Afghanistan's $1 trillion mining dream is fading

Afghanistan's plan to develop its estimated $1 trillion worth of mineral resources received a serious blow when China announced its desire to undo a multi-billion dollar agreement to help create a mining industry in the war-torn nation.

The deal, inked in 2007, was to send $3 billion of Chinese investment into the world's second largest copper deposit, the 5.5 million-tonne Mes Aynak near Kabul.

With little more than a year remaining until international forces exit Afghanistan, without firm Chinese support on the horizon, the government may now be forced to "scale back plans for attracting mining companies to exploit its minerals reserves, including copper, gold, iron ore and rare earths," writes Lynne O'Donnell for the South China Morning Post.

Complex security obstacles aside, Afghanistan's timing may prove to be off. With China's economy – and the economies of other major developing nations – showing signs of slowing, weak commodities prices, and massive, industry-wide cost-cutting, Afghanistan may have missed its window to take part in the boom.

"Until global demand recovers and there is a sense of optimism about growth and mineral prices that will eventually re-trigger big mining interest in new green-fields projects, I think Afghanistan will struggle to develop its minerals assets over the next five years," said Peter Hickson of Global Materials Advisors.

See also: The iron ore slice of the $1 trillion Afghanistan resource pie

Afghan Gold deposits (Credit: British Geological Survey)