According to The New York Times, the US has “discovered nearly $1 trillion in untapped mineral deposits in Afghanistan.” These mining resources include metals such as copper and gold, as well as lithium which is used in cell phones, laptops and hybrid vehicle batteries. The mining find in Afghanistan is huge, and is being closely watched by the biggest names in mining like Freeport McMoRan (FCX), Rio Tinto (RTP), Newmont (NEM), Vale (VALE) and BHP Billiton (BHP).
The report cites unnamed US officials who state that “previously unknown deposits” of iron ore, copper, and other valuable minerals could position Afghanistan as “one of the most important mining centers in the world.”
The references to the untapped resources is true, but it is disingenuous, or at least careless, to claim that the deposits were unknown. The US Geological Survey published a report in 2007 on the size of the Afghan resources and the British Geological Survey published a similar report in 2008 based on work begun in 2004. What neither of these studies estimate is the value of the resources, although both do include maps of probable deposits.
To its credit, the Times does go through the history of geological surveys in Afghanistan since the Soviet invasion in 1979. Soviet maps were used by the USGS to conduct aerial surveys which led to the 2007 report. Then, in 2009, the Pentagon sent a task force to Afghanistan to help create business development plans for the country. The task force recognized the value of the aerial survey data, and set about validating the results.
This is the boring stuff that was well-known. The Times story is the first attempt to put a value on the minerals, but it does not state how the value was derived. The inference a reader is to draw is that the Pentagon came up with the estimate. But the officials who are quoted, including US General David Petraeus, never give a number.
The Times almost certainly derived the $1 trillion figure by checking recent commodity prices and then doing the math based on the USGS report. There’s nothing particularly wrong with that approach, but the paper could have said that that’s how it got the number.
Another question about the story comes from its timing. It’s painfully apparent that the Afghan war is not currently producing any good news for the Pentagon or for the Obama administration. A story like this diverts attention from that fact.
The other, even more important, question that the story raises is, “So what?” Afghanistan can’t develop these mineral deposits on its own, it has to rely on outside investment. Is it likely that private companies are going to commit hundreds of millions of dollars to a state as unstable as Afghanistan?
There is, however, one potential investor — China. The Chinese share a very short border with Afghanistan at the eastern end of its Wakhan Corridor. And the Chinese have shown that they don’t care much about the way a foreign government behaves when it comes to making investments in oil and gas. Its investments in Somalia testify to that.
But even the Chinese are going to want more stability than is currently on offer in Afghanistan. If the Taliban takes power again, the Chinese could live with that, provided they got assurances from the Taliban that the investment was secure.
Certainly the presence on significant mineral deposits is very good news for Afghanistan. But it’s not new news and it won’t be good news for years to come.