On September 7, 2021, the Afghan Taliban (hereinafter referred to as "atta") formed a new Afghan government. After a lapse of 20 years, atta came to power again, which also ushered in the possibility of reconstruction in war-torn Afghanistan. However, in the face of the decreasing amount of assistance from the international community, the Afghan authorities have to rely on their rich mineral resources to make up for the national expenditure and budget deficit, and provide funds for their development and construction projects to reduce the country's poverty.
Today, the mining industry will briefly discuss with you the prospect of mining development under the leadership of the new Afghan government. Is it feasible to mine in Afghanistan?
Mineral resource potential of Afghanistan
Mining plays an important role in the economic development of each country. For Afghanistan, after years of war and violent conflict causing great damage, the whole country is facing severe economic problems. After the war, Afghanistan was full of waste and waiting for prosperity. Due to the serious corruption of the former government and the freezing of a large number of Afghan assets by the U.S. government, the finance of the new Afghan government is seriously tight, and there is an urgent need for mining development to increase fiscal revenue. Afghanistan is located in a very favorable position in the global metallogenic belt. It is rich in copper, gold, iron, cobalt, lithium and energy minerals. There are more than 1400 proved ore producing areas. According to the estimation of the U.S. Geological Survey, the resource value is between $1-3 trillion, which is almost completely undeveloped. This makes Afghanistan, which has been ravaged by decades of conflict, likely to become one of the most important and popular mining development centers in the region.
The inferred resource of copper mine is about 60 million tons, accounting for 4% of the global resource, ranking fourth in the world. At present, 317 copper deposits (points) have been found. Copper deposits are relatively concentrated, mainly distributed in Kabul and Logar provinces in central and northern Afghanistan, extending more than 110 kilometers, forming a world-class giant copper ore concentration area. It is composed of three large stratabound copper deposits of ainak, Johar and darbane and 35 copper ore occurrences. The ore reserves with copper grade of more than 0.6% are estimated to exceed 1 billion tons. It has been proved that the ore reserves of ainak copper mine area are 700 million tons, the average grade is as high as 1.65%, and the amount of copper metal is 11.33 million tons, making it the second largest undeveloped copper mine in the world.
The inferred resource of iron ore can reach 2.5 billion tons. At present, more than 60 iron ore deposits and mineralization points have been found. Hajigak, located in Bamiyan Province, has huge reserves of sedimentary metamorphic iron ore, with proven iron ore reserves of 500 million tons. It is a world-class iron ore concentration area. The ore belt extends for 600 kilometers and is composed of hematite and magnetite, with an average grade of 61.3%, and low sulfur and other impurities. It can be directly smelted without beneficiation.
The prospective resources of lithium ore exceed 100 million tons (including hard rock lithium ore and salt lake brine type). Hard rock lithium deposits are concentrated in Ghazni province. The parun mining area in the province is the largest pegmatite lithium deposit area in Afghanistan. Pegmatite veins form four pegmatite lithium ore belts, extending for 10 kilometers. Seven lithium deposits can be divided, containing 15 ~ 30% spodumene. The proven lithium oxide reserves are 3 million tons (calculated according to the depth of 100 meters), accompanied by beryllium, rubidium, cesium, tin, etc. In addition, salt lake brine lithium deposits have great potential. Seven major lakes such as kavir-i-naizar, gowde zereh and namaksar have good metallogenic conditions.
The inferred oil and gas resources can reach 4.86 billion barrels of oil equivalent, which is a rare land potential area with low exploration degree in the world. At present, a total of 7 gas fields have been proved in China, 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 proved, and the preliminarily proved oil reserves are about 16 million tons, which are concentrated in fariyab and juzjan provinces.
Current situation of mining development in Afghanistan
Afghanistan is rich in mineral resources, and the new Afghan government also takes mining as a national strategic key industry. However, due to years of war, Afghan mining industry has only small-scale "individual" development activities, has not yet formed an industry, and has a small contribution to Afghanistan's GDP. According to the data of the Central Statistics organization of Afghanistan from 2012 to 2020, the country's mining output value is US $41.4 million, US $40.68 million, US $39.8 million, US $36.65 million, US $40.45 million, US $255.53 million, US $228.58 million, US $262.36 million and us $240.64 million respectively.
In 2008, MCC Jiangxi copper joint venture obtained the development right of ainak copper mine project. This is the first large-scale foreign-funded mineral project in Afghanistan. In 2011, PetroChina Afghanistan Watan company consortium won the northern amdalia oil field development project, while Indian and Canadian companies won the mining right of Haji jacket iron ore project (not yet signed). At present, the ainak copper mine project and amdalia oilfield development project are at a standstill due to the situation and social unrest in Afghanistan, while the Haji jacket iron mine project has not been started.
Mining development policies and regulations
The Ministry of mines and petroleum of Afghanistan is the government department in charge of Geology and mining in Afghanistan. Its main responsibilities are to formulate and implement policies related to mining development, exploration, mining and processing of mineral resources and management of mining rights. On November 22, 2021, the new Afghan government appointed Maulvi shahabuddin Delawar as acting Minister of the Ministry of mining and oil of Afghanistan. After taking office, Minister Delawar formulated new mining policies, signed 20 mining contracts, strengthened mine management, severely 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 stipulates that all mineral resources in Afghanistan belong to the state. At present, the new Afghan government has not formulated a new mining law and is still implementing the original mining related laws, but has revised the provisions that violate the Islamic Sharia law or national interests. Afghanistan's mineral law has been revised several times since its adoption in 2005. In 2009, the mineral law was significantly revised by the Ministry of mines, resulting in a reduction in investor confidence; The amendments to the mineral law were passed from 2009 to 2011, which proved to be unable to solve the deficiencies of the 2009 mineral 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. The scope of application of the 2012 mineral law is reflected in two aspects: (1) the investigation, exploration and exploitation of all mineral resources in Afghanistan except water, oil and natural gas; (2) Upstream mineral activities (non trade, export, etc.). The 2019 amendment to the mineral law stipulates that 5% of the mine income will be used for community development around the mining area. In 2021, the new Afghan government revised the Afghan mining law mainly to increase the public bidding procedures, media supervision procedures and transaction information disclosure procedures for mining rights (mining projects), so as to strengthen the transparency and fairness of mining development.
Opportunities and challenges
Afghanistan is rich in advantageous mineral resources such as copper, iron, lithium and beryllium, with huge reserves, but the degree of mineral exploration and development is very low. It lags far behind the surrounding countries in mineral mining and export. In 2020, the contribution rate of mining to Afghanistan's GDP was only 1.2%, and there is a wide space for mining development cooperation. After the new Afghan government came into power, the security environment has improved significantly. Based on the urgent needs of reconstruction, mining investment is encouraged, and the prospect of mining investment is generally good. In addition, most of the dominant minerals in Afghanistan are the most scarce minerals in China, which are highly complementary to China. It will be a rare opportunity for the cooperative development of mineral resources between China and Afghanistan. At present, Afghanistan still has many serious problems, such as complex security situation, unstable economic development, backward infrastructure, shortage of technical talents and so on. We should take a positive and cautious attitude towards mining cooperation in Afghanistan, grasp opportunities and do a good job in risk control at the same time.
