Afghanistan’s most exciting mineral prospect is a large copper deposit at Aynak, 50km south-east of Kabul. It was first surveyed in the 1970s by the Soviets, who spent a further 10 years studying the prospect, going so far as designing an open pit mine. But the war intervened, and the Soviet survey documents almost became a casualty, passing hands between different fighters. Once the Taliban came to power, the records were hidden to prevent their destruction – and rushed away for safe-keeping when the Taliban government fell. In this climate, the sector never developed.

 On the record

Today, the British Geological Society is in Kabul to assist its Afghan counterpart organisation to catalogue, translate and record on to a database similar survey records. The plan is to process more than 2000 reports and prepare the most promising projects– such as the Aynak copper deposit – for international tender.

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Already, the Koreans have expressed an interest in Aynak, and other commodity-hungry Asian nations are also circling. More work is needed to prove the economic viability of the prospects but the first steps are being taken towards developing a sector which promises a great deal.

According to the World Bank’s Multilateral Investment Guarantee Agency (MIGA), there are known deposits of commercially valuable minerals and metals in Afghanistan, including beryllium, coal, chrome, copper, gold, iron, lead, manganese, nickel, salt rock, silver, uranium and zinc. The country’s known precious and semi-precious minerals include alabaster, amethyst, beryl, emerald, jade, lapis lazuli, quartz, ruby, sapphire and tourmaline. There are also several types of stone suitable for construction materials, including marble.

The sector is characterised by defunct state-owned enterprises (only a few of which are minimally operative), numerous informal sector mining operations and a few functioning end-users, such as construction materials producers and stone-based handicraft artisans.

To date, the Afghan mining policy remains incomplete, and private investment in exploration and extraction has yet to be legally sanctioned. Much of the known commercial reserves of minerals remain under state control. At the same time state-owned enterprises that dominated industries, such as coal, have yet to be privatised. As a result, there is no foreign investment in the Afghan mining sector, although overseas investors have expressed interest.

 Other challenges

Added to this, some of the country’s most promising areas for minerals exploration are in areas where anti-government forces operate, particularly along the border with Pakistan where local leaders remain in power. The sector also faces threats from unexploded ordinance, a legacy of war.

World Bank projections suggest the annual value of Afghanistan’s coal, quarries, sand, salt, gemstones and copper reserves could reach $253m by 2008, up from the current value of $60m, if reforms are enacted. For this to happen, public sector investment of $100m and private sector investment of $360m will be required. Vast areas of the country remain unexplored, so the value is potentially far greater.

 Demand on the rise

Reliable statistics on minerals production and activities are virtually non-existent. However, there has been a marked increase in demand for minerals and quarry materials to supply the needs of the road building programme and booming general construction industry. There is thus considerable scope in the immediate term to improve existing production and, over the longer term, to stimulate new investment in the sector.

The government recognises the inherent potential of the sector, noting a potential income of $18m in royalties and taxes; up to 7500 new jobs; and a positive export balance of $66m, based on modest assumptions. An additional spur to government is the looming energy crunch – the country’s coal could be used to fuel power stations.

Few other industries can match this sort of potential. Mining companies are among the best suited to operate in difficult environments, with experience of dealing with security and providing their own infrastructure. For these reasons, developing the sector is a priority for the government and, as such, the outlook for legal and regulatory reform is bright.