The UK government decided Wednesday to get a foot on the door to Afghanistan’s $1 trillion of untapped mineral wealth, by providing a three-year, $15 million (£10m) plan to back mining and oil and gas projects in the country.
Estimations from World Bank officials, reports Financial Times (subs. required), indicate the potential financial benefits from mining and oil deposits are more than alluring.
According to the newspaper’s sources, the likely royalties and taxes that could be generated in the Asian country could reach $3 trillion. They thins the income will be key to establishing financial stability in the Asian country following the withdrawal of NATO troops in late 2014.
Afghanistan’s mineral wealth is so vast that an internal Pentagon memo from 2010 —when most of the mineral and oil reserves were discovered— stated the country was posed to become the “Saudi Arabia of lithium,” a key element in the manufacture of high tech devices.
However, a mining law to attract foreign investment was recently rejected as it was considered “too generous” to Western commercial interests.
The lack of such regulations is jeopardizing several projects, such as the multi-billion dollar contract awarded to a consortium of Indian companies led by SAIL in 2011.
The group was set to mine the huge Hajigak iron ore deposit, considered one of the largest such deposits in the world at 1.8 billion tonnes.
Despite the setbacks, the Afghan government opened bids last year for vast copper and gold deposit, granting three licenses in early December to a consortium backed by City of London banker Ian Hannam, former BHP Billiton CEO Chip Goodyear and Poland’s multibillionaire Jan Kulczyk.
China has also moved to acquire mining interests in Afghanistan with state-owned Metallurgical Corp’s successful $3.4 billion bid to build a copper mine – and a $6 billion railway to go with it – that should enter production in 2014.
(Image: Kabul, April 2009, by United Nations Drug Control Programme and the Centre for International Crime Prevention, UNODC)