Afghanistan: The Saudi Arabia of Lithium

9/3/13
 
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from NCPA,
9/3/13:

U.S. agencies estimate Afghanistan’s mineral deposits to be worth upwards of $1 trillion. In fact, a classified Pentagon memo called Afghanistan the “Saudi Arabia of lithium.” (Although lithium is technically not a rare earth element, it serves some of the same purposes.)

Of course, the fact that Afghanistan is rich in minerals is not necessarily new information. The Soviets identified mineral deposits in Afghanistan during their decade-long occupation.

According to Jim Bullion, who heads a Pentagon task force on postwar development, these maps reveal that Afghanistan could “become a world leader in the minerals sector.”

There’s another set of factors at work today that were not present during the Soviet period: rare earth elements are in high demand, the dependability of the rare earth elements supply chain is in question, and Afghanistan’s mineral wealth may be able to help knit the country back together after decades of war. But simply having a rich mineral endowment doesn’t mean that Afghanistan is poised to tap it quickly. Challenges abound.

Afghanistan can be part of the long term solution to the rare earth elements supply problem. However, building a rare earth mining system from scratch in one of the world’s most broken countries will not happen overnight.

Corruption remains a challenge, stability and security exist only in pockets, and the ingredients that encourage foreign investment — the rule of law, human capital and infrastructure — are in short supply.

For instance, political dysfunction is plaguing efforts to build rail lines considered crucial to transporting Afghanistan’s mineral wealth.

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