Afghanistan, with a total population of 30,419,928 as of July 2012, is located in Southern Asia, north, and west of Pakistan, east of Iran. The country mostly has an arid to semiarid climate and covers a total area of 652,230 km2.
|The national flag of Afghanistan.
Image Credit: CIA Factbook.
In 2001, the UN-sponsored Bonn Conference focused on reconstructing Afghanistan’s political system and conducted a presidential election in 2004, National Assembly elections in 2005, and also developed a new constitution.
Afghanistan’s economy has experienced a positive growth rate since 2001. This improvement in the economy is mainly due to the recovery of the agricultural sector, service sector growth, and international aid. The country’s GDP as of July 2011 was $30.11 billion.
Despite the increasing economic growth rate that the country witnessed in the past few years, Afghanistan still seems to depend on international aid and the people suffer from insufficient jobs, lack of water, medical care, housing, and electricity shortage. On the basis of these aspects, Afghanistan is believed to have one of the lowest living standards in the world.
The country hopes to see a change in its economic status as it has a number of unexploited mineral and energy resources that can indeed contribute to the economic growth rate of Afghanistan.
Overview of Resources
Afghanistan’s key mineral resources include gold, chromium, lead, copper, zinc, precious and semiprecious stones, lithium, talc, and sulfur. Petroleum and natural gas constitute the country’s energy resources.
In 2010, the country’s mining industry saw very little development due to low scale operations and distribution of output to the regional and local markets. The Afghan government insisted on the development of mineral resources and investment in transportation and infrastructure in order to develop the mining industry.
The Aynak copper project, located in the Logar Province, is estimated to contain 11.3 million Mt of copper. A total of 300,000 Mt of copper concentrate is its annual production capacity.
Qara Zaghan is the second largest gold mine in Afghanistan. In 2010, a deal was signed by the Afghan government with Afghan Krystal Natural Resources Co. to invest almost $50 million in the Qara Zaghan Mine, located in the northern Baghlan Province. Commencement of the production activity in this mine was scheduled for 2013.
In 2010, the Afghan government extended the deadline for the final submission of bids from seven Asian companies wanting to obtain a license to mine iron ore in Afghanistan’s Hajigak region. The global recession led to a decrease in the number of bidders and the whole bidding process restarted again in August 2010 with the Afghan government ready to award a license within 6 to 9 months.
In 2010, an oil deposit in the northern part of Afghanistan was discovered by the Afghan Ministry of Mines. This oil deposit was located in a triangle between Balkh, Hairatan, and Shuburghan, and reserves of 1.8 billion barrels were estimated to be found in this field.
The map of Afghanistan. Image Credit: CIA Factbook
With plans to issue mining licenses and explore a number of unexploited mineral and energy resources, the Afghan government recently showcased its interest to attract more foreign investments in its mining sector.
Recent mining reports highlight that the Afghan government feels that violence in Afghanistan portrays a very negative picture of the country thus failing to attract foreign investments. This can also be one of the reasons why Exxon Mobil Corp has still not accepted the offer to invest in the country’s mining activity.
The Afghan Tajik basin holds about 1.9 billion barrels of oil and a number of companies have already visited the area, and a positive response from Exxon Mobil Corp. is expected.
The exploitation of Afghanistan’s rich deposits of copper, gold, oil, iron, and other minerals is of great significance to boost the country’s economic growth rate. The country also aims at revamping its oil drilling and mining laws thus attracting foreign investors as experts feel that Afghanistan has neither the expertise nor the money to finance mining projects.
The Afghan government will have to overcome challenges such as corruption, lack of public infrastructure, low revenue collection, corruption, lack of jobs and political instability in order to boost the country’s economy.
The country also hopes to see a tremendous revival in its economic growth rate by uplifting its mining and mineral sectors through the revival of laws governing mining activities in Afghanistan.
Disclaimer: The author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading