07/02/2010, 00.00
AFGHANISTAN

Afghanistan’s future in mining, not opium

The country is a treasure trove of minerals and precious metals. However, exploiting deposits is a high-risk job because of the danger of attacks. India and China are trying to take a leading role in developing the sector. The Taliban want instead to stop any alternative economic development to maintain their hold on the opium trade.
Kabul (AsiaNews/Agencies) – Beneath Afghanistan lies a treasure trove of untapped minerals like iron, copper and lithium estimated at a US$ 1 trillion. The war has made exploiting such riches, especially for Western companies, an uphill battle, because of Islamic terrorists. This is why many poor Afghans are still relying on Taliban-controlled poppy cultivation and drugs to earn a living. Now Chinese and Indian companies are looking at the situation to see if it is worth investing money in the country’s mining sector.

Digging in the ground is more time consuming and complex than drilling for oil. It requires deep tunnels to get to the ore locked in the rock, blasting away at tonnes of material, carrying everything to the surface and sorting things out. Mining is thus a very expensive proposition and developing a mine can cost up to several billion dollars and take a lot of time. In Afghanistan’s case, matters are made more complicated by the lack of a railway and an adequate electrical power grid. The danger of attacks does not help either.

For Eurasia Group analyst Maria Kuusisto, President Hamid Karzai's low domestic and international standing, the government's tenuous control of the provinces and widespread corruption are additional cause for concern among potential investors.

Time and costs have not however discouraged India and China, both hungry for resources and happy to see Western investors forcibly absent from the field. Given US plans to pull gradually out of the country, China and India, but also Iran and Pakistan are planning to step in. New Delhi has already sunk US$ 1.2 billion in roads, electrical lines and Afghanistan’s new parliament building as goodwill gestures. Beijing is increasing commercial ties and investment as well. Chinese manufactured goods are swamping local markets.

Even though China's Metallurgical Group won a contract for the Aynak copper deposits in 2007 that was later tainted by accusations of bribes, the Chinese are moving into the country big times, building local road connections, transnational railway lines and other infrastructure in an investment that is expected to hit US$ 4 billion.

In central Afghanistan, bidding for the Hajigak iron-ore deposits will open later this year. Indian companies like Essar Minerals, Rashtriya Ispat Nigam and Ispat Industries are in the last stages of the tender process for the mine, estimated to hold 1.8 billion tonnes of high-quality ore.

Pakistan is now also getting into the rush for Afghan riches. Placed between Afghanistan and India, it is opposed to letting India use its territory to ship goods into its northern neighbour. This is helping China, a close ally of Islamabad. In addition, Afghanistan’s main deposits are in the south and the east, close to the border with Pakistan.

However, security remains the main problem with the Taliban ready to sabotage any venture. If terrorism wins, poppy cultivation will be the only economic activity left for the country’s poorest regions. The Taliban in fact control opium production and trade, their main source of funding.

Afghanistan supplies 90 per cent of the world's opium, the main ingredient in heroin, and is the global leader in hashish production.

The Afghan government and its international backers have made a huge effort in recent years to discourage farmers from growing the opium poppy. Cultivation dropped 22 per cent last year. Sadly, almost one million Afghans or 8 per cent of the 15-64 age group have become regular drug users.

Between 12 per cent and 41 per cent of Afghan police recruits test positive for drugs at regional training centres, a US government report issued in March says, this in country that has few rehab centres for drug addicts.

"It is a national tragedy," Ibrahim Azhaar, Afghanistan's deputy minister of counternarcotics, said. Greater drug use has major destabilising effects on communities as violence, insecurity and stealing increase.

The lack of income allows Taliban to maintain their hold on entire provinces in southern Afghanistan, forcing people to earn a living by growing opium poppy under the thumb of Islamic terrorists. This too is a national tragedy.

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