When Charles Hornung lost his finance job in London three years ago, he’d never heard of Tajikistan. Now, the CEO of Silverhill Resources is one of a handful of Western mining magnates who call this impoverished Central Asian country home.

“The prospects here are great,” Hornung said at a Dushanbe café this month. “But so are the hurdles.”

With more than 600 documented mineral deposits, including what’s believed to be one of the biggest silver stores in the world, Tajikistan has been attempting to lure foreign mining investment for almost a decade. And despite poor infrastructure and the ever-present threat of corruption, in recent years Tajikistan’s future looked bright, with four international bidders – including Australia’s BHP Billiton and a consortium led by the Switzerland-based Glencore – vying to develop the country’s immense Kalon Konimansur silver-lead-zinc deposit.

But today, only the Glencore consortium remains in the running for the $3-billion investment, and insiders say even this is uncertain. (A Glencore spokesman refused EurasiaNet.org’s request for comment.)

Bidding is set to close this fall. If the Glencore bid falls through, Konimansur will have to be retendered, said the chairman of Tajikistan’s Geology Directorate, Azim Ibrohim, who also sits on the Konimansur tendering commission. Ibrohim blames internal corporate issues for the mass exodus of foreign investors. “It’s company problems, not Tajik problems,” he said.

But Alastair Ralston-Saul, CEO of London-based Longhorn Mining, blames a rough business environment for frightening off potential foreign investors like BHP Billiton. “These smart executives get off a plane here, think they can have all their meetings in three days, clap their hands and have a deal,” Ralston-Saul said. “But they probably didn’t even get a meeting in three days.”

Ralston-Saul has been mining coal, gold and other precious metals in Tajikistan for the past 17 years. “There was no one else here when we came,” he said. “We’d start a mine in a village that hadn’t had a square meal since perestroika and suddenly there’d be kids with shoes and a market.”

Tajikistan, which has discovered “everything but diamonds, is rich in minerals beyond imagination,” said Ralston-Saul. “This country could be a mecca of riches and success, and make enough to keep all its people happy – but this isn’t happening.”

A year in, Hornung of Silverhill Resources has realized why Tajikistan remains rich in minerals and poor in international investment. “Every month has been a progressive discovery of more difficulties,” he said. “There are all these barriers and we have to continually find creative solutions around them.”

Bureaucracy is the biggest investment barrier, he said. “In all steps of the process you either have to pay people unofficially, or have friends who can pull strings.”

Just getting Silverhill’s first mining license this August took upwards of eight months. “We did everything by the book, and months in we were told we would not be getting the license because another company, formed with government support, would be getting the license instead,” said Hornung. “You really cannot trust anyone inside or outside government because there’s always someone trying to pinch your license from you.”

To date, there are only a handful of Western mining companies in Tajikistan because most foreign investors can’t get exploration licenses, said Ralston-Saul. “People like us come and live here and become part of the furniture, so although it’s difficult we do get them. But unless they [authorities] open the country up for serious inward investment and give out licenses quickly, this country won’t go forward.”

Ibrohim agrees licensing is a problem. “Sometimes we promise documents in a month, and maybe they are late,” he told EurasiaNet.org. “I don’t know why. If we want exploration we have to give licenses. And we want to help investors because we need more investment.”

To help combat these problems, the World Bank sent nine representatives from the Tajik mining sector to Brazil in May 2011.

“[Following the exchange, we] launched the reform of the mining sector of our country, prepared a draft program to improve the investment climate in the mineral resources […] and prepared a new draft law,” deputy chairman of the State Committee on Investment and State Property Management, Shukhratjon Rakhmatboev, said in comments posted on the World Bank’s website.

While foreign investors like Ralston-Saul and Hornung welcome policy changes to streamline the bureaucratic process, they say this is no panacea for all of Tajikistan’s investment woes. Even finding technical expertise in Tajikistan can prove onerous, said Hornung. “We’ve had to bring in chemists, geologists and surveyors from abroad.”

On top of that, Silverhill’s mine site gets only two hours of piped water a day, in winter the roads are virtually impassable and domestics flights can’t be booked more than three days in advance. “And even then they might be cancelled,” he said. “So transportation is a real problem.”

Then there’s the tax regime and the 14 taxes in Tajikistan that affect miners. “I’m only just coming to grips with that,” said Hornung, describing a mining outfit that owes millions in taxes before having started production.

Still, intrepid investors continue to test Tajikistan’s waters. “On Thursday, I had investors from Canada, Germany and China in my office,” said Ibrohim. And the Tajik government has plans to announce a new deposit by the end of this year to lure more investors, he said. “Our investment climate is good and we’re trying to change the rules and requirements because we want to really help them, because if we’re not organized, then they’re not interested.”

Mining in Tajikistan can bring big rewards, but there are also big risks, said Hornung. “So you need to see a high return to actually see any return at all.”

This might be what scared foreign bidders off Konimansur, he said. After all the bureaucratic bungling, they may be afraid they won’t get much money out of it, despite the potential. And the volatile political situation in the Pamirs doesn’t help, he said, referencing an outburst of violence between government troops and regional crime bosses that rocked the region in July. 

Despite the seemingly endless hurdles, Hornung envisages a mining boom in Tajikistan over the next 10 years. The unexplored prospects are huge. “But it’s all bogged down in bureaucracy. It will be interesting to see if Tajikistan can embrace the boom and improve the country or if a few people just end up lining their pockets,” he said.