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Minerals in Dangerous Places: Wealth in a War Zone

This will be the first in a series highlighting areas rich in resources and danger.

Lately there has been a lot in the news about the recently re-discovered mineral wealth in Afghanistan. A lot of the coverage has looked at the potential de-stabilizing/stabilizing effects that so much natural wealth could bring. But while the focus has been on the money that they are potentially worth, what about the minerals themselves? Why do they matter to us? And can we get them elsewhere? A New York Times article, one of the first to break the story, mentioned five minerals that were dominant in the deposits worth an estimated $1 trillion dollars. Those minerals were Copper, Iron, Gold, Cobalt and Lithium. The reason for the high concentration of valuable minerals in the area is the land itself. The ridiculously high mountains of Afghanistan were formed by tectonic activity, with the most recent formation due to the continued pressing of the Indian subcontinent against the Eurasian plate. This area of high pressure is ideal for forming rich deposits of minerals.

Copper Pennies (Image Credit: MB Griggs)

Copper-Copper has a history of being mined in Afghanistan. The Afghan Geological website claims that copper has been mined in the area for “over 2000 years”. Not surprising, as copper was one of the first metals ever worked by humans. Copper mining has recently re-started in Afghanistan after decades of neglect, and China has received permission to mine the Aynak region for the valuable ore. There was a ton of controversy over the Afghan-China deal, because, whoops, the Afghan Minister in charge was taking bribes. Not good. DailyFinance.com had a great article about the conflict between Russia and China, who are getting permissions to mine the region and the western countries like the US that are doing the exploration and defense of the area.

Copper is used today for everything from industrial uses to telephone wires. But it can be found in a lot of other locations around the world, including in the US. Because it is relatively plentiful, unless the security situation in Afghanistan improves, there is little incentive for any foreign mining company to invest in mining or importing the stuff (unless you’re China or and just across the border). BUT because copper has so many uses in constructing what we consider to be basic infrastructure (pipes for running water, telephone lines, etc) it could be of great use to the Afghan people.

Iron- Since humanity first figured out what to do with the stuff, iron has been pretty integral to societies around the world. It’s strong enough to make excellent farm tools, and scary looking weapons. It’s even where blacksmith’s get their name; iron is known as the black metal. When heated properly, and carbon is added or removed, it makes steel, which is used in everything from spoons to skyscrapers. In short, this is a very useful metal, and one that any country with lots of building projects would love to have. So can Afghanistan sell it? The answer depends on who the potential buyer is. The US steel industry seems to be declining, for now, and steel is a metal that can easily be recycled, lessening the need for iron ore. It could be bought up by China, like copper, or used by the Afghan people, though the process of making steel on a large scale requires an infrastructure that Afghanistan does not yet have.

Gold- Who doesn’t love gold? In the US of A people are buying it in a mad frenzy, convinced that it will hold it’s value forever. (A story for another time, though I will mention today that gold did declineslightly on Friday) Currently valued at a ridiculous $1,228 per ounce, this is a metal in high demand for luxury goods and supposed financial security. It’s been mined from Afghan rivers for a looong time, as it has everywhere else in the world. The amount of gold found will determine how much money Afghanistan can make off of it, but it is comparatively easy to mine compared to the other minerals mentioned and is really easy to work with. The downside? It would also be really easy for the Taliban to use it to fund their projects.

Gold Jewelry Image Credit: M.B. Griggs

Cobalt- One of the lesser known ores on the list of five. It doesn’t occur alone in nature, though there are many ores that contain it. It’s a byproduct of nickel, iron, lead and copper, which could explain why it’s found in an area with high levels of iron and copper ore. It can be used for everything from pigmentation (that gorgeous deep blue color of glass) to industrial uses in jet turbines and cutting tools. It is frequently made in labs around the world, and can be poisonous if handled too much. A factsheet by Los Alamos National Labs mentioned that the US had recently announced the discovery of reserves in the ocean off Hawaii. This means that if it is possible to get to the Hawaiian reserves, there is little to no market in the US for the Afghanistan cobalt, though it could be valuable to, you guessed it, China.

Lithium Battery (Image Credit: MB Griggs)

Lithium- Lithium is the mineral that has surprisingly been getting the most press of the five. Though gold is eye-catching, a lot of news reports have focused on the necessity of lithium for technology manufacture. The phrase “lithium-ion batteries” has entered the public lexicon for good (at least for now). Lithium is what makes digital cameras and iPhone’s small, and as smaller is better for electronics, it is coveted by the electronics industry, and could be vitally important to producing hybrid cars. So, is lithium the mineral that Afghanistan can use to get lots and lots of wealth? Short answer: Probably not.

South America has large lithium deposits in many different countries, including Argentina and Chile which produce the most. Some of the largest deposits, if not the largest deposits in the world are in Bolivia, which has just begun to mine it on an industrial scale with South Korea as a primary partner (see here for more information). While South America is by no means the safest area of the world, when you look at the sheer amount of lithium resources there, coupled with the political situation in South America being about as stable as Canada when compared to Afghnistan, there really isn’t much hope for a massive foreign interest in lithium. Also, the lithium in Afghanistan really isn’t going to be of any use to the people in Afghanistan. You have to have cell phone towers before iPhones will do you much good, and roads that won’t eat hybrid cars for breakfast. China won’t be much help either, as they may have found some lithium reserves just over the border in their section of the Himalayas.

So, In the end, even though there is all of this hullabaloo over $1 TRILLION in BRAND NEW resources for Afghanistan, actually developing the wealth into something useful might not be something that will ever happen. While these five resources are valuable, they are not yet as in demand as a resource like petroleum, and because of that they might just end up waiting around in the ground until Afghanistan itself figures out how to use them. And, especially with the security situation in Afghanistan continuing to worsen, foreign investors will be few, meaning that there will be very few ways for even the elite to extract the minerals from the ground, much less use them.

One Comment

  1. James wrote:

    Glad to see someone is being critical of the Afghan mineral “discovery” (Data from 2007 released in 2010? Pretty interesting timing for the announcement, when war support was at an all-time low)

    Keep up the good work!

    Sunday, August 22, 2010 at 1:49 pm | Permalink

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