$1 Trillion of Minerals… Now What?
Newly-discovered mineral deposits in Afghanistan are estimated to be worth close to $1 trillion.1 U.S. and Afghan leaders were optimistic about the find. General David Petraeus stated that “There is stunning potential here…There are a lot of ifs, of course, but I think potentially it is hugely significant.”2 Jaili Jumriany, adviser to the Afghan Minister of Mines, concurred, forecasting that “[t]his will become the backbone of the Afghan economy.”3 The minerals include iron, copper, cobalt, gold, lithium, and other industrial metals that are vital to modern industry around the world. Lithium in particular has increased in value in recent years, as modern tools and electronics such as laptops, Blackberrys, I-Pods and hybrid cars all require lithium. If these minerals can be successfully mined, the Afghan economy will be transformed and Afghanistan will become one of the most important mining countries in the world.
While this discovery makes it easier to be optimistic about Afghanistan’s future, in the short run we should not expect a dramatic transformation in Afghanistan. First, Afghanistan lacks any type of mining infrastructure. The development of these resources will most likely come from foreign countries. For example, China has already invested heavily in Afghan copper. The Chinese have invested $4 billion in the Aynake copper mine, which is worth an estimated $88 billion.4 This is the biggest foreign investment project in Afghanistan’s history. Also, the largest deposit of iron in Asia is suspected to be in the Hajigak Mountains of Afghanistan; India and China will most likely compete over the contract.5 There will certainly be other foreign interest in the recent discoveries as well. However, the sheer size of these deposits means Afghanistan must improve its infrastructure if these minerals are going to be successfully extrapolated from the ground.
Discovering large deposits of natural resources can often be more of a curse than blessing. As former Afghan Finance Minister Ashraf Ghani said, “Either we become Congo, or we become Botswana or Chile. If we don’t get governance of the sectors right, [Afghanistan] will become a bastion of instability, corruption and criminality.”6 Last year, the Afghan minister of mines was replaced after the United States accused him of accepting a $30 million bribe in connection with China’s development of the copper mine.7 The development of resources like these can cause corruption problems in young governments, preventing the general population from seeing the benefits of their nation’s wealth and entrenching unjust leaders in a decidedly undemocratic way.
Afghanistan still suffers serious basic security issues. These minerals will only benefit Afghan and U.S. interests if Afghanistan can solve these first. Iraq, for example, was a country with modern infrastructure and rich in oil. Unfortunately, the lack of security plagued efforts to fully unleash its oil producing potential for a long time. Afghanistan has none of the infrastructure Iraq had but all the security problems and more. The diehard Taliban militants are fighting for primarily theological reasons; however, the idea of controlling these resources may encourage other actors to enter into the political and military struggles currently underway. It is also conceivable that foreign corporations and neighboring states will seek a more active role in the Afghan diplomatic and political arena in order to win contracts to develop mineral deposits.
The U.S. should do everything possible to aide Afghanistan in developing the mines located in secure areas. While some of the deposits are in volatile regions, those in the more secure regions should be developed as quickly as possible. There is no telling exactly how long it will take until Afghanistan enjoys the benefits of these minerals, but that is all the more reason to get started on the project. There is a risk in moving too hastily in any large scale operation. However, considering Afghanistan’s current economic situation, that is a risk worth taking.
The U.S. should avoid being involved in who receives contracts to exploit these mineral reserves. Instead, the U.S. should be involved in some of the details of the agreements between the Afghan government and foreign corporations. The resources are spread out across the country, including in the southern and eastern regions of Afghanistan where there is heavy fighting with militants. It is in the mutual interest of the U.S. and Afghanistan that people living in areas where mining will take place see profit from these resources. This should be negotiated into whatever contracts are formed between the government and the mining corporations. The U.S. should also help to provide oversight of contract negotiations to prevent corruption.
Perhaps, over the long run, the profits earned from these deposits can repay some of the treasure the U.S. has spent on the country over the years. Much more importantly, however, Afghanistan can have a profitable economy based on something more than drugs and war. For the first time, Afghan citizens can be part of a large, modern industry which contributes to humanity. Should this become a reality, Afghanistan will become a dramatically different and much more prosperous country. However, this is predicated on the U.S. and the Afghan government’s ability to defeat the insurgency and successfully mine these minerals. Afghanistan must develop a mining infrastructure capable of exploiting these vast resources. It must then develop a transportation system capable of processing and exporting these resources. For this to happen, the insurgency will have to be significantly weakened or completely eliminated. While this discovery may be a “game changer” in the long run, in the short run the U.S. goals and strategy must remain the same: eliminate Taliban safe havens, train Afghan forces, and help build a capable government. This is the basis for all other success in Afghanistan.
Submitted by PAI’s Analyst in National Security Affairs.
[1] James Risen, “U.S. Identifies Vast Mineral Riches in Afghanistan,” The New York Times, 13 June 2010, Accessed 17 June 2010: http://www.nytimes.com/2010/06/14/world/asia/14minerals.html?hp
2 Ibid.
3 Ibid.
4 Jeremy Page, “Afghanistan Copper Deposits Worth $88 Billion Attract Chinese Investors,” The Times, 15 May 2008, Accessed: 17 June 2010: http://www.timesonline.co.uk/tol/news/world/asia/article3941656.ece
5 David Alexander, “Afghan Mineral Wealth Could Top $1 Trillion: Pentagon,” Reuters, 14 June 2010, Accessed 18 June 2010: http://www.reuters.com/article/idUSTRE65D0OH20100614
6 Laura Rozen, “Afghan mineral finding and the Washington Clock (Update),” Politico, 14 June 2010, Accessed 17 June 2010: http://www.politico.com/blogs/laurarozen/0610/Afghanistans_mineral_find_and_the_Washington_clock.html?showall
7 Risen.
