American geologists have reported that Afghanistan is sitting on $1 trillion of copper and lithium deposits, a new-found mineral wealth that marks the country as a hot spot for metal mining.
Although these are the first big reports of the economic value of these mineral deposits, U.S. geologists have been mapping Afghanistan for minerals since 2006, according to The New York Times, taking data collected from the Soviet occupation of the 1980s. Soviet maps drawn in the interest of finding mineral deposits in the country garnered the interest of American and British geologists; in 2007, geologists were reporting that the copper industry was potentially worth $300 million if Afghanistan could ever access it. Senior American officials are now reporting that these deposits of gold, iron, copper and lithium could be worth much more. Lithium is used to produce laptop and mobile phone batteries, and lithium technology is also being harnessed to produce energy-efficient vehicles.
Can Afghanistan take advantage of its resources?
Figuring out how to capitalize on its valuable mineral boon is a major challenge for Afghanistan. Getting a mining industry off the ground from scratch could take decades. Government capacity is also a factor, says Ali Mawji, diplomatic director of the Agha Khan Development Network, which does development projects in Afghanistan. “I think the critical thing is to ensure that the government has the right policy framework regulatory mechanisms and capacity to deal with private-sector requests and make use of them that’s in the interest of promoting the country,” he says.
Atiq Sediqi with Afghanistan’s Ministry of Mines is looking forward to the mineral boon bringing a lot of work. “It’s not tomorrow you can get it,” he says, “It takes some time. A lot of investment infrastructure exploration development, prospecting and marketing.”
Mawji notes more opportunities could become problematic if it means development of an abusive working system. “One would hope it would lead to stability,” he says.
American interest is also a major concern. The U.S. has been heavily criticized for its continued presence in the country, faulted for sticking around to take advantage of resources. U.S. officials will also be keeping an eye on China, a major bidder for mining rights in the mineral-rich territory. China previously won rights to a copper mining contract before the trillion-dollar value of these minerals had been publicly assessed, and U.S. officials accuse China of bribing Afghanistan’s Minister of Mines for the bid.
The Pentagon says it will help the Afghan government seek bids on its mineral rights by next fall.
Getting minerals to market
Bart Melek, a global commodities strategist with BMO Capital Markets, says there are many steps that need to be taken before the metals are market-ready. “You need some sort of exploration program to actually see what is underground,” he says. “You need to explore it, you need to do pre-feasibility studies, you need to do engineering studies to actually determine if these resources are economic and how they’re economic. At this point, all we have is probably some sort of aerial survey indicating there is metal in some concentrations around the country.”
Copper moved up about 3 percent today on news of the mineral deposits. “Certainly if there was a belief that a large amount of the metal were coming from a new source, we would’ve expected a sell-off,” Melek says.
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