• 2 days U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World
  • 2 days Senior Interior Dept. Official Says Florida Still On Trump’s Draft Drilling Plan
  • 2 days Schlumberger Optimistic In 2018 For Oilfield Services Businesses
  • 2 days Only 1/3 Of Oil Patch Jobs To Return To Canada After Downturn Ends
  • 2 days Statoil, YPF Finalize Joint Vaca Muerta Development Deal
  • 2 days TransCanada Boasts Long-Term Commitments For Keystone XL
  • 2 days Nigeria Files Suit Against JP Morgan Over Oil Field Sale
  • 2 days Chinese Oil Ships Found Violating UN Sanctions On North Korea
  • 3 days Oil Slick From Iranian Tanker Explosion Is Now The Size Of Paris
  • 3 days Nigeria Approves Petroleum Industry Bill After 17 Long Years
  • 3 days Venezuelan Output Drops To 28-Year Low In 2017
  • 3 days OPEC Revises Up Non-OPEC Production Estimates For 2018
  • 3 days Iraq Ready To Sign Deal With BP For Kirkuk Fields
  • 3 days Kinder Morgan Delays Trans Mountain Launch Again
  • 3 days Shell Inks Another Solar Deal
  • 4 days API Reports Seventh Large Crude Draw In Seven Weeks
  • 4 days Maduro’s Advisors Recommend Selling Petro At Steep 60% Discount
  • 4 days EIA: Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019
  • 4 days IEA: Don’t Expect Much Oil From Arctic National Wildlife Refuge Before 2030
  • 4 days Minister Says Norway Must Prepare For Arctic Oil Race With Russia
  • 4 days Eight Years Late—UK Hinkley Point C To Be In Service By 2025
  • 4 days Sunk Iranian Oil Tanker Leave Behind Two Slicks
  • 4 days Saudi Arabia Shuns UBS, BofA As Aramco IPO Coordinators
  • 4 days WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 5 days Norway Grants Record 75 New Offshore Exploration Leases
  • 5 days China’s Growing Appetite For Renewables
  • 5 days Chevron To Resume Drilling In Kurdistan
  • 5 days India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 5 days India’s Reliance Boosts Export Refinery Capacity By 30%
  • 5 days Nigeria Among Worst Performers In Electricity Supply
  • 5 days ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 6 days Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 6 days Saudis To Award Nuclear Power Contracts In December
  • 6 days Shell Approves Its First North Sea Oil Project In Six Years
  • 6 days China Unlikely To Maintain Record Oil Product Exports
  • 6 days Australia Solar Power Additions Hit Record In 2017
  • 6 days Morocco Prepares $4.6B Gas Project Tender
  • 6 days Iranian Oil Tanker Sinks After Second Explosion
  • 9 days Russia To Discuss Possible Exit From OPEC Deal
  • 9 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
Alt Text

Will Oil And Gold Prices Rise This Year?

Both gold prices and oil…

Alt Text

Don’t Expect Palladium Prices To Plunge

Palladium has recently soared to…

Alt Text

How Long Will The Lithium Rush Last?

As the race to secure…

Afghanistan - Newly Discovered Mineralogical Treasure House (Again)

Afghanistan - Newly Discovered Mineralogical Treasure House (Again)

As the U.S.-led Afghan campaign lurches into its second decade, the country’s vast untapped mineralogical resources are again emerging in the Western media, seemingly underpinning the benefits of International Security Assistance Force troops “staying the course” and defeating the insurgency, after which these resources can be tapped, both providing the administration of Afghan President Hamid Karzai with a source beyond drugs for reconstruction and Western companies who develop the reserves a handsome profit.

The latest discovery is that Afghanistan is rich in rare earth elements (RREs). China currently has a near monopoly on the global production of RREs, and the price for a ton of unprocessed ore has soared to a dizzying $100,000 a ton.

So, what’s wrong with this picture?

Western venture capitalists should consider the following points before whipping out their checkbooks to underwrite any mining projects.

