Could Minerals Discovery Make Afghanistan Worse?

US officials have discovered up to $1 trillion worth of cobalt, gold, iron, lithium–a key component of many batteries–and other minerals in Afghanistan. This could turn Afghanistan into a global mining center, they say. The Telegraph has more:

Afghan officials believe the mining sector will eventually become the backbone of the now tiny Afghan economy and provide hundreds of thousands of jobs. The economy is currently dominated by aid money and drug smuggling, raising fears the coalition’s investments in building the Afghan army and state are ultimately unsustainable.

Early attempts to harness Afghanistan’s mineral wealth have been hampered by corruption and poor security. In 2008, the Chinese state-owned firm MCC signed the contract for one of the world’s richest unexploited copper deposits at Aynak, 30 miles south of Kabul after paying a premium of £484 million.

World Bank estimates suggest the Aynak mine alone could yield 100,000 tons a year, bring the Afghan government £240 million a year in taxes and create another 20,000 jobs. Muhammad Ibrahim Adel, minister for mines at the time, was later accused of taking a £20 bribe to award the contract. He denied the accusation, but lost his job.

From the New York Times:

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts. Afghanistan has a national mining law, written with the help of advisers from the World Bank, but it has never faced a serious challenge.

“No one has tested that law; no one knows how it will stand up in a fight between the central government and the provinces,” observed Paul A. Brinkley, deputy undersecretary of defense for business and leader of the Pentagon team that discovered the deposits.

The law–or lack thereof–combined with a lack of infrastructure, Chinese competition, and systemic corruption in Afghanistan, means that Americans could get the short end of the stick from this find. A find this potentially lucrative won’t exactly ease the Afghan government’s endemic corruption.

The talk of an Afghan revival also sounds inflated. Big mineral deposits don’t equate to opportunity for a country’s renewal. Bolivia, the poorest country in Latin America, has the world’s current biggest lithium reserve. (There’s been talk of a Bolivian revival because lithium is a key component of electric car batteries.) Namibia has some of the world’s biggest diamond reserves. But a lack of infrastructure and questionable ability to manage mining are issues in both of those countries. It’s questionable whether the proceeds from mining will build up national economies or benefit oligarchs and exporters.

Afghanistan has the same issues, perhaps even more pronounced because of the size of the country’s reserves. Before anyone claims that these reserves will save Afghanistan, they need to come up with an infrastructure and management plan that will enable something apart from corruption.

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Written by Drea Knufken

Drea Knufken

Currently, I create and execute content- and PR strategies for clients, including thought leadership and messaging. I also ghostwrite and produce press releases, white papers, case studies and other collateral.