Afghanistan Invites India to Participate in $1 Trillion Mining Sector

Researched by Industrial Info Resources (Sugar Land, Texas)--According to the recently presented geological reports from the U.S. Pentagon, large mineral deposits in war-ravaged Afghanistan could transform the country into the El Dorado of South-Central Asia. General David Petraeus, the head of U.S. Central Command, has indicated that Afghanistan's unexplored mining potential is worth nearly $1 trillion. Petraeus said that Afghanistan's rich deposits of gold, copper, iron ore, cobalt, lithium and coal have the potential to turn the war-stricken country into a global mining hub. However, the country's rough terrain, unstable political climate and Taliban insurgency could pose major hurdles to development.

The resources are large enough for commercial development and to attract global investments. The mineral deposits are located across the country, including the Taliban-controlled Pakistan-Afghanistan border. The government has reportedly planned road shows to showcase Afghanistan's mining potential. A road show will be held in London on June 25, and representatives from 200 global corporations are expected to participate in the event.

According to reports, the U.S. has informed Afghanistan about the discovery, and the Pentagon is also setting up a special task force to help the government prepare procedures and modalities to develop the mines. The government is likely to invite bids by the second half of 2011 to explore and develop these projects. Sources indicate that Afghanistan may follow the methodology adopted by Iraq and award contracts to Western companies. Experts have also observed that landlocked Afghanistan has to rely on Pakistani ports for imports and exports, which could pose political problems.

In a related development, China has secured rights to develop the Aynak copper mine in the Logar province of Afghanistan. Controversies surrounded the bids for this mine, which has estimated reserves of 240 million tons, after reports that $30 million was paid to Mohammad Ibrahim Adel, Afghanistan's minister of mines at time. The Afghani government sacked Adel after the accusation. For related information, see March 18, 2009, article - China Metallurgical Begins Work at Afghanistan's Aynak Copper Deposit.

In 2004, American geologists who were sent to Afghanistan to assist in the reconstruction efforts stumbled upon old maps, charts and data about mineral deposits at the library of the Afghan Geological Survey (Kabul, Afghanistan). The data and maps were collated by experts who were conducting studies on the Soviet occupation of Afghanistan in the 1980s.

A day after the Pentagon announcement, Afghanistan invited India to participate in the $1 trillion mining sector. Wahidullah Shahrani, Afghanistan's minister of mines met B.K. Handique, India's minister for mines and development, and discussed India's investments in this sector, especially in coal, copper, gold and iron ore. Shahrani also sought assistance from the Geological Survey of India (GSI) (Kolkata, West Bengal) in training geoscientists at the Afghanistan Geological Survey on remote sensing, exploration and geological studies. The GSI has a century-long association with Afghanistan and has been instrumental in developing several detailed maps of the county that are in use even today. Afghani geologists are expected to visit Jaipur, Rajasthan, for a training workshop conducted by the GSI.

Presently, India is assisting Afghanistan on several rehabilitation and reconstruction projects. Since the 1970s, Afghanistan, which shares borders with Pakistan, China, Turkmenistan, Uzbekistan, Iran and Tajikstan, has been in a state of civil war. India has made investments of nearly $1.2 billion on education, medical care, and construction of highways, roads and power transmission projects in Afghanistan. Shahrani also invited India to develop the country's coal mines. However, Handique expressed concern over the safety and security of Indian nationals working in Afghanistan. There has been a series of terrorist attacks, including the recent attack in Kabul on February 26, which killed seven Indians. India is also keen to participate in the $115 million "National and Institutional Development and Capacity Building" projects proposed to be carried out by the United Nations Development Program in Afghanistan. India has also provided scholarships to 1,200 Afghani students to studies at Indian universities.

While the potential for mining is tremendous and Afghanistan is garnering global attention, Indian steel companies are wary of making investments in the country. In 2008, three Indian and two Chinese steelmakers jointly bid and secured an iron-ore mine in Afghanistan. However, the country called off the arrangement at the last minute.

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