◎ Guo Weili Ma Zhongping
On September 7, 2021, the Afghan Taliban (hereinafter referred to as "Atta") formed a new Afghan government. After 20 years, Atta is once again in power, which also ushers in the possibility of rebuilding Afghanistan, which has been traumatized by war. However, in the face of the current dwindling amount of international assistance, the Afghan authorities have also had to rely on their abundant mineral resources to cover the deficit in state spending and budget, while at the same time financing their development and construction projects and alleviating the country's poverty problems.
Today, the mining community joins you in a brief discussion of the prospects for mining development under the new Afghan government. Is it feasible to go to Afghanistan to engage in mining?
01 Afghan mineral resource potential
Mining plays an important role in the economic development of every country. For Afghanistan, after years of war and violent conflict that has wreaked havoc, the entire country faces serious economic problems. Post-war Afghanistan is in ruins. Due to the serious corruption of the previous government and the freezing of a large number of Afghan assets by the United States government, the new Afghan government is seriously tight on finances, and there is an urgent need for mining development to increase fiscal revenues. Afghanistan is located in a very favorable position in the global mineralization belt, rich in copper, gold, iron, cobalt, lithium and energy minerals, has more than 1400 proven mineral sites, according to the U.S. Geological Survey estimates that the value of resources is between 1 and 3 trillion US dollars, almost completely unexploited. This makes it possible for Afghanistan, ravaged by decades of conflict, to become one of the most important and popular mining development centres in the region.
Map of the distribution of mineral resources in Afghanistan
The inferred resources of copper ore are about 60 million tons, accounting for 4% of the global resources, ranking fourth in the world. A total of 317 copper deposits (points) have been discovered. Copper ore distribution is relatively concentrated, mainly distributed in kabul and Logar provinces in north-central Afghanistan, extending more than 110 kilometers, forming a world-class giant copper ore concentration area, consisting of three large stratified copper deposits and 35 copper sites in Ainak, Johar and Darband, with ore reserves with a copper grade of more than 0.6% estimated at more than 1 billion tonnes. With proven ore reserves of 700 million tonnes at an average grade of 1.65% and a copper volume of 11.33 million tonnes, the Énak Copper Mine is the second largest undeveloped copper mine in the world.
Iron ore inferred resources can reach 2.5 billion tons. At present, more than 60 iron ore deposits and mineralization points have been discovered. Located in Bamiyan Province, Hajigak sedimentary metamorphic iron ore reserves are huge, with proven iron ore reserves of 500 million tons, making it a world-class iron ore concentration area. Extending up to 600 km, the belt consists of hematite and magnetite, with an average grade of 61.3% and low impurities such as sulfur, which can be directly smelted without beneficiation.
The prospect resources of lithium ore exceed 100 million tons (including hard rock type lithium ore and salt lake brine type). Hard rock lithium ore is concentrated in Ghazni Province, the province's Parun mining area is the largest pegmatite lithium mining area in Afghanistan, pegmatite veins constitute 4 pegmatite lithium belts, extending 10 kilometers, can be divided into 7 lithium deposits, containing spodumene 15 to 30%, proven lithium oxide reserves of 3 million tons (calculated according to the depth of 100 meters), but also associated with beryllium, rubidium, cesium, tin and so on. In addition, the salt lake brine type lithium ore potential is also large, Kavir-i-Naizar, Gowde Zereh, Namaksar and other 7 major lakes have good mineralization conditions.
With an estimated 4.86 billion barrels of oil equivalent, oil and gas resources are among the few onshore low-level potential areas in the world. At present, a total of 7 gas fields have been proven in the country, and the preliminary estimate of natural gas reserves in Afghanistan is 2 trillion cubic meters; at present, a total of 6 oil fields have been proven, and the preliminary proven oil reserves are about 16 million tons, concentrated in the provinces of Fariab and Juzjan.
