Memorandum submitted by the British Geological Survey

Institutional Strengthening of the Afghan Geological Survey

Background

1. The Department for International Development (DFID) awarded the British Geological Survey (BGS) a grant amounting to Ł3.8 million over three years to carry out an institutional strengthening project within the Afghan Geological Survey (AGS - part of the Ministry of Mines and Industries).

2. The British Geological Survey is a component institute of the Natural Environment Research Council, which falls under the Office of Science and Technology of the Department for Trade and Industry.

3. The justification for UK support was that the minerals sector is one of the few obvious, near-term economic alternatives to the poppy industry. Not only could it provide significant foreign revenue, but also generate employment and an alternative livelihood in rural areas. In many developing countries, it has been shown that development of mineral resources can provide a rapid path to economic self-sufficiency. Besides the benefits deriving from mining itself, the industry would spawn significant secondary enterprises and spin-off activities. Finally, supporting and building capacity in the AGS would support the DFID aim of good governance.

4. The basis of the BGS project was (and is) to build capacity in the war-ravaged AGS, which would then act as an arm of Government to help promote and oversee the minerals sector, and hence attract inward investment. An efficient government agency able to deal with the international mining community is vital if companies are to put considerable investment into what otherwise would be perceived as a difficult, risky and insecure environment.

5. In 2004 when the project started, the AGS was an organisation in name only, and was entirely dysfunctional. The building was a shell, initially without windows, heating, lighting, or furnishing. It had stood at the front line of fighting since the early 1990s. The staff were demoralised, poorly trained and without a budget or any programme of work. Starting from a zero base, the BGS project refurbished a suite of offices, furnished them and provided power and a basic IT facility.

Overview

6. The project has now been operating in Kabul for a little over a year. BGS staff numbers vary between 2 and 10 at any one time. The main objective in this initial period has been to gather together, database, assess and make available vital geological data and information relating to the geology and mineral potential of Afghanistan. A main drive has been to source data on the most important (and proven) economic deposits and to promote these to the international mining community. In parallel with this, efforts have been made to work with the staff of the AGS to provide training and motivation. This has been challenging due principally to the realities of life in Kabul.

7. Professional (and other) staff in the AGS earn around US$40/month. Given the need to live and maintain families, even the most dedicated geologist has been forced to seek additional employment so that their contribution to the AGS is at best only part-time. This has compromised the work effort; particularly since DFID policy does not permit any enhancement of staff salaries. Unfortunately, a parallel project by the United States Geological Survey is believed to have been supplementing the salaries of their counterparts, which has served to cause division and has diverted

the most able staff away from the UK run project.

8. The DFID position, which BGS fully supports, is that the way to progress the AGS (and indeed its parent Ministry) is to promote the Civil Service reform initiative known as the Priority Reform and Restructuring decree. This process will reorganise existing areas of the Civil Service into smaller, functioning units with a proper (although not generous) salary structure. BGS has actively supported and promoted this initiative, even though this was not envisaged as part of its original remit. BGS has held workshops on the new structure and provided ongoing advice and suggestions to the Ministry of Mines and Industries. At long last, it seems this reform is being put through. However, even now the road to achieving this remains uncertain in terms of a timetable. Until this is emplaced, the BGS project will inevitably be slow.

9. Despite these limitations, the project has made, and continues to make, an important contribution. The Ministry in Kabul considers it to be vital and the World Bank is full of praise and frequently looks to BGS for support and help at a practical level. Unlike other types of interventions, the development of a viable minerals sector cannot happen overnight. It is likely that this work can be developed into a lasting and important contributor to self-sufficient growth in the medium term - perhaps 5 to 8 years. We consider it essential if Afghanistan is to have a long-term stable economy able to support itself and move away from a dependency on either drugs or foreign aid. We believe it would be a grave error of judgement to end this project at this stage, The Minister of Mines, Dr Sediq, has taken a close interest in the project and would, if anything, seek an extension to the three-year project. Premature project termination could have serious political repercussions in Kabul.

Specific Areas of Progress

Governance and Senior Management Advice

10. BGS staff have given support and advice at Ministerial, Presidential Adviser, vice-Ministerial and President of AGS levels. This advice has not only been limited to the Ministry of Mines and Industry as BGS staff have been present at many cross-Ministry meetings. Advice has mainly involved the application of geosciences to policy and problem solving and has covered issues such as: water supply, public sector reform, energy supply, the distribution of key strategic and wealth-creating minerals and rural livelihoods. BGS has offered training courses and workshops that have included Ministers and Deputy Ministers.

Preparing Afghanistan for Inward Investment in Mining

11. Mining is a global industry and mining companies are particularly attracted to countries which are politically stable and secure, have an adequate level of mineral related geological information in a format they can easily use, have workable mining laws and fiscal regulations and have a competent arm of government to deal with. Mining companies are some of the least risk-averse companies in the world often prepared to work in 'frontier areas'. Mines are costly to develop and can take several years of operation before profits are made.

