The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.The previously unknown deposits - including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium - are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.
An internal Pentagon memo, for example, states that Afghanistan could become the "Saudi Arabia of lithium," a key raw material in the manufacture of batteries for laptops and Blackberries. The vast scale of Afghanistan's mineral wealth was discovered by a small team of Pentagon officials and American geologists. The Afghan government and President Hamid Karzai were recently briefed, American officials said...
More at The New York Times.
Comments
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I'm not knowledgeable about mining or manufacturing. I am aware that TheissenKrupp Steel is going to move product from Brasil to Mobile, AL for further processing. Uzmetkombinat is Uzbekistan's sole steel company that with a modest investment of $13 million was able to substantially increase their output in 2009. Problem is that they must import iron ore...
So perhaps some mining corporation teams with Uzmetkombinat to scratch each other's backs. Transportation by rail through Russia or Turkmenistan/Iran is a possibility...don't know. Plus all the "stans" may find access to steel improves local and ISAF quality building costs. Steel buildings in an earthquake prone area?
While respecting anonymous' views, suspect most Afghans would trade use of mountainous terrain not particularly suitable for much else...for jobs. Ask West Virginians and Afghans fighting for land/water rights in large families inheriting limited property. Guess you gotta put potential/uncontrollable $30 million bribes into context if it provides jobs for lots of individual Afghans and mega-billion taxes for the country, whose low labor costs compensate for extra transportation distance.
North to Uzbekistan and the world? Uzbekistan isn't exactly a booming hub of international trade; they have a hard time moving their own exports to market. Look at a map for obvious reasons why.
Two realities:
First, large scale production of commodities like iron, steel, and copper requires access to the major industrial economies that import these commodities.
Second, Commodities with relatively low value to bulk, such as iron, steel, and copper, are moved most efficiently by sea.
Access to port facilities is a primary consideration for assessment of any ore deposit, and in Afghanistan the picture ain't pretty. Again, I doubt that many Western companies will be chafing for a piece of the action.
Afghanistan may be a treasure house of mineral wealth, however unlike the U.S., all sovereign wealth is under control of the central government...a corrupt government. A government that understands the deal of the bribe well, but instituting regulation and enforcement not.
The idea that the average Afghan would share in this wealth, or the country as a whole is absurd and is something large mining companies count on to allow them to do business on the cheap by not having to be concerned with the ecological impact of the local area where extraction is taking place, or concerned about local reaction to traditional ancestral homeland displacement/despoliation
North to Mazar-e-Sharif and Uzbekistan to the rest of the world.
http://www.alertnet.org/thenews/newsdesk/SGE64O08D.htm
The route to the north is safer than through Pakistan because there are fewer Pashtun (more in Pakistan than Afghanistan and primary source of Taliban), which is why more ISAF supplies have been coming that way. Problem is, supplies/equipment comes by rail and then must be off-loaded to truck to enter Afghanistan.
Apparently, Afghanistan also really need concrete for construction, especially for floor slabs to enhance health. Also, IMHO, concrete barriers were one primary reason for urban security success in Iraq. It's harder to get such barriers into Afghanistan without railroads and little way to build them due to lack of concrete.
In case someone is, or wants to play a geologist on line:
http://www.bgs.ac.uk/afghanminerals/docs/Hajigak_A4.pdf
Good news is that it looks like Hajiga is in a Hazara area. In theory, they could build their own rail line through the mountains to the north near Salang or elsewhere with less Taliban interference. Most Hazaras do not resemble Pashtuns so you would think visiting bad guys would be easier to identify.
I have no doubt that the Chinese are subsidizing bids, but I really don't think too many Western companies are going to be interested in any case, unless they get massive support and guarantees against loss. All very well to say how many billion the deposit is theoretically worth, but when you factor in the cost of developing the mine, the cost of developing the necessary infrastructure and energy supply, the extended profitability horizon and the political risks involved, it's just not a very attractive proposition. Western companies will review and pass... who's going to bet a few billion $$ on a long-term deal with a Government that may or may not be around next year?
