Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Afghanistan’s plan to develop its estimated $1 trillion worth of mineral resources received a serious blow when China announced its desire to undo a multi-billion dollar agreement to help create a mining industry in the war-torn nation.
The deal, inked in 2007, was to send $3 billion of Chinese investment into the world’s second largest copper deposit, the 5.5 million-tonne Mes Aynak near Kabul.
With little more than a year remaining until international forces exit Afghanistan, without firm Chinese support on the horizon, the government may now be forced to “scale back plans for attracting mining companies to exploit its minerals reserves, including copper, gold, iron ore and rare earths,” writes Lynne O’Donnell for the South China Morning Post.
Complex security obstacles aside, Afghanistan’s timing may prove to be off. With China’s economy – and the economies of other major developing nations – showing signs of slowing, weak commodities prices, and massive, industry-wide cost-cutting, Afghanistan may have missed its window to take part in the boom.
“Until global demand recovers and there is a sense of optimism about growth and mineral prices that will eventually re-trigger big mining interest in new green-fields projects, I think Afghanistan will struggle to develop its minerals assets over the next five years,” said Peter Hickson of Global Materials Advisors.
See also: The iron ore slice of the $1 trillion Afghanistan resource pie
Afghan Gold deposits (Credit: British Geological Survey)
Comments
Dr.Jagabandhu Mishra.
Afghanistan is a land locked country.For a land locked country peace on long term basis is necessary for the development of mining sector.Transporting minerals through Pakistan is a major problem.The only way is to take the minerals through China.But China is slow to develop the prospecting and mining activities.Other country is India,that can take the minerals from Afghanistan.But the government of Pakistan does not cooperate in transporting of minerals into India. So it may take some more time to start the geological and mineral survey in Afghanistan. Mineral prospecting and mining activities may follow .