First and most obvious, Afghanistan has been in a civil war for thirty years, with Western forces intervening only in the last decade. The country is torn by tribalism and religious divides and Karzai's administrative control is largely limited to the larger cities.  Mao Tse Tung in his 1947 work "The Present Situation and Our Tasks" wrote, “Concerning attacking cities, resolutely seize all enemy fortified points and cities that are weakly defended. At opportune moments, seize all enemy fortified points and cities defended with moderate strength, provided circumstances permit. As for all strongly defended enemy fortified points and cities, wait until conditions are ripe and then take them,” a strategy the Taliban are apparently following to the letter, unconcerned with election cycles and opinion polls. The Taliban know that they have time on their side – as one Taliban commander told a U.S. military officer, “you have the watches, we have the time.”

Secondly, the administration of Karzai is increasingly viewed by the Afghan population as illegitimate, foisted on them by foreign forces, and extremely corrupt to boot. During the August 2009 presidential election, Karzai, in an election reported by foreign observers as riven with fraud, received less than 50 percent of the popular vote, triggering a runoff. Two months later, after Karzai agreed to a runoff election, tentatively scheduled for 7 November, but five days later his main opponent Abdullah Abdullah withdrew and Afghan officials canceled the election, leaving Karzai in power for a second term, despite the provisions of the Afghan constitution, alienating many Afghans from democratic principles.

Third, Afghanistan’s rich mineral base has been known for a long time. Following disastrous December 1979 Soviet invasion, extensive Soviet exploration in Afghanistan produced detailed geological maps and reports that listed more than 1,400 mineral outcroppings, along with about 70 commercially viable deposits. The USSR subsequently committed more than $650 million for resource exploration and development in Afghanistan, which included a smelting complex for the Ainak deposit that was to have produced 1.5 million tons of copper per year. In the wake of the Soviet withdrawal a subsequent World Bank analysis projected that the Ainak copper production alone could eventually capture as much as 2 percent of the annual world market. Afghanistan’s Hajigak iron deposit, in the Hindu Kush mountain range west of Kabul, is assessed as one of the largest high-grade deposits in the world.

As for the recent announcement about gigantic deposits of rare-earth metals, including lanthanum, cerium and neodymium, being discovered in Afghanistan, it is worth bearing in mind that the U.S. geologists who surveyed the sites were airlifted by Black Hawk helicopters to the Khan Neshin Village in a desert area of Helmand Province, where they worked under military protection. If such deposits are to be developed, then given the lack of security forcing geologists to be airlifted to the site, then how is the mining infrastructure to be conveyed?

Fourthly, the stupendous rise in RRE ore prices has led to a frenzied search for deposits around the world, from Estonia to Mongolia, some of which will doubtless pan out. Given Afghanistan’s instability, why would an investor risk his capital there, especially when neighboring Central Asian nations like Mongolia represent a far more stable and investor-friendly environment? Mongolia recently signed off on a massive $7 billion mining project, allowing Rio Tinto and Ivanhoe Mines a majority 67 percent share.

While Afghanistan’s mineralogical potential is vast, the country’s crippling economic and insurgency problems remain, and it’s worth nothing here that despite the 2010 joint report by the Pentagon, the U.S. Geological Survey and U.S. Agency for International Development that Afghanistan possesses "previously unknown" and untapped mineral reserves worth up to $1 trillion, two-thirds of Afghanistan’s population live on less than $2 a day.

So, even though Afghan Ministry of Mines adviser Jalil Jumriany said of the RRE discoveries, “This will become the backbone of the Afghan economy,” the question, not only for foreign investors but the Afghans themselves remains, “qui bono?”

There are no clear answers emerging to this question from Kabul anytime soon.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment
  • Anonymous on October 15 2011 said:
    Japan did a survey of the Pacific and found large deposits of easily accessible 'rare Earth's on the ocean floor. The largest find of which was near Hawaii. There is estimated to be many times the amount of 'rare Earth's that China has. And these deposits are in international waters--thank God--so there should not be any hoarding and fighting over them. The recognition of these new cheap sources should quickly diminish the militarized efforts at gaining control of those in foreign countries. But then, common sense hasn't seemed to lead us in the past.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News