12. Afghanistan is a country that currently has no foreign investment in mining but very significant mining potential: a potential that is virtually untouched. This project has started to place Afghanistan on the radar screens of Mining Companies. Some of the largest and most reputable international mining companies are showing an interest in one deposit in particular: the Aynack copper deposit near Kabul, which is one of the largest known un-worked copper deposits in the world. BGS and AGS have worked to synthesise, model and re-interpret this information in preparation for the arrival of mining companies. BGS is promoting this deposit and Afghanistan in general at the largest mining industry tradeshows (at Toronto and London to date). If Aynack is worked successfully it will create many jobs, not only in mining but also in service companies and downstream industries. Many of the jobs will be in poor rural areas. Mines also develop a range of infrastructure including roads, railways, energy infrastructure and water supplies. One successful mine attracts others as it demonstrates to the industry that it is possible to work successfully in the country.

13. BGS is attempting to build the relevant institutions of governance in mining. This includes training Civil Servants in administering mining activities, developing modern state of the art mining cadastre systems, generating a range of information services and products, and ensuring that those areas of government that need to support a mining industry start to prepare themselves. A competent 'Mines Department' is essential for Afghanistan to maximise the benefits mining can bring and ensure that mining is undertaken to the highest standards of sustainable development.

Developing a Modern Geo-Information Capability

14. When BGS first arrived the geological data were in a very poor condition. Within one year many of the data have been archived and labelled. Furthermore, BGS has introduced one of the most sophisticated IT facilities in any government department in Afghanistan. As time passes more and more data are being captured digitally and databased. This allows the information to be delivered to a worldwide stakeholders through a specially designed website and value is added to the data by generating a range of information products.

15. This sub-project will also develop a publicly available geological library and museum and, if things go well, possibly a range of outreach services for small-scale industry (such as jewellery and gems, industrial minerals, ceramics, small scale mining etc.).

Generating New Geological Products

16. A range of reports, maps, presentations, data syntheses, new interpretations, and ultimately GIS products and data-models has been developed for various aspects of the geology of Afghanistan. This work is essential not only for the mining industry but for a whole range of services including energy minerals and oil and gas, urban planning, waste disposal, environmental management, understanding and mitigating natural hazards, and a range of industries (industrial minerals, road building, engineering etc.).

Industrial and Construction Minerals

17. Industrial and construction minerals such as sand and gravel, gypsum, barytes, brick-clay, talc etc. are essential to a wide range of industry and services. Industrial mineral projects can employ large numbers of people and be localised quickly. BGS is working on a range of minerals in the Kabul area with the aim of improving the knowledge base and bringing industry together to learn from each other. This sub-project has organised a number of highly successful seminars and workshops including a private-industry focused Chamber of Commerce event, which received wide media coverage. Kabul is developing rapidly as a city as are other areas of Afghanistan. Construction and industrial minerals and the industries they support play a vital role in urban and infrastructure development. Usage of inappropriate and poor quality construction materials can have dire consequences in the future.

Counterpart Training

18. Counterpart Afghan staff members are involved in every area of the project. As well as learning a range of technical skills the staff are being offered training in English and IT. These training courses are widely praised for their quality and effectiveness. The English and IT proficiency of the AGS staff is rapidly developing as the staff realise these are generic skills they will need for the future.

Creating a Knowledge and Expertise Node in Kabul

19. One of the biggest successes of the project to date has been the way the project has had an impact across many areas of development in Afghanistan. The project is acting as a catalyst and bridge, joining up a range of people and expertise. The project has drawn together people from the university and polytechnic in Kabul, a range of government agencies, and visiting consultants and agencies such as the World Bank to name but a few. The constant residential presence in Kabul has been particularly appreciated allowing solid business relationships to be developed. Through this a range of knowledge and expertise has been widely distributed and shared.

Alternative Livelihoods

20. It is our firm belief that this project has the potential to attract investment and create jobs. Afghanistan desperately needs economic development, wealth creation and increased employment: this will be the real route to the eradication of narcotics together with good governance. This inward investment will take some time but once it starts it has the potential to snowball. We hope that DFID will fund this project sufficiently well and for a long enough time to make a lasting positive impact on the economy.

Conclusion

21. In spite of the many difficulties in the setting up and running of this project and bearing in mind that Afghanistan is a difficult country to work in, we believe the project has made remarkable progress in a short space of time. The BGS staff have all enjoyed the challenges of working in Afghanistan and have been very effective. Although the project started at a zero base level with exceptionally poor infrastructure and a very weak level of government structure, it is already delivering a high quality service and making a real difference. We hope DFID will give us the opportunity to further progress this project.

November 2005