Afghanistan – Why Invest?
Resources in Afghanistan
A joint team from the Pentagon, US Geological Survey and USAID has calculated Afghanistan’s mineral deposits, excluding oil, gas and coal could be worth in excess of USD 900 billion.
Key minerals identified in this survey include, iron, copper, niobium, cobalt, gold and lithium (New York Times, June 14, 2010).
It has been recognized by global leaders and the leadership of Afghanistan, that Afghanistan’s future stability and prosperity, is heavily dependent on the appropriate and transparent development of the resources sector, including: minerals, oil and gas and coal.
The overall goal of the National and Regional Resource Corridors Program (NRRCP) is to ‘progress Afghanistan’s financial independence through strategic and prioritized infrastructure development that enables private sector investment.’ The purpose of NRRCP is to ‘connect Afghanistan to the region and the rest of the world through the promotion of inter‐state resource corridors as a means to realizing Afghanistan’s natural resources, growth, revenue and employment potential’.
The realization of the Development Corridor concept by definition is a long‐term objective. The implementation plan set out within the program covers the period from August 2010 to July 2013 and focuses on:
- Establishment and operationalisation of NRRCP planning and coordination mechanisms; and
- The development of critical (prioritised) road, rail and civil aviation infrastructure needed at this stage to realise Afghanistan’s inherent mineral resources potential along and adjacent to development corridors, and to reap the benefits from increased trade flows and labour mobility.
The investment program of NRRCP has four key components:
- Component 1 envisages the formation and operationalisation of a Resource Corridor Secretariat;
- Component 2 focuses on highways and provincial road projects;
- Component 3 proposes rail development projects; and
- Component 4 recommends key civil aviation projects.
These programmes are particularly relevant to the Hajigak Iron Ore Project in that, the proposed project is in close proximity to:
- Kabul (130 km);
- the proposed Aynak rail line (25 km rail spur); and
- proposed power generation and transmission infrastructure.
Today, with infrastructure costs being a significant barrier to entry for many bulk commodity projects, this significantly improves the competitive position of this project relative to its peers.