The plot thickens. It seems this news came out just before the mining auction for the Hajigak fields. The Asia Times story claims that the Pentagon wanted to drum up more competition for this auction, because China keeps winning mining contracts. Interesting.
Here is the link and piece of the story to look at:
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The Pentagon memo may have been an effort to attract international interest in the mining sector before the auction in the next few weeks of the 1.8 billion-ton iron-ore field in Hajigak, which could be worth $5 billion to $6 billion, according to the British-based Times. The development of the country's largest known iron deposit has been hampered by the war and weak institutions.
The memo coincided with a visit to India by Wahidullah Shahrani, the new Afghan minister of mines, to solicit bids for Hajigak after a planned tender was canceled last year because of a lack of international interest, the Times reported. Shahrani was appointed with US backing in January after his predecessor was sacked for allegedly taking bribes from a Chinese mining company - a charge he denies.
Afghan and Western officials want more companies to bid for Hajigak and other deposits to prevent China from gaining control over Afghanistans natural resources through bids subsidized heavily by Beijing, the Times said. American and European companies have alleged that underhand methods were used by Beijing to get contracts, it said.
Dayuhan, I think your assessment is correct. And I think a handover to China is coming someday, so why not do it sooner and let them enjoy playing world power now instead of spending another trillion dollars and letting them enjoy the good parts later? And apparently a lot of Pakistanis want the US to leave, so why not give them their wish?
Of course, that's not really going to happen. It looks like this expensive mess will go on forever.
The investments required to realize this potential are going to be enormous. Mines cost a lot of money and the entire supporting infrastructure will have to be built. The recovery horizon is long and political risk is very high... I honestly don't see anyone but the Chinese wanting to invest in those circumstances.
Looking at things like iron an copper... do you ship out unrefined bulk ore, from a landlocked country with no railways? Or do you build hugely expensive and energy-intensive refining capacity on site? Massive obstacles, all around, and if you add the cost of achieving and maintaining political stability (if that can be done at any cost) to the cost of the facilities and infrastructure needed to exploit the resources, profitability is far from assured. I wouldn't put a perforated penny it, myself. Conspiracy theorists will, of course, have a field day with claims that it was "all about the minerals" from the start, but while these resources may represent hope for some kind of future Afghan economy they are not going to be any kind of windfall for the US.
Of course now maybe we can hand the whole mess of to the Chinese, which would be a real gain...
The Washington Post article ("Huge obstacles seen in exploiting afghan minerals")cites that iron ore and copper account for $693 million of the trillion with iron being nearly half. The Chinese already have allegedly bribed their way to a big part of the copper.
Still seems like this reinforces that some of the key centers of gravity there include lack of roads, railroads, and electricity. Many resources are supposedly near the ring road between Kabul and Kandahar. Why not build a railroad next to that segment of ring road to safeguard both transportation systems with the same ANA/coalition troops.
Maybe you include building/securing an adjacent segment of railroad and electrical infrastructure (power line poles with cameras and OP platforms) as part of the contract for bidders. It's a pretty big incentive to "get er done" when you need transport and electricity for your business to function. Also sounds like opportunities to build new towns with built in security and limited access to workers.
If nothing else, this may eventually give Afghanistan the funds to pay for their own ANA defenses.
Lithium isn't going to save us regarding the emergence of a "green" energy policy, if there can be such a thing. Just think of the energy required for recharging hybrid car batteries. Just because you don't see it, doesn't mean that there isn't some conventional boiling of water going on behind the juice that powers that electrical outlet where your hybrid car is being recharged.
In the end, man must be able to boil water to meet his energy needs. And the majority of energy used in the world goes specifically toward boiling water. Windmills, geothermal, and other fashionista initiatives don't even make a small dent in the energy requirements for modern man, and can't. These concepts, however, do make for impressive chit-chat by politicians on the Georgetown cocktail party circuit.
Submit that the locals will apply the Afghan model. Here are some simple rules. The minerals do not belong to "the Afghan people" or the central government. The territory where the minerals are located is not controlled by the central government nor does it belong to the central government.
