FOCUS: Afghan Minerals A Prize, But Extraction Is The Key

14th Jun 2010 09:40

By David Fickling Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Nearly $1 trillion in reported untapped minerals deposits in Afghanistan could transform prospects for the poor, war-ravaged country, but bringing such reserves to development would be a colossal challenge, analysts said. The New York Times reported Monday that Pentagon analysts had surveyed resources of iron, copper, cobalt, gold and lithium in the country which could turn the country into one of the world's most important minerals exporters. An internal memo stated the country had the potential to become the "Saudi Arabia of lithium," the newspaper said. "This will become the backbone of the Afghan economy," Jalil Jumriany, an adviser to the Afghan minister of mines, was quoted as saying. However, political and business analysts stress the huge hurdles necessary to bring any such minerals to market. "This is absolutely wonderful for the country but it will be very difficult to implement the extraction of this resource," said Ayesha Khan, an expert on Afghanistan at Chatham House, a U.K.-based foreign policy think tank. "It would involve the creation of a mine industry in Afghanistan and that requires a long-term vision for the country that we don't seem to have just yet," she said. In particular, she stressed the lack of support infrastructure, power struggles between the Kabul government and Taliban or other local groups, and the exigencies of the U.S.-led counterinsurgency campaign. The New York Times report, citing research by the Pentagon and independent geologists completed in 2007 but not previously reported, comes at a time when the performance of the war in Afghanistan is under intense scrutiny in Washington. President Barack Obama last December set a deadline of July 2011 to begin withdrawing the 30,000-strong troop surge from the country, but progress on stabilising the country has been slow. General Stanley McChrystal, commander of international forces in Afghanistan, told reporters at NATO headquarters in Brussels last Thursday that efforts to secure Kandahar, the country's second-largest city and a stronghold of the insurgent Taliban, were taking longer than expected. Chatham House's Khan said that efforts to develop the country's resources were not helped by the ongoing intervention. "Reconstruction and development is very difficult when there's an ongoing conflict, and unfortunately, as you've seen in the course of nine years of this war, it has also been subsidiary to the military campaign." However, Geoff Howie, senior vice president of global futures at MF Global in Singapore, pointed out the importance of any such reserves in the context of rising minerals demand from China, which shares a short land border with Afghanistan. "Sustainable global recovery is going to require more fusing together of economic flows between the developed and developing countries. This discovery provides such an opportunity," he said. Major resource developers would likely be very interested in the reported deposits if the U.S. campaign was able to reduce geopolitical risk, he added. If true, the Pentagon analysis would suggest that Afghanistan is the most geologically blessed country in the world. Citigroup research published in April estimated that only four countries - South Africa, Russia, Australia and Canada - have non-energy mineral reserves in the order of $1 trillion. South Africa's $2.5 trillion resource topped the list, largely thanks to the fact that it has 80% of the world's resources of platinum group metals, the most costly widely-traded minerals. Of countries in the top 10, only Chile and Ukraine, with estimated reserves of $661 billion and $516 billion, are of comparable geographical size to Afghanistan. Newspaper website: www.nytimes.com -By David Fickling, Dow Jones Newswires; +61 2 8272 4689; [email protected] (END) Dow Jones Newswires June 14, 2010 04:40 ET (08:40 GMT)