Afghanistan’s Future is Underground

Source: BBC

On Monday, a spokesman for Hamid Karzai’s government announced a discovery made by the US Geological Survey. “Afghanistan has mineral resources worth $1 trillion…I think it’s very, very big news for the people of Afghanistan and that we hope will bring the Afghan people together for a cause that will benefit everyone. This is an economic interest that will benefit all Afghans and will benefit Afghanistan in the long run.”

He was quick to note however, that this is not the sum of all geological wealth in the country – Karzai’s government estimates that the nation’s total mineral wealth is upwards of $3 trillion.

A Department of Defence briefing put the value of the study at over $908 billion, AP reports. Around $420 billion of that is in iron; $273 in copper. The Geological Survey, who made the discovery, have found lithium, cobalt, gold and nobium, along with rare earth elements.

The study began in 2006 but due to the US Army’s focus on Iraq, the findings were only addressed last year. A Pentagon task force, visiting Iraq to investigate business development opportunities, went to Afghanistan.

Paul Brinkley, a senior defence official leading the study, told AP “The Afghan people (are) developing an understanding that they have a source of indigenous wealth that if properly developed will enable them to be sovereign.”

Hope for the potential benefits to Afghanistan is high; several senior US officials have expressed excitement at this revelation. The amount of raw minerals found could be enough to change the economy of Afghanistan and lay down solid foundations for its future.

It could also help spell the end, or at least a changed outcome to, the war which  has torn the country apart. Officials believe that these mines could bring in investment before they are even operational. This would give many Afghans jobs, potentially altering the social landscape of the country for the long term.

General David H Petraeus, commander of the US Central Command announced, “There’s stunning potential here. There are a lot of ‘ifs’, of course, but I think it’s potentially significant.”

Bruce Riedel, a senior CIA agent who formerly advised the Obama administration on its policy in the country, thinks that the value of these minerals on the international market could be sky-high. He told the AP that if the US government provided the nation with the necessary support – in terms of security and logistics, the results could be excellent. He highlights, however, that there are challenges of corruption, war, lack of infrastructure and a whole host of complications which could potentially thwart any progress.

Riedel said that if the U.S. can provide the Afghans security and logistics to build up its mining capacity, Afghanistan’s international stock will suddenly become more valuable. But there are a host of complications — competing industries and countries, corruption and war.

Source: BBC

Such resources have not been developed properly however, as decade after decade of war have taken prosperity out of the equation for Afghanistan. Were they to be properly used to benefit the nation’s people and its economy, Afghanistan could play a central role in changing its predicted future.

Charles Kernot, a mining analyst at Evolution Securities Ltd predicts that it could take between three to five years to get a lithium mine off the ground, so it could be at least a decade before any real profits are seen.

There are several obstacles to the development of these mines and the road to economic wealth could be many years away.

Source: UN

The ongoing clashes between the Taliban and Karzai’s government is perhaps the most significant of them, as several of these resources have been found in Pashtun regions of Afghanistan – land controlled by the Taliban. Deposits have been found along the border to Pakistad and along the southern and eastern regions. These areas have seen some of the most violent clashes in the fight against the Taliban.

Afghanistan’s lack of a real mining community and industry presents yet another challenge. The World Banks has helped draft out a mining policy but if Afghanistan has such little experience with the business, its applicability is as yet unknown.

“The big question is, can this be developed in a responsible way, in a way that is environmentally and socially responsible?” Mr. Brinkley said. “No one knows how this will work.”

Corruption in the government is one of the greater challenges – recently, US officials accused the Minister of Mines of bribery, when he apparently accepted $30 million from China, giving them access to, and rights to develop, Afghanistan’s copper mines.

Source: National Geographic

Western governments fear China’s potential involvement in these mines. American officials worry that China may get hungry for greater power over natural resources in the Middle East – this will not sit well with governments who have a strong military presence and have committed themselves to Afghanistan for many years.

The New York Times reports: “The Pentagon task force has already started trying to help the Afghans set up a system to deal with mineral development. International accounting firms that have expertise in mining contracts have been hired to consult with the Afghan Ministry of Mines, and technical data is being prepared to turn over to multinational mining companies and other potential foreign investors. The Pentagon is helping Afghan officials arrange to start seeking bids on mineral rights by next fall, officials said.”

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