Reuters reports Afghanistan has grand plans for a vast rail network to attract mining investors, but experts say the project would simply be a new target for insurgents and warn that sovereign risk and high production costs are also deterring companies.
With an impoverished economy ravaged by more than three decades of war and corruption and now bank rolled by foreign aid, Afghanistan's government has pinned its hopes of rebuilding on untapped mineral resources of mainly iron ore and copper, which it has said could be worth up to $3 trillion.
"From a sovereign risk perspective, Rio, BHP and most of the big guys would probably steer clear of that country," said Troy Flannery, senior resource analyst at DJ Carmichael in Australia.
China's top copper producer, Jiangxi Copper Co, together with China Metallurgical Group Corp, in 2007 won the contract to develop the Aynak Copper Mine south of Kabul — which is due to start production in 2014.
Picture is of Kabul, the capital of Afghanistan.