Afghan mining road show set for London on June 25

Wed Jun 16, 2010 5:13pm EDT

* 200 companies expected at London meeting

* India, China seen as most interested

* Lithium shows big promise, says expert

By Sue Pleming

WASHINGTON, June 16 (Reuters) - Afghanistan will promote its mining wealth at a "road show" in London on June 25, aiming to boost interest in its major iron ore deposit and other minerals, Kabul's envoy to Washington said on Wednesday.

Ambassador Said Jawad said about 200 companies were expected to attend the London meeting where the Afghan Mines Ministry will give details of a tender due to be relaunched later this year for the Hajigak iron ore deposit west of Kabul and to drum up foreign interest in the nascent mining sector.

"We are asking for investment in our country to develop these resources so we cannot be a burden on the world," said Jawad, speaking to Reuters on the sidelines of an event to announce a water study of Kabul by the U.S. Geological Survey (USGS).

"Investing in Afghanistan (the mining sector) is part of investing in global security," he added.

Afghanistan has huge untapped mineral reserves, from gems, copper and iron ore to gold, lithium and rare elements.

U.S. defense officials, who recently examined the results of a 2007 USGS survey and other information from the Soviet era, estimate Afghanistan's mineral wealth could top $1 trillion.

However, experts say this figure is untested and caution it will take years, even decades, for that money to materialize because of a host of problems from war and poor infrastructure to a government trying to overcome years of corruption.

Afghanistan awarded a giant copper contract in 2007 to a Chinese consortium for a deposit in the Aynak region south of Kabul and Jawad said he expected there would be Chinese and Indian interest in the upcoming iron ore tender.

INDIA AND CHINA

That iron tender was scrapped in February, partly due to lack of interest, market instability and a wish by the new Afghan mines minister to reexamine the contract after the 2007 copper deal was tainted by corruption claims.

"The new minister has put together a new strategic plan and is reorganizing the department to make sure that these mineral awards are exploited in a way that every Afghan will benefit," said Jawad.

Many international mining firms are cautious over bidding on Afghan tenders and Jawad conceded it could be a tough sell.

"We have had a hard time convincing U.S. companies, despite my personal hard lobbying to consider this. One has to be realistic," he added.

"Practically speaking, the two countries in our neighborhood -- China and India -- are in need of these resources and they may be more forthcoming ... Companies from developing countries are less risk averse," he said.

However, Jawad said the discovery of lithium and other rare earth elements used for cellphone manufacture and other consumer electronics, might be attractive for companies that were traditionally more conscious of risk.

LITHIUM PROMISE

Jack Medlin, chief of Asian and Pacific Geology at USGS, said lithium deposits in Afghanistan showed great potential and samples were currently being studied in Denver, a process which would take several months.

"We don't know how big it is. In four or five months, after the samples are analyzed and people try to fit them into a context (more will be known)," he told Reuters.

The geologic setting for the lithium -- in dry lake beds -- was similar to those found in Bolivia, one of the world's biggest producers of the metal, Medlin said.

Medlin also anticipated big interest in rare earth elements in Afghanistan which are used in many modern technologies from hybrid cars to windmills and superconductors.

"The lithium has high promise although the other one no one is talking about is the rare earth deposits," said Medlin.

A key area for those elements was in Helmand province, where much of the fighting with the Taliban is taking place and Medlin said they had not been able to get samples yet.

Said Mirzad, Afghanistan project coordinator for USGS, said there needed to be close attention to environmental hazards as the Afghan mining industry developed.

"We have to make sure that the environment is not disturbed by this frenzy of minerals," he said.

(Editing by Sandra Maler)





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