“If you were to pick a country that involves high risk in developing a new mining sector, Afghanistan is it,” said Eleanor Nichol, campaign leader at Global Witness, a group that tries to break the link between natural resources, corruption and conflict. “But the genie is out of the bottle.”

The part of this article that struck me was the illegal chromite mining and smuggling going on, thanks to the Haqqani network. If they think it is lucrative enough to do illegally, then there must be some money in it.  So any effort of the government to move in and secure those mines would be good. They could get a private company in there to extract it, they would deny the Haqqani’s that revenue, and it would get people working and earning a living.

And really, earning a living is what Afghans need– as noted in this quote:

At a store in the dusty bazaar, Shir Ali, 38, a gangly man who drives a minibus, says that with a job as a day laborer or security guard or driver, he could buy uniforms and textbooks to send all of his 12 children to school.
Sitting at the counter behind open sacks of rice and beans, the storekeeper, Daoud, 38, cracks his bronzed face with a smile, sharing the optimism but also the trepidation about whether at last his country can really make something of itself.
“If the mine doesn’t come, we will be like those people who live on treasure,” he said, “but they cannot use it.”

It will also require the services of private security companies and professionals who know how to operate in Afghanistan and navigate it’s complex ways. Mining operations require everything, from good roads to electricity to infrastructure to house miners and engineers, etc. They also need a viable way of getting that stuff out of the country, and all of this needs to be protected. Of course Afghans will be protecting a majority of this, but expats will be involved as well– to protect foreign companies from these Afghan protectors and insurgent/criminal attacks.

I say this because of the large spike of insider attacks and the infiltration of bad guys. The criminal/Taliban networks will all want their cut, or they will be attacking everything to make the point. Don’t forget about the Islamic extremists, and they will attack foreign infidel companies just for common practice. Companies must have a protective buffer in the form of expats in order to work in such a dangerous and complex environment.

The Afghan government must also come to terms with this reality, and if they want the revenue necessary to fund their military and police and services to the people, then they will have to do business with these foreign companies and meet in the middle. If those companies cannot trust your APPF force, or the local guards they contract with, then the government must know that it is either you allow these companies to bring in their own security–or they don’t come at all.

And like Daoud said,  “If the mine doesn’t come, we will be like those people who live on treasure,”. They will also be a poor and pissed off people, who will find no use in a government that cannot produce the conditions necessary for this foreign investment and involvement. No jobs equals protests–please note the Arab Spring…. No revenue means you cannot pay your soldiers or police, or properly secure the country. Get the picture Afghanistan?

To make this point very apparent, I posted a second article about the Chinese pulling their people out of the Anyak copper mining project. The Taliban are definitely targeting this operation to scare off the Chinese and put the hurt to the Afghan government. Here is a quote:

“We had meetings with them (the Chinese investors) and assured them these rocket attacks happen anywhere and they are not the direct targets. We had repeatedly meetings with them but could not make them confident,” Sardar Mohammad Sultani, acting deputy Minister of the Interior, told Reuters in his office.
“They left before any harm (was done to them). This was their own idea… It’s up to them if want to return or not,” said Sultani, in charge of the security force protecting the mine.
A spokesman for the consortium running Aynak, China Metallurgical Group (MCC) and Jiangxi Copper, confirmed some workers had been sent home indefinitely. It said unspecified “conditions” promised by the Afghan government in their contract had not been met…The threat is so severe that villages have warned the Afghan rights and anti-corruption monitor Integrity Watch Afghanistan (IWA) to stay away as they can no longer guarantee their safety.
IWA reported there are four armed groups operating in the Aynak area, some aiming to stop the project.
And the attacks are becoming more deadly. At the start of September, an assault on the protection unit killed 15 Afghan policemen, spreading fear among local and visiting workers…

 On another note, it looks like the Chinese will be getting into the game of training/funding/equipping Afghans. Enter the Private Security Dragon. lol

In a rare visit to Kabul this month by a top Chinese leader, bilateral deals on security were signed, including an agreement for police to be trained, funded and equipped with help from Beijing.
The government did not say whether the Chinese programme was aimed at boosting security around China’s oil and mining assets.

