YOU ARE HERE: LAT HomeCollections

Excavating a future in Afghanistan

The country sits atop oil, gas and mineral deposits that could be worth a trillion dollars. But building a commercial mining industry will be a rocky road.

March 24, 2013|By Alexandra Zavis, Los Angeles Times
  • Drillers from Central Asian Mining Services collect samples from the North Aynak mineral zone outside Kabul, the capital of Afghanistan.
Drillers from Central Asian Mining Services collect samples from the North… (Alexandra Zavis, Los Angeles…)

TAGHAR, Afghanistan — In a rugged valley outside Kabul, where mud-walled villages blend into bare scrubland, a team of international mining experts and Afghan trainees set up camp over the winter to probe the region's mineral resources.

Protected by armed guards, they spent three months drilling test holes into the snowcapped peaks, as curious goat- and sheepherders looked on.

"We hit copper damn near everywhere," said Robert Miller, a Colorado-based mining executive recruited by the Pentagon to help advise Afghan authorities on how to develop the country's natural resources. "It's a very encouraging finding."

Studies have found that Afghanistan, one of the world's poorest and most war-torn countries, sits atop hydrocarbon and mineral deposits that could be worth more than a trillion dollars. The Afghan government and its U.S. backers are counting on this largely untapped wealth — including oil, gas, copper, iron, gold and lithium — to bring in cash and create jobs as international assistance begins to wind down.

"Afghanistan needs to develop its geology," said Najibullah Rochi, a 24-year-old geophysicist with the Afghanistan Geological Survey who was getting his first field experience at the Taghar deposit in what is known as the North Aynak mineral zone. "We need jobs and salaries. This is the way."

But industry experts caution that it will take many years and billions of dollars to build the power plants, railway lines and other infrastructure needed to extract and transport commodities from the country's mountainous terrain. Moreover, many of the mineral deposits are in the south and east of Afghanistan, where the Islamist insurgency is strongest.

Afghanistan's first attempts to develop a modern mining industry have been plagued by security threats and rumors of corruption, underscoring the difficulty the country is likely to face in unlocking its mineral riches.

Miller said he had no doubt about the country's potential.

"In my opinion, Afghanistan could replace Chile as the largest exporter of copper," he said. "Can they put it together? That's the trillion-dollar question."

Managed poorly, Afghanistan's mineral riches could instead become a source of more conflict and graft, another example of the "resource curse" that has afflicted countries such as Angola, Cambodia and Democratic Republic of Congo.

The World Bank estimates that 97% of Afghanistan's economy is tied to international military and donor spending. Although the United States and other major donors have pledged not to abandon the country, they are tired of government corruption and have economic difficulties of their own. Support for Afghanistan could fall sharply after most foreign forces leave by the end of next year.

Afghanistan's natural resources appear to represent the country's best hope for self-sufficiency. A report prepared by the Pentagon in 2010, based on research by the U.S. Geological Survey, identified mineral and oil reserves worth nearly $1 trillion. Afghan authorities called that estimate conservative and put the figure at $3 trillion.

They hope to sell the development rights to many of the deposits to international mining companies.

A $3-billion agreement was reached in 2008 with a Chinese consortium to develop a copper deposit in Logar province, south of Taghar. Negotiations are underway with companies in India and Canada for rights to one of the world's largest iron ore deposits, in Bamian province. The government is also completing contracts for major copper, gold and oil concessions.

Wahidullah Shahrani, Afghanistan's minister of mines, said the mining and petroleum sectors could bring in as much as $1.5 billion in annual government revenue, create 150,000 jobs and contribute $5 billion to the economy annually by 2016.

"Not in your wildest dreams," Miller said; it could take 10 to 15 years for major projects to be readied.

Afghans have engaged in small-scale "artisanal" mining for centuries, but the country does not have large commercial operations.

Major construction has not started at the Mes Aynak deposit south of Taghar, a joint venture by the state-run China Metallurgical Group Corp., or MCC, and Jiangxi Copper Co. The site holds ancient Buddhist ruins and artifacts. Archaeologists were given until the end of last year to salvage what they could. But in an interview with The Times, Shahrani said mining would not be allowed to begin until he received clearance from the Ministry of Information and Culture, which he expects by May.

Another reason for the delay is that several villages must be relocated, MCC said in its latest earnings report.

Los Angeles Times Articles