehwal highlighted the impact of prolonged conflict on Afghanistan’s transportation sector, noting the challenges that lie ahead in construction and restoration efforts alongside the opportunities for economic development and for the improved living standards of the Afghan people.

Focusing on the specific challenges for Afghanistan, he underscored the impact of turmoil on transportation, which has left behind damaged roads and structures and has turned away international air carriers and other sectors from investing in and servicing Afghanistan’s transportation needs.

The Minister of Economy also specified that “The government of the Islamic Republic of Afghanistan’s strategic vision and goal for the transport sector is to have a safe, integrated transportation network that ensures connectivity and that enables low-cost and reliable movement of people and goods domestically as well as to and from foreign destinations. This will give impetus to economic growth and employment generation and help integrate Afghanistan into the global economy. A high priority is to have in place an efficient and viable road transportation network for achieving economic growth and poverty reduction, particularly in rural areas.”  To this end, Minister Arghandehwal spoke of the many gains Afghanistan has made in building and restoring transportation infrastructure in the country.  He explained the progress that had been made with roads, railways, and civil aviation as well as the legal and regulatory gains that have been made for effective governance and for the facilitation of trade.

Further, Minister Arghandehwal drew attention to the fundamental role of transportation for economic growth, stability, and peacebuilding in Afghanistan, and that this relationship necessitates the strategic development of the Afghan transportation sector.  He noted that Afghanistan is currently “…working to develop and complete a network of regional roads to connect to neighboring countries, the coordination of funding for the implementation of projects, quality control and the development of a sustained operation and maintenance of roads, organizational strengthening and capacity building of technical staff, and strengthening the role and relation of private sector in road construction and maintenance.”

During his addresses on both mining and transportation, Minister Arghandehwal expressed Afghanistan’s appreciation for the organization of CSD 19 and for the continued support and commitment of the international community for stabilization and security in Afghanistan.

Doha Forum Addresses UN Security Council Reform and International Stability

The Doha Forum in tandem with “Enriching the Middle East’s Economic Future Conference” are currently underway in Doha, Qatar. On 10 May, the second day of the three day event, the session entitled “International Stability,” featured panelists from Foreign Ministries and Government, academics and experts from around the globe including Afghanistan, France, Mexico, Romania, South Africa, the UK, and the US. The panelists discussed the future of peace in the Middle East including recent revolutions in the region and their strategic implications. Other topics included the escalation of Islamophobia in Europe, the development of the G20, the growing role of regional powers, and the reform of the United Nations Security Council.

His Excellency Zahir Tanin, Permanent Representative of Afghanistan to the United Nations and Chair of the Intergovernmental Negotiations on Security Council Reform, spoke on the panel, delivering a statement entitled “ The Call for Reform: The UN and the Security Council in a Changing World.” In his discussion he gave a rich analysis of historical and current shifts in the global landscape that have led to the need for reform for the United Nations Security Council.  “International bodies, such as the United Nations, must adapt… in order to remain effective, efficient, and relevant in our dynamic world,” he said. He expressed optimism about the potential of facing the challenge of change, saying “although adjusting to change is a constant challenge, it is also a chance to progress.”

Ambassador Tanin traced the historical context of the United Nations from its founding in 1945 through the Cold War era, the Post-Cold War era, the post 9-11 era, and what he referred to as “the Post-Bin Laded time.”  He explains that in this current period, “we are witnessing new countries being born, and we are seeing a blossoming movement towards democracy – in the Arab world and elsewhere. What I think we are all witness to is a general reshaping of global alliances and new international constellations.”

Pointing out that it a time of increasing expectancy for the Council to reaffirm itself as a leader of enforcing peace and security on the global stage, Ambassador Tanin recognized that, “with no reform we risk losing the legitimacy of the Security Council.”

Other panelists addressed a range of issues related to international stability including: the Minister of Trade and Industry of South Africa, the Arleigh A. Burke Chair in Strategy at the Center for Strategic and International Studies, a Professor at UC Berkeley and Former Assistant Secretary of Defense for Global Strategic Affairs in the US, a French researcher at CNRS, a former Delegate Minister for Equal Opportunities of France, a former Minister of Foreign Affairs in Romania, the Deputy Minister of Foreign Affairs in Mexico, and a Shadow Secretary of State of Transport from the UK.

Later in the day Ambassador Tanin led a workshop on the topic of Security Council Reform in which he gave a more in depth perspective on the historical and current context for Security Council Reform.  Ambassador Nassir Al-Nasser, Permanent Representative of Qatar to the United Nations who will be President of the General Assembly in the 66th Session beginning in September, also spoke at the workshop.  He talked about the importance of the issue of Security Council Reform for the next General Assembly Session and welcomed the day’s “gathering of ideas” which he believes will be useful for the process.  He also showed support for the current process, saying “I am confident in the wisdom of Ambassador Tanin as we face this challenge.”

A lively question and answer session with the diplomats and experts in the room followed in which questions ranged from discussing the stances of various nation states to speculations about how positions will progress to analysis of the UN’s increased role in today’s global climate to inquiring about the legitimacy of the Security Council.  Ambassador Tanin responded with a final argument for reform of the Council, pointing out that the Security Council “is working for the people.”  “In the streets,” he said, “there’s very little belief in the legitimacy of its decisions if the Security Council is not more inclusive, more representative, more democratic. We have to listen to the streets.”

On 12-13 May, on the margins of the Doha Forum, there will be an informal and in depth two day workshop of diplomats and experts discussing the issue of Security Council Reform.  Ambassador Al-Nasser and Ambassador Tanin will speak at the event as well.

The Call for Reform The UN and the Security Council in a Changing World by Ambassador Zahir Tanin