Interesting stuff, but Afghanistan can navigate this if they pull together and get serious about securing and controlling this stuff. They must secure this revenue source for the people, and do all they can to break this ‘resource curse’. –Matt

 

 

Potential for a Mining Boom Splits Factions in Afghanistan
By GRAHAM BOWLEY
September 8, 2012
If there is a road to a happy ending in Afghanistan, much of the path may run underground: in the trillion-dollar reservoir of natural resources — oil, gold, iron ore, copper, lithium and other minerals — that has brought hopes of a more self-sufficient country, if only the wealth can be wrested from blood-soaked soil.
But the wealth has inspired darker dreams as well. Officials and industry experts say the potential resource boom seems increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government’s vulnerabilities on display.
It all comes at what is already a critically uncertain time here, with the impending departure of NATO troops in 2014 and old regional and ethnic rivalries resurfacing, raising concerns that the mineral wealth could become the fuel for civil conflict.
Powerful regional warlords and militant leaders are jockeying to widen their turf to include areas with mineral wealth, and the Taliban have begun to make murderous incursions into territory where development is planned. In the capital, Kabul, factional maneuvering is in full swing, including disputes over lucrative side contracts awarded to relatives of President Hamid Karzai.


Further, a proposed mining law vital to attracting foreign investment is up in the air, with the delay threatening several projects. The cabinet rejected it this summer, saying it was too generous to Western commercial interests. But some Western officials fear other motives are at work, too, including an internal fight for spoils, and perhaps an effort by some neighboring countries to sway sympathetic officials to keep Indian and Chinese state mining companies out.
“If you were to pick a country that involves high risk in developing a new mining sector, Afghanistan is it,” said Eleanor Nichol, campaign leader at Global Witness, a group that tries to break the link between natural resources, corruption and conflict. “But the genie is out of the bottle.”
Already this summer, the China National Petroleum Corporation, in partnership with a company controlled by relatives of President Karzai, began pumping oil from the Amu Darya field in the north. An investment consortium arranged by JPMorgan Chase is mining gold. Another Chinese company is trying to develop a huge copper mine. Four copper and gold contracts are being tendered, and contracts for rare earth metals could be offered soon.
The Ministry of Mines has also requested bids for a richer oil concession in the Afghan-Tajik basin, and American officials are optimistic it could come online soon.
And in the shadow of the Black Mountain, here in the Kalu Valley in remote Bamian Province, villagers hope that Indian and Canadian mining operations can turn buried iron ore into new lives for struggling families, breaking a cycle of poverty in this high place cut off by snow for six months of the year.
When the digging begins, Abbas Ali, a 30-year-old farmer here, will have to give up the four-acre potato field his family has worked for generations. He is more than ready.
“Our life will change 180 degrees,” Mr. Ali said this summer, staring up with fervent brown eyes at the bowed wooden roof beams in the white-walled madrasa where he teaches for extra income. “We support any effort to make it happen quickly.”
That hope, and the prospect of more self-sufficiency as international aid ebbs, is driving Afghan officials like the minister of mines, Wahidullah Shahrani, as he tries to get more projects going. The World Bank estimates that if things go very well, mining and agriculture together could raise annual growth rates by 3 to 4 percentage points between now and 2025.
But Mr. Shahrani is concerned about striking the right balance between generating revenue for the Afghan government and drawing in international investors, saying that getting contracts wrong would jeopardize critical development timelines.
“This is all about the credibility of the country,” he said.
There are other concerns, too. Some officials are worried about a swath of small mines — for gemstones, marble, chromite and other resources — that are out of the state’s control and might be fueling the insurgency.
A recent Defense Department analysis said criminal mining syndicates were smuggling chromite over the border, paying protection money to the Pakistani Taliban and the Haqqani insurgent network.
In the border province of Khost, the director of mines, Laiq Muhammad, said more than half the chromite there had been extracted illegally and smuggled to Pakistan, with no benefit to Afghanistan. “Not even one afghani has been added to national income from chromite mining,” he said. Senior Pentagon officials say they are trying hard to bring the mines into the legitimate economy by finding international buyers for the chromite.
