Huge obstacles seen in exploiting vast Afghan mineral resources

[Dr. A ♥ O 203]

June 14th, 2010

By Deb Riechmann

Associated Press

KABUL, Afghanistan — It could take years and possibly even a peace settlement for Afghanistan to reap profits from nearly $1 trillion in mineral resources that U.S. geologists say lie beneath its rugged terrain — some in areas currently controlled by Taliban insurgents or warlords.

Geologists have known for decades that Afghanistan has vast mineral wealth, but a U.S. Department of Defense briefing this week put a startling price tag on the country's reserves of iron, copper, cobalt, gold and other prized minerals: at least $908 billion.

If impoverished Afghanistan is seen as having a bright economic future, that could help foreign governments persuade their war-fatigued publics that securing the country is worth the fight and loss of troops. It also could give Afghans hope, U.S. officials say.

"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," said Paul Brinkley, a senior defense official who led the study.

Still, without increased security and massive investment to mine and transport the minerals, it could take years for Afghanistan to bank the rewards. And there's always the potential that such a discovery could bring unintended consequences, including corruption and civil war.

If the Afghan government has taken notice of the billions in potential revenue, so will the Taliban.

"Obama's war just became more important and more complicated at the same time," said Bruce Riedel, a former CIA officer who helped advise the administration last year when it was rethinking its Afghanistan strategy.

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.

"If this was Pennsylvania, it'd turn out one way," he said. "But this is Afghanistan."

Stephanie Sanok, who dealt with similar issues while working at the U.S. Embassy in Iraq, likened the situation to a carnival game that promises a prize if you can guide a tiny, hand-controlled crane to the perfect spot: It almost never works and requires a steady stream of money.

"Everyone has known about this," Sanok said of the minerals. "But there's no way to get at it."

For one thing, Afghanistan lacks even the most basic resources for mining, such as railroads and electricity. Afghanistan is expected to complete its first railroad this year, linking Mazar-e-Sharif in the north to Asian rail lines.

And much of the minerals are located in or around Taliban strongholds, which could encourage fighting to gain control of the deposits, said Sanok, a senior fellow at the Center for Strategic and International Studies in Washington.

Col. Dave Lapan, a Pentagon spokesman, told reporters Monday that the $1 trillion figure didn't surface until recently because Brinkley's task force had been preoccupied with Iraq. Previously, discussions with Kabul have focused on encouraging the export of carpets, agriculture and other modest resources.

It wasn't until late last year that the task force got around to looking at a 2007 study done by the U.S. Geological Survey. That's when, according to Lapan, the group determined the nearly $1 trillion estimated value.

The value of Afghanistan's mineral riches could rise even higher when taking into account Afghanistan's unknown reserve of lithium, a key ingredient in products from medicines to cell phone batteries, potentially resting beneath dried-up lake beds scattered across the country.

According to the Pentagon, iron would account for almost half of the total value of minerals, or $420 billion. Copper would come in second, with about $273 billion.

But many of the sites listed on a map as potential metal or mineral sites are also known for Taliban activity. For example, a cluster of those sites are just north of the Taliban stronghold of Kandahar and along the road leading to Kabul.

"What (Afghanistan) faces going forward is developing a mining culture, basically, at a very large mine scale," said Jack Medlin, a geologist with the U.S. Geological Survey, which has been working with the Pentagon on the issue.

Afghan President Hamid Karzai said last month that he had seen estimates that his nation's mineral resources could be worth between $1 trillion and $3 trillion. The mineral resources are a "massive opportunity," Karzai said at a May 13 event with Secretary of State Hillary Rodham Clinton in Washington.

Waheed Omar, a spokesman for Karzai, said the $1 trillion figure is "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."

Afghanistan's minister of mines was traveling on Monday, and his aides declined to provide details until a news conference Thursday in the Afghan capital.

Most of the data on Afghanistan's mineral resources was produced between the early 1950s and 1985 — some by the Soviet Union during its war in Afghanistan. Much was hidden and protected by Afghan scientists during the following two decades of conflict, but after 2001, the data was returned to the Afghan government.

Geologists say there is a motherlode of the mineral in Ghazni province in a dangerous area of eastern Afghanistan. But large lithium deposits may not mean an automatic windfall — given competition and the uncertainty of the market.

Charles Kernot, a mining analyst with Evolution Securities Ltd. in London, said it typically takes three to five years to get a lithium mining operation up and running. Factors include how close the deposit is to power sources and other infrastructure and the size of the deposit.

"Bolivia wants to expand its lithium mining operations dramatically over the next few years so there is a risk of oversupply if demand from electric cars does not meet expectations," Kernot said.

Mike Davis, who works on issues of natural resources and armed conflict with activist group Global Witness, said that the windfall should be welcomed, but also has the potential to exacerbate Afghanistan's problems.

"The particularly corrosive effect that the theft of these resources can have is to make politicians who were powerful and possibly corrupt even less accountable to the people," said Davis, who is based in London. "It increases their capacity to do everything from rig elections to building up militias."

"It's really like pouring petrol on a fire that's already out of control," he said.

Natural resource wealth doesn't have to be a curse, he added, but keeping it from fueling corruption and militancy requires strict regulation and transparency.

In November, two U.S. officials familiar with intelligence reports alleged that Afghanistan's former minister of mines, Mohammad Ibrahim Adel, accepted $20 million after a $3 billion contract to mine copper was awarded in late 2007 to China Metallurgical Group Corp. The former minister has denied having taken any bribes and said the contract went through all legal channels.

Aynak, a former al-Qaida stronghold southeast of Kabul, is thought to hold one of the world's largest unexploited copper reserves.

Flaherty reported from Washington. Associated Press writers Heidi Vogt, Amir Shah and Rahim Faiez in Kabul contributed to this report.

Science News

Edited June 15, 2010 by Cleocatra