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News and Views

$1 Trillion Worth of Minerals Up for Grabs


Aired August 24, 2010 - 16:00:00   ET


BECKY ANDERSON, HOST: A trillion dollars worth of minerals up for grabs in Afghanistan. But just like Iraq and its oil fields, does Kabul have the stability to reap the rewards?

Hidden beneath Afghanistan, a mountain of riches.

But is it a coup or a course for a nation battling corruption and insurgency.

And who will be the real winner when the wealth is shared out?

I'm Becky Anderson in London with the story and its connections tonight.

Well, putting its national -- or natural treasures up for tender, we're going to start tonight in Afghanistan, where the discovery of vast mineral deposits is attracting interest from investors the world over.

Jill Dougherty explores whether the untapped gems will pave the path to a better life for the war torn nation and its people.

ATIQ SEDIQI, AFGHAN MINISTRY OF MINES: It's a huge deposit. This is a beginning and it continues in that direction.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): We're in the mountains of Bamyan Province, 80 miles from Kabul. Atiq Sediqi, senior geologist for the Afghan Ministry of Mines, is showing me the Hajigak iron deposit, said to be the largest undervalued iron ore deposit in the world.

(on camera): So that's it?

SEDIQI: It is a piece of -- of the Hajigak.


SEDIQI: And it's 62 percent iron. Let me break them.

DOUGHERTY: It's all pure iron ore.

SEDIQI: It's 100 percent.

DOUGHERTY: (voice-over): In the mountain range that stretches 15 mils, almost two billion metric tons of amazingly pure iron ore. This September, the government of Afghanistan will offer a tender for mining rights here, hoping to attract international companies.

SEDIQI: As a magnet attracts (INAUDIBLE).

DOUGHERTY: (on camera): So that's definitely iron ore?

SEDIQI: Right. Right.


SEDIQI: And then we break it a little bit more. Oops. And that's the oxide of iron from the surface that this is there.

DOUGHERTY: Can I feel that?

SEDIQI: Yes. Sure.

DOUGHERTY: Oh my god, it really is heavy.

(voice-over): Iron ore is just one of a vast array of minerals Afghanistan has hidden under breathtaking mountain ranges formed 140 million years ago. There's copper, cobalt, lithium and rare metals -- gem stones like emeralds, rubies, sapphires, lapis lazuli, topaz and the recent discovery, 1.8 billion barrels of crude oil plus natural gas.

Based on Soviet studies from the 1960s, the U.S. Geological Survey estimates the potential value of Afghan's mineral wealth at a trillion dollars. The minister of mines says it could be as much as $3 trillion and only 30 percent of the country has been explored.

(on camera): So that could be, really, the economic future of your country?

WAHIDULLAH SHAHRANI, AFGHAN MINISTER OF MINES: It's got great potential for this country. Right now, the major source of our economic growth have been the international aid coming to Afghanistan. And in future, of the five, seven or 10 years, the contribution from the mining sector would be the major sector in our a -- in the sustainability of our economic growth in the future.

DOUGHERTY: (voice-over): But there are two huge challenges -- a lack of security and infrastructure. Right now, Afghanistan has only about 50 miles of railroad. The government plans to build much more, tying railways, highways and energy supplies together so those minerals can be exported.

(on camera): So you've got all of the places that you want to go...

SHAHRANI: Sure. Sure.

DOUGHERTY: -- east toward Pakistan, India, China...


DOUGHERTY: And then north, Central Asia...

SHAHRANI: Indonesia and Russia.

DOUGHERTY: And then Iran?

SHAHRANI: Yes. And, also, you know, that was the south of Pakistan, again.

DOUGHERTY: Near the Hajigak iron ore deposit, the villagers are hoping that development, if it comes, will bring jobs and money. This 14- year-old boy tells me, there's no danger from the Taliban here.

UNIDENTIFIED CHILD: Here is not an insurgent. And the people can provide you with security, too. And you don't need more killing guns. (INAUDIBLE) guard yourselves.

DOUGHERTY: But can the government assure the village elder that corruption won't siphon off the potential benefits to his people?

The government promises everything will be public and transparent. These Afghan citizens hope that's true.

Jill Dougherty, Kalu, Afghanistan.

ANDERSON: All right, well, who's lining up to do business in Afghanistan?

Well, topping the list, China. In 2008, it made the single largest investment in Afghanistan's history, bidding $3.5 billion for a huge copper mine. Over the next 25 years, China plans to extract about 11 million tons of copper.

Also, five firms from India are bidding against who?

Well, you guessed it, China. They're after five to six billion tons of iron ore, as you saw in that report. There are deposit in the Afghan mountains. But the bidding currently on hold due to corruption concerns.

And Russia -- well, it's refocusing on the region. A state-owned firm is exploring potentially lucrative gas fields in the north of the country while other Russian companies are said to be hunting for minerals such as iron and aluminum.

Well, Afghanistan isn't the only country digging deep into its natural resources to try and fund a new future for its people. Dozens of rigs in Iraq's Ramallah oil fields are already online, many contracted out to international companies, as you probably know.

Fred Pleitgen checked out the progress being made back in June.

Here's a -- a reminder of what he dug up.