In Bamian, up on the mountain above Abbas Ali’s home, 12 new wooden and brick security huts march across the hillsides of the 230-square-mile concession area, a sign of intent — maybe — that the soil will soon be broken and the mine’s promise fulfilled.
But they are also a nod to the possibly more violent times ahead.
Bamian’s chief geologist Mohammad Amin, 27, was striding through the boulders scattered on the hillside. “If the Taliban are able to make it to this part of the country, this project will be halted and nobody will be able to work,” he said.
There are signs, in fact, that is happening in this part of Bamian, which until the past year had been considered relatively secure. Now, the road to Kabul is no longer safe for foreigners, and there has been a string of attacks on government officials and security forces.
Beyond the concerns about security, there is the matter of creating the mines themselves. The prospecting project here — named Hajigak, after one of the treeless mountain ridges — has long been marked by yellow stripes. They are Soviet survey ditches, testament to efforts decades ago to tap Bamian’s iron ore that never panned out.
Before mining can actually begin, there is a need for a power plant, a smelter, and a road to bring the ore down the pristine red-rock ravines of the Kalu Valley.
There are also plans for a major railroad — a first on a large scale for Afghanistan — to take the iron ore out, perhaps west to an Iranian port or to join up with a rail route promised by the Chinese from the Mes Aynak copper mine east to Pakistan or north to Turkmenistan.
The Mes Aynak mine, in Logar Province, is another trove of potential Afghan wealth awarded to the Chinese in 2007. It is already behind schedule, and no work has begun on a railroad yet. Mr. Shahrani is adamant mining will start in two years and blames the discovery of Buddhist ruins and artifacts, as well as Soviet-era mines that had to be cleared, for the delay.
But in a country where the future always seems to be put off, the delays may also reflect an unwillingness, say officials who work closely with the mining industry, by international investors to put in hundreds of millions of dollars they could lose if Afghanistan again descends into turmoil.
“Everyone is hesitant to plan beyond 2014,” said a Western official who spoke on the condition of anonymity. “They have dragged their feet. The government might change and you have built your new roads and new power plants. It might all be gone.”
Doubts about the government’s role in any resource boom loom large for the Afghan public, too, where there is deep skepticism that the weak state and notoriously kleptocratic ministries can build a functioning mining economy that will help ordinary people.
Some outsiders fear that the recent delay in the new mining law represented, in the messy world of Afghan politics, an attempt to discredit Mr. Shahrani and win control of the mining ministry, one of the government’s most lucrative power bases.
Already, there are examples of how resource riches can spark conflict.
At the Amu Darya oil field in June, President Karzai’s government accused a rival, the warlord Gen. Abdul Rashid Dostum, of putting pressure on the Chinese oil company to make illegal payoffs. General Dostum’s party said he wanted the Chinese only to hire more local labor. And at Mes Aynak, where the government says nine villages were displaced, the mining project has caused tensions among locals contending for compensation for their land.
As the details of the Hajigak contract are negotiated, the people of Bamian are clear about what they want in return for opening their lands to mining: paved roads, a gymnasium, a conference hall, a technical college, and guaranteed work for locals among the 50,000 jobs some say the mine could generate. Hoping to avoid the frictions that have arisen at other sites, they have formed a 114-member commission to work on issues like compensation and jobs and provide a mechanism for airing grievances.
Some of the people of Bamian — most of whom are Hazaras, wearily familiar with years of ethnic oppression by those in power in Kabul — remain dubious that wealth will automatically come their way. But there is still hope in the valley of the Black Mountain, in Abbas Ali’s village.
At a store in the dusty bazaar, Shir Ali, 38, a gangly man who drives a minibus, says that with a job as a day laborer or security guard or driver, he could buy uniforms and textbooks to send all of his 12 children to school.
Sitting at the counter behind open sacks of rice and beans, the storekeeper, Daoud, 38, cracks his bronzed face with a smile, sharing the optimism but also the trepidation about whether at last his country can really make something of itself.
“If the mine doesn’t come, we will be like those people who live on treasure,” he said, “but they cannot use it.”
Story here.

