The South Asia Channel
Minesweeper: Afghanistan’s Untapped Potential
Afghanistan is rich with natural resources but fully realizing the potential comes with costs and benefits.
Afghanistan’s economic potential rests on its ability to create equilibrium between the companies providing economic growth and its population, and in particular upon its ability to do so in the mining sector. A country rich with a young population and natural resources, Afghanistan has the potential to use its mineral resources, not only lower deficits, but to help put the country on a trajectory towards stability and sustained economic growth.
According to a recent report issued by Afghanistan Investment Support Agency (AISA), there are more than 1,400 mineral deposits that have been identified including deposits of oil, gas, lead, gemstones, copper, iron, gold, and rare earth. Afghanistan’s former minister of mines, Wahidullah Shahrani, has said that the country has about $3 trillion dollars of natural resources in the mining sector. In fact, a secret Pentagon memo labels Afghanistan the “Saudi Arabia of Lithium.”
Expanded mining will provide employment opportunities on a massive scale. For instance the Mes Aynak project, located in the Mohammad Agha district of Logar province, alone will employ 6,500 to 7,000 people directly and provide up to 30,000 employment opportunities. In addition, the government will be able to collect significant revenue in terms of taxes and royalties from mining activities.
Despite Afghanistan’s natural resources, the security situation poses an obstacle to the development of mines across the country. For example, security has deteriorated in Logar province over the past five years, where the Mes Aynak project is located, with part of Logar accounting for a large part of insurgent violence.
In order to develop its mineral wealth, Afghanistan must secure the mines from local mafia, warlords, and international terrorist groups. However, according to Global Witness, the mining law former Afghan President Hamid Karzai signed in August 2014 has weaknesses and could result in the country’s mineral wealth fuelling conflict and corruption instead of development. It notes that this danger can be not just in other countries, “but from Afghan examples like the militia forces involved in chromite mining in Kunar province.”
The potential for under-regulated mining to fuel militias and instability is not the only risk that requires management if Afghanistan is to successfully develop its natural resources as a base of national wealth.
Currently, the Afghan government also lacks a clear mechanism to deal with cases of heritage areas affected by mining activities. The failure to establish a clear mechanism has led to delays in mining development. The China Metallurgical Group Corporation’s work on the Copper Mining project, Mes Aynak, faced hurdles due to large number of historical statues found at the project site.
Another risk is the effect mining can have on the environment that sustains other sources of employment for the local population. Agriculture is the major source of income for more than one third of households in Logar province, where Mes Ainak is located, and mining operations can have a negative impact on their agricultural activities, as there is a high risk of ground water contamination and soil degradation.
The dean of the faculty of geo-science at Kabul University warns of the potential environmental risk stating: “As I know, all the processes, extraction, and the purification will take place in Afghanistan. If the decisions behind all these are not made correctly, it can have severe environmental tragedies.”
The Afghan government needs to develop clear policies to address these risks. If the government fails to manage these risks in an appropriate way, the repercussions will be damaging not only to livelihoods and health of Afghans but also to the mining companies and the government.
However, by formulating policies in coordination with foreign mining companies to transfer some of the arising benefits from their enterprise activities to local community and companies, the Afghan government can mitigate some of the risks posed by mining and increase the potential benefits. Such coordination would encourage local businesses to engage with mining companies by providing them goods and help create local employment opportunities for the local population, especially for young men, reducing their incentive for joining militant groups.
The security ramifications of failing to address local economic interests would threaten the stability required for mining development. According to the World Bank Report on Afghanistan’s Economic Update, in the year 2014, “political and security uncertainties during the transition period will continue to take a toll on business confidence and investment.”
To avoid such a fate, the Afghan government should ensure that the foreign companies make the employment of local Afghans a priority.
In order to establish equilibrium between local interests and development goals, Afghanistan’s universities will need to engage actively with the Afghan Ministry of Mines and introduce mining related degrees in order to meet the demand for mining experts. The Afghan government should seek capacity development services from its international partners. Afghanistan might look to Australia, which has immense experience in the mining industry, as a guide However, the focus should be on capacity development.
For Afghanistan to successfully develop its mining sector as a foundation of national wealth, cooperation between the government, local population, mining ministry, the academic faculties, and even farmers is required. Striking a balance between these various public and private interests is essential.
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