Some perspective on Afghanistan’s mineral resources

As everyone who follows Afghanistan should know by now, during the past week the country was estimated to have up to $3 trillion in untapped mineral resources. There is hope that this could transform the country and the war effort: as James Risen wrote following the discovery, senior US officials believed it could be “enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself.” This hope is intuitive, as the economic potential might “attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.”

Other commentators have made reasonable arguments calling this development into question. Among other things, the timing of this news is suspicious since we are in the midst of a bad news cycle about Afghanistan, and the findings on which these estimates are based are not new (they have been online since 2007).

In addition, a bit of perspective from recent history provides reason for additional skepticism. In March 2006, the U.S. Geological Survey and Afghan Ministry of Mines and Industry revealed new estimates holding that Afghanistan’s energy resources were far greater than previously believed. The parallel to current discoveries is obvious, and these energy discoveries were expected to represent a turning point in their own right. As Stephen Blank wrote:

According to their findings [of the U.S. Geological Survey and Afghan Ministry of Mines and Industry], undiscovered petroleum resources in northern Afghanistan range from 3.6 to 36.5 trillion cubic feet (TCF) of natural gas, with a mean of 15.7 TCF. Estimates of oil range from 0.4 to 3.6 billion barrels (BBO), with a mean of 1.6 BBO. Estimates for natural gas liquids range from 126 to 1,325 million barrels (MMB) with a mean of 562 MMB. These estimates represent an 18-fold increase in the country’s potential oil resources, and more than triple the natural gas resources. If accurate, the news could mark the turning point in Afghanistan’s reconstruction efforts. Energy exports could generate the revenue that Afghan officials need to modernize the country’s infrastructure and expand economic opportunities for the beleaguered and fractious population.

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  • KnightHawk says:

    Yup, it was re-release as PR\fluff effort, nothing really new and no actual news on the progress of the development of said resources, nor progress on overcoming the various inhibitors from development moving forward. NY Times and Wapo reporting on this falls into the category of accurate but moot.

  • jonh says:

    Wow, the reserves have grown from 1 to 3 trillions in a matter of days.

  • T Ruth says:

    jonh, i spotted that too–quite some inflation isn’t it!
    For all the zeros a trillion has, personally i think that is the sum total effect this story is going to have on this war, at least in the foreseeable future–zero.

  • blert says:

    Afghani energy reserves did not increase dramatically in 2006.
    Iraqi energy reserves, however, did.
    Said reserves have now been bid upon by all and every.
    China is bidding way out in front.
    So, yes, the increase in energy reserves in 2006 turns out to be understated. The reason for the up-estimate is that Saddam’s crew and predecessors NEVER conducted an up to date assessment since the sixties.
    As for Afghanistan, this survey-estimate updates Soviet estimates circa twenty-five years ago. Since prices for hard rock minerals have risen sharply since that time it’s easy to see that trillions are realistic.
    Most hard rock materials are now known to be biogenic. Google “deep ocean smokers”. E.G. copper is reduced by microbes from its sulfurous state and drifts as ultra fine dust onto the ocean floor. Eons of time pass. The carpet of copper is silted over, compressed, and raised above the sea by plate tectonics. One fine day we stumble upon the result which is a folded ore body now high in the hillside.
    All of Afghanistan was lifted from the ocean bed in this manner. Check out the astronaut photos.
    So I’m sorry to say, the minerals are there and the estimates normally are conservative. The mining industry hates puffed up reserve estimates: that’s the way they lose their shirts.

  • madashell59 says:

    I thought this was another push for the old “the war is all about oil” and it may have been. But what ticks me off is that we are paying the price for stability in the region why China sits back and profits from it. BOYCOTT CHINA!

  • I don’t agree with the “boycott China” remark: they’re simply executing a smart strategy. However, it is worth understanding that China is indeed — in the words of Aziz Huq, in a piece posted to Foreign Policy on June 15 — enjoying “a gratuitous hidden subsidy from the United States … which has defrayed the enormous costs of providing security amid war and looting.”
    China does have a tremendous security apparatus on the ground in Afghanistan, but it is geared toward protecting Chinese investments (i.e. the Aynak copper mine) rather than providing general stability. The U.S. needs to do a better job of taking into account other countries’ interests, or else it will continue to bear disproportionate costs while countries like China reap disproportionate benefits.

  • Planet Sojourner says:

    It is a pity that NATO blood and treasure has provided for the Chinese parastatal to step in and scoop up Afghani resource.
    Given the political – legal state Afghanistan is in, there is no mechanism in the capital markets to assess and price tenure risk, thus licensing of mineral resources as practiced elsewhere in the world is not applicable here. The only process that would provide any measure of security of tenure would be multilateral agreements. It would be political suicide in every ISAF troop contributing country to even suggest multilateral agreement whereby one or more corporations benefit.
    The Chinese parastals are not troubled by any such concerns, therefore as things stand, Afghani resources are theirs to scoop up.
    Rather than pitching the Afghani resources garage sale, the whole tenure compromising process should be shut down until there is an iota of a chance for the western exploration companies to put crews out in the field and not have them kidnapped or killed.

  • Bodrod says:

    What about the billions a month that Iraq receives in oil revenues? Why are we still throwing money there way?

  • Civy says:

    I think this analysis sells Afghanistan’s potential short, deprives it’s people and US policy-makers of a vision they can organize around, and will prove to be false.
    Recall the way in which Saddam’s oil fires were put out years ahead of schedule, and rest assured, those minerals will be exploited with breath-taking speed if the Chinese have a crack at them.
    We are not only holding the door open for the Chinese for free in Afghanistan, but our Navy provides safe passage all around the globe for them go bring their raw resource plunder home in safety. This is an outrage. These services should be used in a systematic way to get China to forgive a great deal of US debt.

  • June says:

    The timing of the news is lagging but then again since the MSM doesn’t pay much attention to the world of engineering and science as a rule it comes as no surprise. It is excellent to hear that Afghanistan has something to make it economically important as well as politically important in the 21st century. What I want to know about is the reaction (and action) of Afghanistan’s fledgling government, and more importantly, its non-government-joining warlords who might seize upon ancient tribal lands that might happen to contain the juciest minerals and oil and NG deposits and bid out mining and extraction rights to the highest bidder willy-nilly. Better than opium sales? Also, who is going to work those mines? Afghan citizens? I would hope so but at what wages to make them worthwhile, and at high enough wages to finally kill opium production (I doubt)? And who would protect the mining operations from raids by the insurgents?

  • Civy says:

    A thoughtful post. I think the key players will be the US and the Chinese.
    First, what has made Afghanistan a battleground for centuries puts it in a position to reap a rich, endless revenue stream from oil and gas pipelines – location – Afghanistan has a bright economic future.
    In contrast to mining, which is a very cyclical business, these right-of-way revenues make an excellent, dependable source of income. China, India, Pakistan, Iran and the “stans” of the Caucuses all have a great interest in this role succeeding.
    As for who will defend such pipelines and mining interests, as well as the vast hydroelectric potential in such a mountainous country, the very Army we are helping them train and build provides the solution. Unlike Iraq, where many will be out of work when “peace” breaks out, the need for security in Afghanistan should provide work for, perhaps, a million men for decades to come.
    Longer term, a question for the Afghans is to what extent they would welcome the cultural and ethnic differences that will arise should a large Chinese community develop inside it’s country.
    This could easily happen, as even a small percentage of a 1,325 million population could become a substantial percentage in a country with 25 million people. While I’m sure this is a problem Afghanistan would like to have at the moment, it could eventually become a big problem in a somewhat xenophobic society.


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