ANDERSON: The gremlins are having a go at this tonight. No track on that report, but some shots there of the oil fields in Iraq. You know the story -- carving up Iraq's oil fields by the international companies, so there are people going in.

Well, do the locals get a chance to really get the benefits of those natural resources?

Well, back in Afghanistan, could the discovery of the country's mineral wealth be something of a double-edged sword?

You don't have to look far, of course, to find an example of how minerals can fuel conflict rather than conclude it. Take the blood diamond phenomenon in which diamonds mined in African war zones are sold on to finance and insurgencies.

That's the big question tonight. Let's dig further into it.

I want to bring in Ashraf Haidari.

He's a political counselor at the embassy of Afghanistan in Washington.

Antoine Heuty from the Revenue Watch Institute in Washington.

Ashraf, let's start with you and let's start in Afghanistan.

We -- we saw Jill Dougherty's report about the area where the largest amount of iron ore in the world, potentially, is sitting below the Afghan mountains. We also saw some pictures there of Iraq.

How does Afghanistan exploit its newfound mineral resources?

ASHRAF HAIDARI, EMBASSY OF AFGHANISTAN IN THE US: Well, as the minister of mines, Wahidullah Shahrani pointed out, we hope that in the next three to five years, we attract capital [intensive] investment from the region as well as from around the world in the natural resources sector in Afghanistan, which has largely been unexploited and which is, potentially, a major source of employment for the Afghan population, which is one of the youngest in the region, where, of course, most of our people are unemployed.

And, also, it's part of our economic development strategy to create as many jobs as we can, now, and, of course, on the long run...


HAIDARI: -- so that Afghanistan, over time, becomes self-financing, both in terms of our economic growth and reconstruction, but also in terms of the defense of the people of Afghanistan against our common enemies.

ANDERSON: I understand that.

So jobs in mind, not necessarily, though, Antoine, owned by the Afghans themselves. We just alluded to those who are bidding for much of the mineral resource in Afghanistan. It doesn't look as if the entirety of it will go anything like Afghanistan's way.

ANTOINE HEUTY, REVENUE WATCH INSTITUTE: Well, if we -- if we judge by international experience, a number of countries have had serious difficulties in getting a good deal from their exportive sector. A number of countries, such as Congo, the Sierra Leone and others, have not only signed bad contracts with companies, but, also, their expectations from the populations, as we've seen in the report, have also often been missed and which can further create discontent among the citizens of Afghanistan if all these hopes are not fulfilled.

ANDERSON: Ashraf, how do you prevent that?

HAIDARI: Yes, we reject those contracts, like we did back in February 2010, when there was one offer from one of international firms. I believe it was from Orient Petroleum International, which we considered not to be in our best interests and the best interests of the Afghan people in terms of creating jobs.

So we are, of course, very careful about the terms of the contract, based on the minerals laws and other natural resources laws, which allow us to make sure that the revenues generated from the natural resources sector in Afghanistan...


HAIDARI: -- will stay in Afghanistan, will be invested in a productive economy so that we continually grow up our economy...

ANDERSON: Right. I get that. OK...

HAIDARI: -- and continue to create jobs.

ANDERSON: So that would be a key to Afghanistan.

But will it create conflict?

And lest we forget, the movie, "Blood Diamonds," laying out the potential for resource conflict.

Let's just take a look at that.


ANDERSON: Resources can be a mixed blessing, Antoine, of course, and resource conflict can ruin a country.

HEUTY: Yes, definitely. I mean the experience of Sierra Leone, of Liberia is there to remind us what can happen if a country that is still in conflict, such as Afghanistan, discovers significant resources, such as is the case here. And the key to -- to -- to answering that -- that problem is transparency. The government of Afghanistan has taken some steps to address the transparency and corruption concerns, but a lot needs to be done. They have signed up to the Extractive Industries Transparency Initiative, but now we want to see whether this will be actually implemented.

And there are other major concerns regarding how money is spent and how (INAUDIBLE)...

ANDERSON: All right...

HEUTY: -- happens in the country that will need to be addressed.

ANDERSON: Ashraf, the last question to you -- and it's an important one and one that has been brought up with me again and again and again. It's our Twitter question tonight and it's a controversial one.

Did the coalition forces go into Afghanistan to rip off the national resources?

Your answer?

HAIDARI: That's absolutely wrong. The international forces are in Afghanistan at the invitation of the Afghan government and people to help secure Afghanistan so that reconstruction of Afghanistan and the long-term development of Afghanistan, in part, through extraction of our natural resources, which have not been exploited, happen. And so we are committed, in partnership with the international community and, of course, their military forces in Afghanistan, to help secure Afghanistan, on the one hand, and also to build institutional capacity and help our ministers, such as the minister of mines, through technical assistance, to implement laws and to offer bids on...

ANDERSON: All right...

HAIDARI: -- these natural resources so we extract for them the long- term economic growth of Afghanistan.

ANDERSON: Mineral resources -- coup or conflict?

Gentlemen, we thank you very much, indeed for joining us this evening, connecting the world here on CNN.

Well, the day after Somali militants declare a final war to overthrow the government, a devastating suicide attack kills dozens in Mogadishu. We're going to have the details of the assault just a stone's throw from the presidential palace.



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