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The Afghan Papers – Part 12

Afghanistan: The Saudi Arabia of Lithium?

Lithium, which is used to make batteries for everything from mobile phones to iPads, could transform the war-torn nation’s economy.

THE GIST

– Nearly $1 trillion of mineral wealth has been discovered in war-ravaged Afghanistan.

– Lithium, gold, iron and copper are among the minerals identified.

– Little has been exploited because the country has been mired in conflict for three decades.

Afghanistan has nearly $1 trillion in mineral deposits, according to a study, but there are doubts the war-torn and graft-prone country can manage the windfall offered by the untapped riches.

President Hamid Karzai said in January that the deposits could help the war-ravaged nation become one of the richest in the world, based on preliminary findings of the United States Geological Survey.

The final results, reported in the New York Times Monday, found previously unknown reserves of lithium, iron, gold, niobium, cobalt and other minerals that the paper said could transform Afghanistan into a global mining hub.

“The natural resources of Afghanistan will play a magnificent role in Afghanistan’s economic growth,” Jawad Omar, spokesman for the country’s ministry of mines and industries, told AFP.

“The past five decades show that every time new research takes place, it shows our natural reserves are far more than what was previously found,” he said.

Afghanistan’s potential lithium deposits are as large of those of Bolivia, which currently has the world’s largest known reserves of the lightweight metal, the Times said.

There is ever-growing demand for lithium, which is used to make batteries for everything from mobile phones and cameras to iPads and laptops. Future growth in electric and hybrid cars could create still more demand.

Afghanistan has so much of the metal that it could become the “Saudi Arabia of lithium,” according to an internal Pentagon memo quoted by the New York Times.

The iron and copper deposits are also large enough to make Afghanistan one of the world’s top producers, U.S. officials said.

“There is stunning potential here,” General David Petraeus, head of the U.S. Central Command which oversees Afghanistan, told the newspaper. “There are a lot of ifs, of course, but I think potentially it is hugely significant.”

Little has been exploited because the country has been mired in conflict for three decades, and is today embroiled in a vicious insurgency by Islamist rebels led by the Taliban.

The country would have to find a way of bringing the minerals to markets but its infrastructure is rudimentary, with only one national highway connecting north to south and its ramshackle roads often targeted by Taliban bombs.

Analysts worried the country, hobbled by rampant corruption and a weak central state, was not ready to manage its potential mineral wealth.

“I highly doubt it will be able to either properly manage these resources or use the riches to build a more peaceful and prosperous Afghanistan for all Afghans,” Janan Mosazai, a political analyst, told AFP.

“We have living examples of other countries where natural riches have actually turned into a curse for peace and prosperity for people,” he said, citing Nigeria’s endemic poverty and conflict despite vast oil exports.

The Afghan government has already reported large deposits of chromite, natural gas, oil and precious and semi-precious stones.

“The only significant new bit of information (this year) is the dollar figure, as Afghan and Soviet geologists already had evidence of the riches,” Mosazai said.

China and India have bid for contracts to develop Afghan mines, with the Chinese winning a huge copper contract. An iron-ore contract is due to be awarded later this year

A new minerals rush could pit U.S. and Chinese interests against each other. Some critics in Washington grumble that China is reaping rewards from the copper mine while U.S. troops are heavily committed against the Taliban.

Afghanistan the “Saudi Arabia of lithium”

By Ghanizada – Tue Aug 13 2013, 1:42 pm

Afghanistan the Saudi Arabia of LithiumThe Afghanistan’s natural resources are considered to be a silver lining for the economy of Afghanistan, as the NATO-led international coalition
security forces are preparing to leave the country.

The withdrawal of the NATO troops and reduction of international community’s aid to Afghanistan has created fears of economic crisis among the Afghans, however, there are optimisms that the natural resources of Afghanistan could play a vital role in economic development of the country.

U.S. agencies estimate Afghanistan’s mineral deposits to be worth upwards of $1 trillion. Afghanistan’s copper, cobalt, iron, barite, sulfur, lead, silver, zinc, niobium, and 1.4 million metric tons of rare earth elements (REEs) — may be a silver lining.

A classified Pentagon memo called Afghanistan the “Saudi Arabia of lithium.” (Although lithium is technically not a rare earth element, it serves some of the same purposes.)

Jim Bullion, who heads a Pentagon task force on postwar development quoted by The American said, the maps reveal that Afghanistan could “become a world leader in the minerals sector.”

There are optimisms that Afghanistan’s mineral wealth may be able to help knit the country back together after decades of war, having Rare Earth Elements (REEs), which are high in demand.

The REEs are are essential to the manufacture of a host of modern technologies, including cell phones, televisions, hybrid engines, computer components, lasers, batteries, fiber optics, and superconductors.

According to the American, congressional findings have called rare earth elements “critical to national security,” and understandably so. REEs are key to the production of tank navigation systems, missile guidance systems, fighter jet engines, missile defense components, satellites, and
military grade communications gear.

Currently, China is considered to be one of the major suppliers of Rare Earth Elements, and produce 97 percent of the world’s REEs. However, the global market has reportedly been manipulated by China.

The overall exports of REEs were reduced to 72 percent in the second half of 2010 following a maritime dispute with Japan, and China stopped supplying REEs to Japanese customers.

There optimisms that Afghanistan can be part of the long term solution to the REE supply problem in the long term. However, concerns regarding the corruption and security remains a challenge.

The rule of law, human capital, and infrastructure which are critical to attract foreign investment is yet another challenge, which prevents to build a rare earth mining system from scratch in the short term.

In the meantime, china is considered to be a vital player and can play an important and constructive role in Afghanistan, as the country is is eager to develop Afghanistan’s mineral wealth.

China is one of the major foreign investment in the mining sector of Afghanistan, it has so won exploration rights for copper, coal, oil, and lithium deposits across Afghanistan.

 

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