Afghanistan may be sitting on an estimated $1-trillion (U.S.) in untapped mineral deposits, but Canadian miners seem happy to let others take the lead in developing the discoveries.
Not only is Afghanistan one of the world's most war-ravaged countries, but there is also the issue of how to transport commodities out of the landlocked country.
"The risk is too high, regardless of the quality of the ore bodies," said Paul Blythe, chief executive officer of copper producer Quadra FNX Mining Ltd. of Vancouver.
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The mineral discoveries were made by a small team of Pentagon officials and U.S. geologists as part of a move by Washington to help Afghanistan develop its economy.
According to the Pentagon, iron accounts for almost half of the country's estimated mineral value, or $420-billion (U.S.). Copper comes second, with about $273-billion.
A New York Times article on the discovery quotes an internal Pentagon memo stating Afghanistan could become the "Saudi Arabia of lithium," a material used in everything from batteries to BlackBerrys.
Veteran mining financier Robert Friedland, who has developed mining projects in such challenging locations as Mongolia and the Democratic Republic of Congo, is unconvinced about the potential for mining in Afghanistan.
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"Hopeless," Mr. Friedland said in an e-mail to The Globe and Mail .
"Lithium is common as chips. The trillion dollar number is meaningless. ... Absurd," he added.
Patrick Highsmith, CEO of Lithium One Inc. in Vancouver, believes there may be potential in Afghanistan, depending on the lithium's purity.
That said, he isn't ready to begin exploring in the country either. "We are happy to be working in safe places with great access, such as Argentina and Quebec," Mr. Highsmith said.
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China, an aggressive buyer of resource projects in politically challenging countries, is undoubtedly the front-runner to benefit most from the development of Afghanistan's mineral riches. The Asian economic superpower is already the largest foreign investor in Afghan resources.
In 2008, state-owned conglomerate China Metallurgical Group Corp. won a crowded auction for the right to develop the Aynak copper deposit in Afghanistan, believed to be one of the largest untapped copper projects in the world.
China Metallurgical bid $3.4-billion for the right to mine the deposit, $1-billion more than any of its competitors, which included privately held Hunter Dickinson Inc. of Vancouver as well as mining firms from the United States and India. Construction of the mine, set to begin production in 2012, is said to have been delayed as a result of the war in Afghanistan.
"We feel like we were fortunate to come in second," said Robert Schafer, Hunter Dickinson's executive vice-president of business development.
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He said the company might consider trying again in Afghanistan, but isn't yet convinced there's more to explore beyond Aynak.
"It's just indications. There's not anything you can hang your hat on and say 'We can turn this into a mine,'" he said.
Allegations of corruption have since surfaced involving the Chinese bid for Aynak. Last year, Afghanistan's minister of mines, Muhammad Ibrahim Adel, was accused by U.S. officials of accepting a $30-million bribe to award the project to the Chinese bidders. He has since resigned from his post.
Rather than try and buy major projects in well-established mining jurisdictions such as North America and Australia where they could be rejected by the government, China has decided to invest in resources where many others fear to go. China Metallurgical, for example, also operates a copper mine in Sandaik, Pakistan.
With a file from Associated Press