The hidden treasure of Afghanistan: A blessing or curse for the country?

By: Sayed Ikram Afzali, Executive Director of Integrity Watch Afghanistan and Wahidullah Azizi 

In 2007, a small team of American geologists boarded an old British navy bomber equipped with sophisticated tools that offered a three-dimension map of mineral deposits below the earth’s surface, gathered critical data. The team had already conducted a survey in 2006, by flying over seventy percent of Afghanistan’s airspace. The exploration was guided by blueprints of Russians which mapped out the minerals of Afghanistan in the mid-1970s and included gold, copper, iron, chromite, rare-earth elements to lithium. As some call it the “oil of future generation” the latter is used in batteries of smartphones, laptops and next-generation electrical cars. In fact, lithium is of a special importance that can turn Afghanistan into the “Saudi-Arabia of lithium” according to a Pentagon internal memo. The combined worth of these God-given reserves according to US geological survey is one trillion USD while the Afghan government speculates the worth a staggering three trillion USD.

Recently, speaking to the heads of more than two dozen states, European Union and United Nations’ representatives in Tashkent Conference on Afghanistan, president Ghani called the natural resources of the country ‘one of the richest’ while ‘one of the poorest’ people on earth are the owners of it. He called this unfair and not tolerable. While he was speaking in a peace summit in trying to get the support of the regional countries as well as major powers to buy his peace plan which he offered to the Taliban in Kabul Process conference, the link among peace, war and the country’s natural resources cannot be overlooked.

Afghanistan is in at a unique historical moment. The shrinking foreign aid will compel the country to look for alternative sources of income. Exploiting minerals could be just that. By 2024 the government hopes to get half of its revenue from extractives sector. However currently, there are no signs indicating a move in that direction. Also, the government has not been able to take concrete steps to enable an environment for mining extraction. The Afghan Mining and Petroleum Ministry had no minister for two years and since then was run by acting ministers with little motivation or authority.  In addition, the Afghan mining law is weak and inadequate. The mining law that has already been amended twice, does not guarantee transparency, except for observation of EITI process for which Afghanistan has been planning to go through a validation process for almost a decade now.

More than three decades of war in Afghanistan destroyed much of its infrastructure and drained human capital needed to exploit the mineral reaches. A new class of human capital will have to compensate some twenty years of technological fall out in the extractive sector. Also, low capacity in the Ministry is less likely to get the process of minerals exploitation in Afghanistan to the next level that ensures standard practicing in giving away new mining contracts to companies based on transparency and best interest of the Afghan public. The wide-spread corruption is hearth to the insecurity in Afghanistan. After opium, the mining has been the major sources of revenue for the Taliban. In the long run, the later may replace for former as the main source of income.

In order to take advantage of its natural resources and create an extractive-based economy, the government has to put in place a transparent working system for the mining sector. The government should implement its major commitments including the following:

  • The Ministry of Mines and the overall Afghan government lacks the capacity and integrity to bid its large copper, gold, iron, etc. deposits. Therefore, the Afghan government has to prove its abilities through the management of the existing small and medium contracts and then explore the possibility of bidding large deposits.
  • The existing legal framework is not able to ensure transparency and accountability of the sector. While the mining law is under the amendment, some urgent provisions should be incorporated which includes strong language on beneficial ownership, a single transparent account for extractive revenues, publication of contracts as a condition of their validity, obligatory publication of production and revenue data, rights of communities around mines and community monitoring.
  • While we welcome the foreign investment in the Afghan extractive sector, we caution the Afghan government and the US that preferential treatment of US companies may not lead to the benefits of both parties rather it will face serious backlash from the Afghan people. We should move forward with mining, but slowly, carefully and having built the solid foundation that has been missing until now. That is in the interests of America and of Afghanistan alike.

Naser Timory contributed to the spotlight.