Published on 31 Jan 2012 at 10:08
According to analysts, the mining and excavation of Afghanistan’s precious minerals and natural resources hold the potential to catalyze massive economic growth and enhance the livelihoods of tens of thousands of Afghans across the country. However, transparency, organization, and investment are needed to push forward this growth.
Afghanistan anticipates that mining and the excavation of its minerals will significantly boost economic development at a critical time, as the country faces foreign troop withdrawal in 2014 and the international community begins to draw down development assistance. The Afghan government reports that internal revenues have increased thanks to mining and excavation, but to ensure a stable and upward trajectory, the extractive industry in Afghanistan needs foreign investment, organized transport, strong infrastructure, and above all, security.
Based on several geological surveys of the Ministry of Mines, Afghanistan has gold, silver, copper, iron, azure and other precious minerals and stones which hold tremendous potential in the development of the country’s feeble economy. The U.S. Department of Defense has already estimated the value of Afghanistan’s mines at up to a trillion U.S. dollars.
The Afghan government has already taken several major steps in the development of the country’s mining industry. The government has completed the bidding and contracting process of the Aynak Copper Deposit, the Hajigak Iron Deposit, and the Amoo area’s fuel and gas reserves.
Mining of the Aynak Copper Deposit was contracted to a Chinese company [MCC] in 2007. According to geological surveys, with approximately 100 million tons of copper, Aynak is the ninth richest copper mine in the world.
Given that Afghanistan does not have the existing infrastructure and capital to excavate its resources on its own, this emerging industry will, for now, rely on foreign investment.
“Afghanistan would reap the total rewards from the mines if the government itself were able excavate them,” said Ahmad Shah Faizi, head of the Geology Department at the Afghanistan Science Academy. “To some extent the country will benefit from the foreign excavation. There are several multi-minerals mines in Afghanistan, so the multi-mineral should be carefully considered during the bidding and contracting process.”
Abdul Rayees Alani, member of the Afghanistan Science Academy asserts that the extractive industries alone cannot make Afghanistan economically self-sufficient. Economic stability and growth in Afghanistan requires multi-industry diversification and development.
Alani further asserts that investment in industrial factories and geological higher education institutes is key to tapping into the potential of this economic development.
“Contractors should have financial solvency, sufficient human resources, qualified professionals, and modern machinery in order to receive a contract,” said Omar Jawad, spokesperson for the Ministry of Mines. “These types of contracts benefit Afghanistan.”
According to Jawad, foreign contractors will recruit personnel based on their qualifications, but optimistically, an approximate 25 to 30 thousand Afghans across the country will find employment, directly or indirectly from mining and excavation.
Much like Alani, Jawad also warns that mining and excavation alone will not bolster the level of economic development desperately needed in Afghanistan. “The Aynak Copper Deposit excavation will start in 2014, but this does not mean that it alone can sustain the country’s economic needs. It is necessary to draw attention to other economic sectors, including agricultural, industrial, and commercial sectors to meet people’s employment needs,” he says.
Jawad estimates that, within the first four years of excavation, Afghanistan will receive 1.5 billion U.S. dollars in income and this will rise to approximately four billion dollars within the next 10 to 14 years.
Jawad added that the Ministry of Mines and Ministry of Interior Affairs are coordinating closely to provide the security needed to attract and retain investors. The Ministry of Interior Affairs is establishing a special division composed of seven thousand soldiers to provide protection to mining and excavation sites across the country. The Ministry of Interior Affairs plans to increase this number to 30 thousand soldiers by 2014.
According to Jawad, the contract for the excavation of Amoo River’s fuel and gas site has been signed with a Chinese company [CNPCI], with a value of 700 million U.S. dollars. The Amoo River site, where excavation is due to start within a year, is anticipated to inject up to ten million U.S. dollars into the government’s treasury every year.
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