02 The current situation of mining development in Afghanistan
Afghanistan is rich in mineral resources, and the new Afghan government has also made mining a national strategic key industry. However, due to years of war, the Afghan mining industry currently has only small-scale "individual" development activities, has not yet formed an industry, and its contribution to Afghanistan's GDP is small. According to data from the Central Statistics Organization of Afghanistan for 2012-2020, the country's mining output was $41.4 million, $40.68 million, $39.8 million, $36.65 million, $40.45 million, $255.53 million, $228.58 million, $262.36 million and $240.64 million, respectively.
Afghanistan Mining Output (2012-2020)
In 2008, the MCC-Jiangsu Copper Consortium obtained the right to develop the Ainaq Copper Mine project. This is the first large-scale foreign-funded mineral project in Afghanistan. In 2011, the PetroChina-Afghanistan Vatan consortium acquired the development project for the Amdalia oil field in the north, while Indian and Canadian companies acquired the right to exploit the Haji Jacket Iron Ore Project (not yet signed). At present, the Ainaq copper mine project and the Amdaria oilfield development project are at a standstill due to the situation in Afghanistan and social unrest, while the Haji jacket iron ore project has not been launched.
03 Mining development policies and regulations
The Ministry of Mines and Petroleum of Afghanistan is the competent government authority for geology and mining in Afghanistan, and its main responsibilities are to formulate and implement policies related to the development of the mining industry, the exploration, exploitation and processing of mineral resources, and the management of mining rights. On November 22, 2021, the new Afghan government appointed Maulvi Shahabuddin Delawar as acting minister of the Afghan Ministry of Mines and Petroleum, and after taking office, Minister Delava formulated a new mining policy, signed 20 mining contracts, strengthened mine management, cracked down on illegal mining activities, and actively carried out mining cooperation and exchanges with Iran, Pakistan, the United Arab Emirates, Russia and other countries.
Afghan law provides that all mineral resources in Afghanistan are owned by the State. The new Afghan government has not enacted a new mining law and is still enforcing the old mining-related laws, but has revised its provisions that violate Sharia law or the national interest. The Afghan Minerals Law has been amended several times since its adoption in 2005, and in 2009 the Minerals Law was significantly revised by the Ministry of Mines, resulting in a decrease in investor confidence; the adoption of amendments to the Minerals Law in 2009-2011 proved to fail to address the deficiencies of the 2009 Minerals Law; in 2012, the Ministry of Mines and the Ministry of Justice unanimously adopted a decision calling for further improvement of the law to support the mining industry in Afghanistan, and the scope of application of the 2012 Mineral Law is reflected in two aspects: (1) in addition to water, oil, Investigation, exploration and exploitation of all mineral resources in Afghanistan other than natural gas; (2) upstream mineral activities (non-trade, export, etc.). Amendments to the Minerals Act 2019 provide that 5% of mine proceeds are used for community development around the mining area. The amendments to the Afghan mining law by the new Afghan government in 2021 are mainly to increase the public bidding procedures, media supervision procedures and transaction information disclosure procedures for mining rights (mining projects) to strengthen the transparency and fairness of mining development.
Important regulations on the exploration and development of mineral resources in Afghanistan
04 Opportunities and Challenges
Afghanistan copper, iron, lithium, beryllium and other advantageous mineral resources are rich, huge reserves, but the degree of mineral exploration and development is extremely low, far behind the neighboring countries in mineral mining and export, in 2020 mining to Afghanistan's GDP contribution rate accounted for only 1.2%, mining development cooperation space is vast. After the new Afghan government came to power, the security environment has improved significantly, and mining investment has been encouraged based on the urgent need for reconstruction, and the prospects for mining investment are generally good. In addition, most of the dominant minerals in Afghanistan are the large quantities of minerals in the mainland, which are highly complementary to the mainland, which will be a rare opportunity for the cooperative development of mineral resources between China and Argentina. At present, there are still many serious problems in Afghanistan, such as complex security situation, unstable economic development, backward infrastructure, shortage of technical personnel, etc., and we should have a positive and prudent attitude towards Afghan mining cooperation, seize the opportunity and do a good job in risk control.
Author Affilications: Central Asia and West Asia Mining Research Institute, International Mining Research Center, China Geological Survey
Xi'an Geological Survey Center, China Geological Survey
*This article only represents the personal views of the author and does not constitute platform opinions or investment advice