The concept of eminent domain does not exist in Afghanistan. The territories where the minerals are to be found belong to the locals. Makes me wonder why the central government or some international mining concern isnt already actively mining those precious minerals. Maybe its because the locals dont share in the mining culture, or maybe its because the locals do want uninvited outsiders hanging out in their mountains. Lets think through what an active mining operation actually looks like... at a minimum it will take a road to get in and out of the area; something that many locals dont want since all roads are dual purpose. I can transport raw materials, commodities, contra-band and soldiers on roads. Why would I want to I invite the devil himself into my local strong hold and then make it easy for him to do so by building him a road?
The Afghan model stipulates that if the central government is strong enough to control these mineral rich territories, it will. If it cant, it wont. If the Karzai government is unable to conquer the territory outright it will have to negotiate with the local powers that currently control the territory. If too many local powers then President Karzai might maneuver and apply leverage to install a friendly strongman like his brother Ahmed Wali Karzai in Kandahar, or allies such as Gul Agha Sherzai in Nangahar and Matiullah Khan in Uruzgan province to control and manage the area.
The Karzai administrations local ally will receive a stipend, development funds, weapons and munitions to assist in consolidating his position and power in the territory. He will receive this support as long as he can maintain a stable and secure environment. In time his militia will be integrated into the state security apparatus.
The good, the bad and the ugly are all co-opted eventually. This isnt civil war, this is business. Fighting is a form of negotiation. If unable to co-opt the good, the bad and the ugly... then no one gets to extract the minerals.
Don't mind the fact that this was picked up off of the Daily Kos. What is important is the content, and if you follow the link below, the author sourced everything. It is very good, and I suggest checking it out.
What is interesting to me, is that the US and Bolivia are not exactly partners, and getting access to the Lithium there will not be politically easy or expedient. I don't think Chavez and company will help in this endeavor either.
The other thing to add to this article, is the spill in the Gulf. This disaster will have far reaching effects on future energy policy. The message that the gulf disaster sends to the world is 'oil sucks, find alternatives'. So with that said, we might actually see an energy policy and public that favors alternative power, with a passion. Power storage via lithium batteries, is a part of that alternative. Especially for electric powered vehicles. The disaster will certainly drive policy, and I think that is what we need to be looking at here.
Finally, there is China. This article compares Lithium to being China's oil of the future.(China is also going after oil big time)
http://www.jdsupra.com/post/documentViewer.aspx?fid=aa823cc1-9e2f-4a4c-…
And those countries that have industries that depend on lithium, will be hunting for lithium all over the world like hungry pigs to feed the market demand. China and the US both have industries that need that stuff. From phones and computers, to all of those electric cars and even homes--the industries of both countries will be needing Lithium to keep up. That is why Lithium matters, and that is why this news out of Afghanistan is very interesting to say the least.
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The state of lithium
by brooklynbadboy
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Sun Jun 13, 2010 at 08:02:03 AM PDT
As the United States turns its attention to new sources of energy, one of the most obscure minor metals in the world is becoming a household name. Demand for lithium, specifically lithium carbonate, has increased substantially in the last ten years. According to the U.S. Geological Survey, the United States imports 3,450 metric tons of lithium carbonate while producing about 1,500 tons annually. Approximately 80% of the world's lithium is located in the great salt flats of Argentina, Bolivia, and Chile. As with any valuable commodity, lithium is becoming another focus of competition in national and world politics.
(While Lithium (Li) and Lithium carbonate (Li2CO3) are very different materials, for the purposes of this article lithium carbonate shall be called lithium.)
