Tuesday, October 6, 2009

Afghanistan sitting on a gold mine

Afghanistan sitting on a gold mine

The USGS estimates there are about 700 billion cubic metres of gas and 300 million tonnes of oil across several northern provinces.

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Afghanistan is sitting on a wealth of mineral reserves -- perhaps the richest in the region -- that offer hope for a country mired in poverty after decades of war, the mining minister says.

Significant deposits of copper, iron, gold, oil and gas, and coal -- as well as precious gems such as emeralds and rubies -- are largely untapped and still being mapped, Mohammad Ibrahim Adel told AFP.

And they promise prosperity for one of the world's poorest countries, the minister said, dismissing concerns that a Taliban-led insurgency may thwart efforts to unearth this treasure.

Already in the pipeline is the exploitation of a massive copper deposit -- one of the biggest in the world -- about 30 kilometres (20 miles) east of Kabul.

"There has not been such a big project in the history of Afghanistan," Adel said.

A 30-year lease for the Aynak copper mine was in November offered to the China Metallurgical Group Corporation and the contract is being finalised.

"It is estimated that the Aynak deposit has more than 11 million tonnes (of copper)," he said, citing 1960s surveys by the Soviet Union and a new study by the United States Geological Survey (USGS).

"With today's prices, it contains an 88-billion-dollar deposit," he said.

The mine is expected to bring the government 400 million dollars annually in fees and taxes, Adel said.

That is on top of an 800-million-dollar downpayment from the developer who has also committed to build a railway line, a power plant and a village for workers, complete with schools, clinics and roads.

About 5,000 jobs will be created and mining is expected to start in five years. "Up to 40 percent of the income will pour into our pockets," Adel said.

The colossal Aynak project represents, however, only a fraction of Afghanistan's unexploited resources, he said. The scale of the deposits is still being charted.

The USGS is carrying out a nationwide survey of mineral wealth and oil and gas deposits that is expected to be completed in a year, Adel said.

Studies of only 10 percent of the country have discovered abundant deposits of copper, iron, zinc, lead, gold, silver, gems, salt, marble and coal, the ministry says.

The USGS estimates there are about 700 billion cubic metres of gas and 300 million tonnes of oil across several northern provinces.

A Soviet survey estimated there are more than two billion tonnes of iron reserves, the ministry says.

One of the best known iron deposits is at Haji Gak, 90 kilometres west of Kabul.

"If everything goes as we desire, Haji Gak requires two to three billion dollars' investment," said the minister.

"Another 100 million to 1.5 billion dollars is needed to explore the gas and oil mines."

The government plans to offer more projects for private sector tender next year, Adel said.

There is already some mining underway such as ad hoc emerald extraction in the Panjshir valley region northeast of Kabul, where dynamite is used to blow gems out of the ground.

And the ministry has handed two coal mines to private Afghan companies, although they lack standard equipment.

The Aynak contract will be a model for others, with developers expected to put in basic infrastructure as Afghanistan's power grid is weak and its transport network limited.

There is also the challenge of the insurgency, which overshadows development and has made many areas off-limits to foreign companies.

Writer and analyst Waheed Mujda warned there could be no mining in Taliban-held areas, which are mostly in the south, without the permission of the Islamic extremists.

"Any kind of agreement with Taliban will have to involve money and that money obviously would finance the insurgency in part," Mujda told AFP.

But Adel is not concerned. "We can provide security for mining sites simply by hiring a private security company," he said.

Most of the deposits that have been discovered are in the relatively stable north. There are, however, uranium reserves in the southern province of Helmand, one of the worst for Taliban attacks, the minister said.

The minister's sights are firmly set on mining bringing his impoverished country a brighter future.

"In five years' time Afghanistan will not need the world's aid money," he said. "In 10 years Afghanistan will be the richest country in the region."

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