Friday, October 30, 2009

Afghanistan resources: How great are they?

Much is unknown about the natural resources of Afghanistan. Here is an article that refers to some of the resources that might exist in that country. Certainly the neighboring countries to the north and west are very rich. It could be. RLC

Afghan minister seeks justice through exploitation
By Lynne O'Donnell October 19, 2009

(AFP) - KABUL - "My family name means justice and that is what I am determined to get for my country," says Mohammad Ibrahim Adel, Afghanistan's minister of mines.

In his large, plush office in a Soviet-style compound in downtown Kabul, Adel -- whose surname means "just man" in Arabic, Dari and Pashtu -- outlined how he plans to bring economic justice to one of the world's poorest countries.

"People in Afghanistan are like people lying on a bed of gold but going hungry," he told AFP.

"Afghanistan is not known for its natural resources. It is known across the world and in history as a nation of war and violence and poverty.

"But we have a lot: copper, iron ore, gold, natural gas, oil, precious and semi-precious stones, chromite, talc, salt," he said, counting on his fingers.

"Except diamonds," he grinned. "We haven't found diamonds yet, but we might."

Adel has seen other poor countries -- notably in Africa and South America -- allow foreign governments and companies to extract and export their mineral wealth, with the profits rarely remaining at home.

"Afghanistan will never be exploited in this way. The relationship between the company that invests in Afghanistan's mineral resources and the people has to be just," said Adel, who trained as a mining engineer in the former Soviet Union.

"Not more than five percent of Afghanistan's natural resources is known, 95 percent we still don't know. But I hope that in the very near future we can start exploration work.

"We are trying to develop the economy using our natural and mineral resources."

Adel, who spent time in jail and as a refugee in Pakistan before returning to Kabul and joining the ministry after the fall of the Taliban in 2001, has already signed contracts developing a massive copper mine in Logar province, and a medium-sized coal mine in Bamiyan province.

But he said companies interested in Afghanistan's natural resources must make long-term and costly commitments to developing not just the underground resource, but also everything above it.

Exploitation plans must be environmentally sound and based on solid social impact studies, with development including "job creation, schools, hospitals, electricity, water," he said.

In 2007, China's state-owned metals producing giant Metallurgical Group Corporation (MCC) signed a three-billion-dollar contract to develop the Aynak copper mine -- one of the world's biggest -- over the next 30 years.

First discovered in 1974, the site, 30 kilometres (20 miles) south of Kabul in Logar, is estimated to contain 11.3 million tonnes of copper.

The red metal used in plumbing, heating, electrical and telecommunications wiring, is essential to China's breakneck economic development.

The region is becoming increasingly tense and insecure, and is being guarded by US soldiers.

While China's involvement in the mine is another step in its often-controversial forays into resource exploitation abroad, the terms of the contract are very much in Afghanistan's favour.

"The Aynak Copper Mines alone can bring us 500 million dollars a year just in revenues to the government," Adel said.

He said he insisted on conditions binding the Chinese in Aynak to de-mine the area and, effectively, build a city from scratch that will be centred on the mine.

The contract obliges the Chinese partner to develop a smelter, refinery and factory as well as infrastructure such as roads, houses, hospitals and schools -- similar to the cities centred on single industries that were a hallmark of China's centralised economy in the 1960s and 1970s.

The Chinese company will also build a rail link across the country, from the border with Pakistan in the southeast to the border with Uzbekistan in the north.

Thousands of jobs will be created at the Aynak mine, Adel said, adding that the company is also obliged to train Afghan engineers and geologists so that "in 10-15 years Afghans are able to work independently."

On top of these agreements, he said, MCC threw in a bonus of 808 million dollars, to be paid in three installments during the lease.

"How could we refuse that?" Adel asked. "No one else offered us anything like that."

He intends to apply the same principles to the huge Hajigak iron ore mine in Bamiyan province, north of Kabul, which is currently under tender, with one Chinese and half a dozen Indian firms vying for the contract.

The contract for exploitation of almost two billion tonnes of high-grade ore includes processing, smelting, steel production, 200 megawatts of electricity and a coking plant.

In addition, the winning firm -- expected to be announced by next July -- will help develop downstream industries such as machinery plants, he added.

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