Almost all the the innovations in battery technology today use lithium. Lithium is not an obscure, precious commodity. It has applications in ceramics, pharmaceuticals, and in aluminum production. The rapid rise in demand for it, however, is due to its increasing usefulness in lithium-ion batteries. Lithium-ion batteries are desirable because they are lightweight, have a very slow loss of charge when not in use, and have double the energy density of nickel-based batteries. Lithium is commonly found in rock salts around the world. The United States has one domestic major lithium company, American Lithium Minerals of Nevada, exploring throughout the Great Basin. The company has no mines producing at the moment. USGS reports a total 760,000 tons in proven U.S. reserves. There are 13 million tons in other countries, with the Chile and Bolivia holding 3 million and 5.4 million tons, respectively. There are many more details about lithium production I wont address here, but will in future work. Lithium mining, like all mining, has an environmental price. There are alternatives to lithium in development that may render it obsolete. For now, I want to examine the political dimension of lithium production in Chile and Bolivia and its impact on the United States.
Chile
Any talk about lithium has to begin with Chile. Chile exports 50 percent of the world's lithium, mostly through a formerly state-owned company called SQM. The company mines lithium at the huge Atacama Salt Flat, tapping an estimated 2.5 million metric tons in lithium reserves. Julio Ponce Lerou is the son-in-law of the brutal military dictator, Augusto Pinochet, and is the man in control of formerly state-owned SQM. He is one of the richest men in Chile. Larou's control of Chilean lithium is a classic story of corruption common wherever privatization schemes have unfolded. There are other unexplored salt flats throughout Chile, almost all owned by the state. RareMetalBlog notes that under a new "open markets" initiative, the government of the new center-right president, billionaire Sebastian Pinera, has passed measures that will open up new lithium mines to more private interests. Chilean bloggers are already calling Pinera their George W. Bush--complete with "ownership society" rhetoric.
Bolivia
Bolivia made big news when it announced 5.4 million tons of proven lithium reserves in its vast Uyuni Salt Flats. But the government of socialist president Evo Morales has made clear it does not intend to do business like Chile:
In Bolivia, where President Evo Morales has called lithium the "hope of humanity," as well as the key to Bolivias future economic prosperity, the government is taking a different approach. According to Bolivias new constitution, the countrys natural resources belong to the Bolivian people and must be administered in their collective interest by the state. Instead of exporting raw lithium, the government wants it to be processed, refined, and industrialized, with battery plants and even car factories, on Bolivian soil. The goal is to capture the value added by industrialization for Bolivians, in the form of jobs and economic and social benefits, instead of simply enriching transnational corporations.
Unfortunately, Bolivia does not have the money to mine, refine and add value to lithium this way. Morales has stated that he is actively seeking private investment, but that Bolivia wants "partners, not bosses." This approach has scared away foreign investment, compounded by Morales' closeness to Venezuelan President and U.S. antagonist Hugo Chavez. There are also significant infrastructure problems. The Uyuni flats are remote and inaccessible by road and train, whereas the Atacama flats are very easy to reach. Bolivia has established a state-owned lithium company, and even has met local resistance. The local folk of Uyuni insist on sharing the benefits of mining. Bolivian leaders believe that increasing global demand for lithium will help trump these challenges and will allow the country to become the dominant producer.
President Obama has made automobile battery innovation a centerpiece of his agenda to remake the American economy. Since taking office, his administration has invested heavily in domestic battery production and research and development. The President has announced a goal of putting 1 million battery-powered vehicles on the road by 2015. If that goal is met, the vast majority of these vehicles are expected to use lithium-ion batteries. While the Prius uses a nickel-based battery, Toyota is testinglithium-based batteries. General Motors' new Chevy Volt will use a lithium-based battery. The competition for the design and manufacture of these automobile batteries is the central item driving the optimism among lithium producers. As of today, there is only one domestic lithium mine producing. That mine, in Silver Peak, NV, received a $28.4 million Recovery Act grant for expansion. The mine and a refinement facility in North Carolina are both owned by German chemical conglomerate Chemetall.
