Mining Investment and Development for Afghan Sustainability (MIDAS) USAID Project Dr. Michael Heydari, Chief of Party December 2013
MIDAS OBJECTIVE To provide technical assistance aimed at strengthening the capacity of the MOMP and private sector to build a robust, investor and environmentally-friendly mining industry in Afghanistan, inclusive of communities and local businesses.
Component I – Legislative and Regulatory Reform – Improve laws, regulations, and practices to create enabling environment for economic growth in mining sector
Component II – Mineral Exploration and Capacity Building for MOMP – Help MoMP explore for minerals, provide technical assistance to the MoMP and AGS, and deliver mineral packages to ministry for tender
Component III – Private Sector Development for the Mining Sector – Private Sector Development, community engagement, training enhancement, access to finance, and provide grants to develop SMEs and labor pools
MIDAS Cross Cutting Objectives • • • • • • • •
Gender – Promote women in mining sector Conflict Mitigation Governance and Transparency Job Creation Afghanization Environmental Protection Community Development Internship Program for MoMP
COMPONENT 1: LEGAL & REGULATORY REFORM Establish Legislative & Regulatory Structure Conducive to Business Activity & Revenue Generation In the Ministry –
Tender process
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Regulatory role for Ministry
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Minerals subject to Ministry—Develop legal basis • Oil, gas, and coal
Outside the Ministry –
Other Ministries / Division / Taxes – Environmental – Gender
–
Private sector skills and industries
COMPONENT 2: MINERAL EXPLORATION AND CAPACITY BUILDING FOR MoMP Mineral Exploration • Assist AGS and MoMP to develop a “pipeline” of mineral projects to be brought to market in 2014 and beyond • Build value and increase investor interest via targeted exploration work • Goal: assist with transforming AGS into a full-service mineral exploration entity, capable of advancing mineral deposits from concepts to market-ready projects Capacity Development @ MoMP • Provide support to Directorates of Investment Promotion, Economic Policy, Fiscal Regime Working Group, as well as the Minister’s Office for special projects Capacity Development @ AGS • Training for exploration drilling, NI 43-101 reports, 3-D modeling, etc • Achieving MIDAS goals requires that on-budget funds be available in early 2014
On-Budget Financing USAID has allocated US $45 million in on-budget funding for MIDAS, primarily for exploration drilling • Finalize implementation letter with USAID • Work with MoMP and MoF to develop annual plan for use of funds and procedures for disbursement • Target date for fund disbursement: March 2014 • Plan assistance for MoF and MoMP to include procurement, internal controls, reporting requirements, increased efficiency in disbursing funds, etc.
COMPONENT 3: PRIVATE SECTOR DEVELOPMENT FOR MINING SECTOR • Community Engagement: – Developing a sustainable mining and SME sector by bringing investors, governments, and communities together
• SME Programming: – Providing technical assistance to SMEs to acquire new skills and equipment to support FDI and local mining operations
• Building Training Capacity: – To strengthen local institutions to train people for years to come
• Access to Finance: – Work with financial institutions to help SMEs support and benefit from mining operations
CHALLENGES • Deteriorating security could drastically hinder activities • 2014 Presidential Elections, drawdown of forces, etc. • Mining law and fiscal regime not investor-friendly, development of regulations dependent on passing of law • Timely disbursement of on-budget funding; necessary for drilling and bringing projects to tender • Lack of skilled labor force and access to finance, low-literacy, poverty • Civil service pay scale low; difficult to hire/retain qualified staff • Poor communication channels between MoMP, communities, private sector, provincial government, civil society, etc.
STATUS OF MINING LAW • • • •
New mining law endorsed by Cabinet February 2013 Currently under review in Parliament Final content uncertain MIDAS will assist MoMP to develop regulations in support of law
Issues with 2009 Law • Exploration licenses awarded by tender rather than application (first-come, first-serve) • Exploration license holder has no guarantee to exploit a deposit. All projects must be re-tendered.
OUTLOOK • New (interim) Minister appointed for MoMP – – – –
A new minister may be appointed after 2014 Presidential Elections Approved MIDAS program on November 12, 2013 Well-positioned to take lead amongst donors in working with minister New Minister of Finance also likely in 2014
• TFBSO likely closing end of 2014; MIDAS may be asked to continue their work on exploration, tenders, law, etc. • Provide support to improve mineral fiscal regime • MoMP to move ahead with coal and hydrocarbons law after 2014: possible alternatives for additional work