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Exclusive – Chinese halt at flagship mine imperils Afghan future
By Jessica Donati and Mirwais Harooni
Thu Sep 27, 2012
Afghan officials are battling to convince nervous Chinese investors to restart work at a landmark $3 billion (1.8 billion pounds) mine project and not to worry unduly about insurgent rocket attacks to salvage one of the country’s big hopes of economic independence.
Western donors have focused on Aynak, the largest foreign investment project in its history which could help the country, now reliant on development aid, find its feet after most foreign combat troops leave in 2014.
But the giant Aynak copper deposit, among the world’s largest, is situated in Logar province, one of the country’s most dangerous, southeast of Kabul and insurgents aiming to wreck the government’s flagship project have stepped up attacks.
After decades of war, many Afghans are resigned to the daily threat of roadside bombs and crossfire between NATO and insurgents. Civilian casualties hit a three-year high in August.
Most Chinese staff at the site, however, appear to have been spooked by Taliban attacks and left the country, with only a skeleton crew remaining to watch over equipment.
Afghan officials point out that the insurgents have not yet killed any Chinese workers.
“We had meetings with them (the Chinese investors) and assured them these rocket attacks happen anywhere and they are not the direct targets. We had repeatedly meetings with them but could not make them confident,” Sardar Mohammad Sultani, acting deputy Minister of the Interior, told Reuters in his office.
“They left before any harm (was done to them). This was their own idea… It’s up to them if want to return or not,” said Sultani, in charge of the security force protecting the mine.
A spokesman for the consortium running Aynak, China Metallurgical Group (MCC) and Jiangxi Copper, confirmed some workers had been sent home indefinitely. It said unspecified “conditions” promised by the Afghan government in their contract had not been met.
He declined to link their departure to attacks, but said the government was working to improve security as the Afghan-NATO coalition targets insurgent strongholds in the east.
“The timing of those workers returning to Afghanistan will depend on conditions,” the MCC spokesman told Reuters.
The project has been underway since 2007, with the Chinese companies overseeing the project about to start the final stage of construction, expected to take at least three years.
Even if work resumed tomorrow, it would be almost 2016 before any copper is extracted. Once fully operational, the mine could generate annual income of close to half a billion dollars, based on current copper prices.
International aid is already expected to fall short of the $6 billion a year required to promote economic growth, and a further $4.1 billion a year needed to secure pay the bill for the 350,000-strong security forces as NATO draws down.
So far, $4 billion a year through to 2015 has been promised.
TALIBAN THREAT
The Taliban say blocking the Aynak project has become one of their priorities, even as NATO claims a nine percent reduction in militant attacks.
“All government offices are corrupt and we don’t believe that the money will benefit our nation, but will all be looted,” Taliban spokesman Zabihullah Mujahid said by telephone.
“If they (the Chinese operators) get permission from us, their lives may be spared,” he said, although the Taliban frequently exaggerate their reach and abilities.
The government-run Afghan force created this year to protect oil and mining assets — when President Hamid Karzai banned private security firms — is having difficulty protecting Aynak.
Despite increasing to more than 2,000 the number of security personnel at the site and installing extra checkpoints and wider security perimeters, rockets attacks have continued.
Afghan officials say they are doing all they can.
“We launched many operations. We detained a number of insurgents and killed a lot more. But our efforts haven’t reached any conclusion,” deputy minister Sultani said.
In a rare visit to Kabul this month by a top Chinese leader, bilateral deals on security were signed, including an agreement for police to be trained, funded and equipped with help from Beijing.
The government did not say whether the Chinese programme was aimed at boosting security around China’s oil and mining assets.
“This problem (insurgent attacks) exists all over the country. We are trying our best to clean the Aynak copper area from insurgents,” Sultani added.
The threat is so severe that villages have warned the Afghan rights and anti-corruption monitor Integrity Watch Afghanistan (IWA) to stay away as they can no longer guarantee their safety.
IWA reported there are four armed groups operating in the Aynak area, some aiming to stop the project.
And the attacks are becoming more deadly. At the start of September, an assault on the protection unit killed 15 Afghan policemen, spreading fear among local and visiting workers.
“There are new groups who are more brutal and make it difficult for us to go. There is one new group in particular that is quite opposed to the development of the mine,” said the IWA’s mining expert Javed Noorani.
Noorani said that most Chinese workers had been repatriated.
CHINESE SLUMP
Safety may not be the only reason.
Beijing officials may intend to delay the project amid China’s worst economic slowdown in years, which has caused global copper prices to tumble and hit Aynak’s investors hard.
Metallurgical Corp of China, which has a majority share in the mine, swung into the red in first six months of 2012. Net losses stood at 186.13 million yuan ($29 million), compared to net profits of 1,969.03 million yuan in the first half of 2011.
Jiangxi Copper performed slightly better, but profits in the first half of 2012 slid by 38 percent, compared to a 12 percent decline in global copper prices over the past year.
Social, environmental and economic concerns linked to the development of the mine also remain, Noorani added, including disruptions to water supply and displacement of villagers.
Some officials at the Ministry of Mines say China may be waiting for new mining laws to be passed by parliament to renegotiate the terms of the deal.
Proposals to draft new legislation have been backed by Western donors and the World Bank. But some cabinet members blocked proposed legislation in July, saying it failed to protect national interests from foreign exploitation.
A new proposal has been redrafted and is expected to be discussed in parliament within weeks.
Wrangling over the legislation is already holding up progress finalising an investment deal with an India-led consortium at the Hajigak iron ore deposit in central Bamiyan province, worth up to $11 billion.
The government said last year oil and mining could contribute up $1.5 billion in revenue by 2016, but there is little prospect of achieving such figures while the legal framework is in limbo.
Ministry of Mines senior geologist and adviser Atiq Sediqi said the future of the industry depended on the legislation.
“If the mining law is not approved, no one will come to invest in the mining sector in Afghanistan and the revenue forecast by the government from the development of the country’s mineral resources will become a myth,” Sediqi said last week.
Story here.