Afghanistan Bids for Place as Iron Ore and Copper Producer

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Whatever is said about Afghanistan, and much is said about Afghanistan, it is rarely looked upon as a source of mineral wealth. Indeed although the economy managed 7% growth last year it’s 33.6 million people are still desperately poor with a GDP ranked 113 in the world. Half the population technically lives below the poverty line and 80% of the labor force is employed in agriculture, according to the CIA. Apart from opium, Afghanistan’s biggest exports are essentially agricultural – fruits, nuts, wool, skins and wool products like woven carpets. We don’t think of Afghanistan as a source of ores, metals or metal products, but that may be about to change.  Bidding has opened for foreign firms to participate in the exploitation of a massive iron ore deposit 80 miles to the west of the capital Kabul according to the Telegraph newspaper. The Hajigak deposit as it is known, had been surveyed in the 1960’s but 30+ years of conflict has meant it has gone unworked in all this time. The reserve is said to be 1.8bn tons of 62% pure iron ore and is termed world class in terms of size and quality. According to an Afghan government report, the reserve occurs in 16 ore bodies over an area some 20 miles in length. Fortunately the iron ore deposit is close to a large supply of coking coal at nearby Shabashak making steel production a viable proposition.

Not surprisingly Asian firms are front runners in the bidding process with five Indian firms, (including Vendanta, JSW, Essar, Rashtriya Ispat Nigam and Ispat) a state-owned Chinese company (MCC) and a joint Pakistani and Saudi venture intending to bid during the next three months for the mining rights. The winner will be expected, in addition to developing the iron ore mine, to build a steel plant, a rail link and a replacement for an aging fertilizer factory. Muhammad Ibrahim Adel, Afghanistan’s minister for mines hopes it will create 10,000 jobs in mining and another 10,000 in steel production ” that is pretty optimistic but the spin off benefits from developing a major iron ore mine and associated steel industry would be considerable for the Afghan economy.

Copper and zinc/lead deposits were also identified by the Russians between 1973 and 1988 suggesting extensive deposits averging 2.3% copper and 6.64% zinc plus lead according to the Afghan Ministry of Mines. Two smaller deposits in central Afghanistan at Darra-i-Nur grading 22% zinc and Kalai-Assad averaging 30.4% zinc suggest that far from being a largely semi arid country with limited potential, Afghanistan could become a significant source of minerals. The country already has one copper mine of significance, the Ainak Copper mines is estimated to hold 11 million tons of copper which according to this report would make it the largest in the world. Is the next minerals rush going to be Afghanistan? Probably not until the security situation is resolved but instead of western governments agonizing about how they weed the economy off opium production and onto other agricultural products may be they should look at the longer term potential for making Afghanistan into a mineral exporter.

–Stuart Burns

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