Despite domestic production, the United States and China are likely to be the major global importers of lithium carbonate. Increased domestic production of lithium-ion batteries for automobiles will drive the demand in America. Consumer electronics and appliances will drive demand in China. China is also stepping up its domestic mining and refining of lithium believing it to be the "oil" of the 21st Century. China's domestic reserves are also limited, with only 540,000 tons. Both nations have their eyes on Bolivia, but the State Department says bilateral relations have "deteriorated sharply." The U.S. has taken a hardline position against the Morales government over coca production. Morales expelled the DEA from the country after taking power. President Obama talked of a "fresh start" when he met with Morales, but so far his administration has taken a decidedly hostile stance. Meanwhile, China continues improving warm relations with Bolivia, recently signing new trade aggrements. China is looking for Bolivian immigrants while the U.S. is cracking down on immigration. These developments are likely to impact international politics as nations scramble to secure alternatives to oil production. The global competition for resources continues unabated, whether it's petroleum or lithium at stake.
Should lithium become as important a strategic resource for the United States as oil currently is, the domestic political environment in nations like Bolivia, Chile and Argentina will become increasingly important to America. Should Bolivia become successful in its development, that nation's insistence on being more than a simple supplier of materials will strain relations between other entities or nations seeking a share of the country's riches. Nearby states like Chile and Argentina could be influenced by the people's movement in Bolivia and their insistence on enjoying the fruits of the natural resources. How these things play out should be of great interest to the labor, environmental, and business groups in the United States. By insisting on a clean energy transportation system, there will inevitably be unpredictable consequences, both domestic and international. It could be that humanity is on the cusp of the very same global competition for lithium that defined oil exploration and production in the 20th century.
http://www.dailykos.com/storyonly/2010/6/13/874746/-The-state-of-lithium
If this turns out to be true, it will be interesting to see how the lithium will be mined and transported out. One can imagine several scenarios and I am interested in hearing what people think is the most likely one:
1. The Saudi model. One well organized family takes over the country in the name of Islam and in line with traditions of royal rule that have existed in the wider region for thousands of years. They get the infidels to come in and exploit the resource under fairly tightly controlled conditions. Said family makes billions but also spends a good deal to keep the population happy. Over two generations, the wealth transforms the country and the ruling family faces the usual problems of royal succession, transition to modern democracy and exploding Islamists, but thanks to billions of dollars in cash, manages to hold on.....
I think this one is unlikely because: the saudi royal famly took over BEFORE they found the oil. Once the lithium has been found, the stakes are far too high and this happy outcomes is pretty much foreclosed. Add to that the greater number of powerful interfering neighbours, the two generations of war that have already happened and have already ruined any traditional royalist possibilities, the greater number of armed men, the greater diffusion of military knowledge...I think this one is unlikely.
2. Colonial model. Occupying power enforces peace, sets up puppet regime. lives happily ever after.
I think not. The current "occupiers" (NATO) are not really functional as colonial powers anymore. The people hate foreign occupiers in general and have not been successfully colonized in recent times. etc. etc.
3. New world order model. ALL the great powers of the world (and that means America, China and Russia in this case) agree on what to do and cooperate to set up a functional regime that will allow modern companies from all these powers and others to come in and mine the place and will have enough legitimacy in Afghan eyes as well. Pakistan and Iran and India all cooperate enough with the project to make it work. "good taliban" are coopted into the Afghan regime.
Presumably, this is the "good American" dream for Afghanistan. Does anyone think it is working? Can it work?
4. Chinese world order. Once NATO makes a total hash of things, the Chinese buy out the contract and use the Pak army and those Dari speaking special forces they have been training for the last 10 years to stabilize neo-taliban rule. All-male Chinese work teams then come in to do the actual mining.
For various reasons, I think this dream scenario will not work as advertised. But I would say there is a 22% chance it will be tried and a hundred percent chance that some pakistanis and Afghans will get very very rich when it is tried out.
5. Endless civil war aka "lithium dreams".
I hate to sound pessimistic about this discovery, but wealth will not solve A'stan's problems.
Instead, this discovery reminds me of the lottery paradox, known in economic terms as a poor man's tax. Within several years, the vast majority of lottery winners are bankrupt.
Unless the central gov't finds a way to translate the materials into direct benefits for the average citizen, this wealth will only futher divide the state.