Afghanistan’s Minerals Await Vital Railroads

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from Bloomberg Businessweek,

At the Naibabad freight terminal near the northern Afghan town of Mazar-e-Sharif, workers rush to unload wheat and construction materials from Uzbekistan that have arrived on Afghanistan’s only railroad. Trucks will have to carry the cargo through the icy Hindu Kush mountains to the rest of the country because Afghanistan, which encompasses almost 252,000 square miles, has only 47 miles of train track.

The government has grand plans to change that by constructing a 2,237-mile national rail line to transport not just food and other goods but something more vital to the struggling nation’s economy: its vast natural resources, including iron, copper, and gold. In 2010 the Pentagon estimated Afghanistan is sitting on mineral deposits worth about $1 trillion. In 2011 the Afghan government put the value at $3 trillion. This potential wealth has remained largely untapped, because there’s no way to safely and reliably ship the minerals from the country’s mines.

Afghanistan’s 25-year economic plan calls for connecting the country to established rail lines that run through Asia, Europe, and the Middle East. “Railways are absolutely vital” for carrying landlocked Afghanistan’s minerals to neighboring countries with seaports, says Joji Tokeshi, country director in Kabul for the Asian Development Bank. It provided a $165 million grant that covered most of the cost of building the short railway from Uzbekistan’s border to Mazar-e-Sharif in 2011. Yet constructing a national railway has proved far more difficult than the Afghan government and its international advisers imagined.

One of the most vexing problems has been finding a way to protect trains, tracks, and trestles from attack by the Taliban and other militants, an effort that will become more urgent after Afghan forces take over from the U.S. later this year. “There are a lot of challenges they need to overcome, both in terms of security in building it and in maintaining the rail line,” says U.S. Army Major Timothy Christensen, director of a rail advisory team that’s assisting the Afghans.

Then there’s the question of finding the billions of dollars it will cost to build the rail network, money the country doesn’t have. The government has tried to get foreign corporations to foot a chunk of the bill. Companies that win lucrative mining contracts in Afghanistan must agree to build tracks connecting the mines to rail lines in neighboring Iran and Pakistan. That hasn’t worked out very well. When Chinese investors led by the state-owned China Metallurgical Group won a $3 billion bid to mine copper at Mes Aynak, 31 miles south of Kabul, they pledged to lay a stretch of rail, says Afghan Finance Minister Omar Zakhilwal. Yet seven years later the project is stalled amid security concerns and the discovery of Buddhist artifacts at the site.

An $11 billion iron ore project in Bamiyan province, 62 miles west of Kabul, is also delayed.

Aid agencies including the Asian Development Bank and the U.S. advisory team are trying to get things moving by drawing up plans for a 209-mile section of rail in the north. Laying track nationwide will cost about $2 million per kilometer on flatlands and as much as $17 million per kilometer through mountainous regions, says Ahmad Shah Wahid, Afghanistan’s deputy minister of public works.

That doesn’t include the cost and complication of training thousands of people to operate and maintain a rail system. Afghans don’t have the know-how to run even the scant 47 miles of track they have—the government contracts out the job to Sogdiana Trans, part of Uzbekistan’s state-owned railway. Getting Afghanistan on rails “will take a huge investment,” says Tokeshi. “It cannot be done by the government alone, or donors alone.”

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