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Metals Found in Afghanistan
Old 06-14-2010, 12:42 PM   #1
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Metals Found in Afghanistan

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Wonderful! Afghanistan can go from a backward, but relatively environmentally clean country, to a backward but environmentally despoiled country.

Would you prefer to look out you window and see a poppy field, or a lithium mine?

Ha
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Old 06-14-2010, 01:34 PM   #2
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Would you prefer to look out you window and see a poppy field, or a lithium mine?

Ha
I'll take cheap lithium over expensive heroin anyday, Ha.
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Old 06-14-2010, 04:30 PM   #3
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This is nothing but politics. It makes Afghanistan look worth investing in by companies and development banks. But it's not like there is a shortage of lithium in the world. There is lots of lithium underground, it is just not cost effective to produce it because the price is too low. Additional supply is not going to do much but lower the price. I think this is all about countering the argument that is out there that Afghanistan has no potential because it has no resources. It had a GDP last year of a little over $10 billion. If it grows to 5 times that it would burn through these $1 trillion in metals in 20 years...not exactly anything of long term importance.
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Old 06-14-2010, 05:46 PM   #4
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This is nothing but politics. It makes Afghanistan look worth investing in by companies and development banks. But it's not like there is a shortage of lithium in the world. There is lots of lithium underground, it is just not cost effective to produce it because the price is too low. Additional supply is not going to do much but lower the price. I think this is all about countering the argument that is out there that Afghanistan has no potential because it has no resources. It had a GDP last year of a little over $10 billion. If it grows to 5 times that it would burn through these $1 trillion in metals in 20 years...not exactly anything of long term importance.

So, a new revenue source worth potentially 100 times the current total Afghan GDP is "not exactly anything of long term importance" ?

Exactly what would you consider significant, a drive-thru Starbucks in Kabul?
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Old 06-14-2010, 05:49 PM   #5
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So there was something to that cold call offer on the phone today from a broker offering Afghan Lithium bonds paying over "20%"...
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Old 06-14-2010, 06:25 PM   #6
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So there was something to that cold call offer on the phone today from a broker offering Afghan Lithium bonds paying over "20%"...
...from the Nigerian Broker?
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Old 06-14-2010, 06:57 PM   #7
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No blood for lithium!
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Old 06-14-2010, 08:20 PM   #8
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You guys can't trick me into investing into these Afghan metals, I'm sticking with Iraqi Dinars.
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Old 06-14-2010, 08:22 PM   #9
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Maybe that was why the Russians for fighting back in the 1980s?

'Real danger' in discovering Afghan minerals
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Old 06-15-2010, 01:57 PM   #10
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So, a new revenue source worth potentially 100 times the current total Afghan GDP is "not exactly anything of long term importance" ?

Exactly what would you consider significant, a drive-thru Starbucks in Kabul?
The whole point is that this discovery could help the Afghan economy grow. So let's say it does - spectacularly - to $50B a year. This new resource would be gone in 20 years and they'd be back where they are now. That situation is not long term enough to get a loan to build the infrastructure to extract it. We might help them...but how would that be different from the subsidy we give them now?

If it does not lead to economic growth and does last 100 years then they get another 100 years of stone-age existence.

So, where am I wrong? Where is the long term importance?
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Old 06-15-2010, 03:27 PM   #11
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Exactly what would you consider significant, a drive-thru Starbucks in Kabul?
How about a battery factory. How about sustainable agriculture (poppies?)?

Hmmm, I guess it's pretty tough to come up with anything for them. Why again are we there?
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Old 06-15-2010, 03:46 PM   #12
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The whole point is that this discovery could help the Afghan economy grow. So let's say it does - spectacularly - to $50B a year. This new resource would be gone in 20 years and they'd be back where they are now. That situation is not long term enough to get a loan to build the infrastructure to extract it. We might help them...but how would that be different from the subsidy we give them now?

If it does not lead to economic growth and does last 100 years then they get another 100 years of stone-age existence.

So, where am I wrong? Where is the long term importance?
I think too many people talk of economic growth in the abstract (whether it be US growth vs European growth differences of 1-2% per year, or tripling the total size of the Afghan economy). We're not talking about an abstraction here, we're talking about the real quality of people's lives. I urge you to visit Afghanistan and see how the people live. The equivalent of $1000 per person could make a HUGE difference in the happiness of these people, if the wealth were available to them. This is the difference between children living or dying, the difference between a life of blindness due to malnutrition or of having healthy vision, the difference between having clean water and not. To write this off because it appears it won't last indefinitely is unconscionable. "It will never work, forget it, let them eat dirt--and their kids, too. They are poor now, I guess nothing can change that."

The bigger problem that does need discussing is how best to leverage this opportunity to build a sustainable economy. The problem with mineral extraction as an industry is that it tends to employ relatively few people per dollar of revenue, and the large capital costs for equipment mean that giant enterprises (private companies or the government) tend to do it best. This is not a formula for broad economic development among the entire populace. Even in countries that do spread the money around, it leads to a patronage and dependence-based economic and social structure (example 1: Saudi Arabia) that does not result in widespread entrepreneurship and a broad economy. I'm sure there's a way to make things work, but it's a tall order, and it's not like Afghanistan has a great foundation in place already. But, it's better to have this opportunity than not to have it.
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Old 06-15-2010, 03:47 PM   #13
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The whole point is that this discovery could help the Afghan economy grow. So let's say it does - spectacularly - to $50B a year. This new resource would be gone in 20 years and they'd be back where they are now. That situation is not long term enough to get a loan to build the infrastructure to extract it. We might help them...but how would that be different from the subsidy we give them now?

If it does not lead to economic growth and does last 100 years then they get another 100 years of stone-age existence.

So, where am I wrong? Where is the long term importance?
So, based on your numbers above, their economy ramps up to 5X over what it is now, and sustains that for 20 consecutive years. Impressive growth by anyone's standards. Now, factor in the 7x rule- every dollar generated locally turns over 7x in the local economy, in the way of support services, retail growth, etc. So we take a country that is impoverished, underdeveloped, and was believed to have limited natural resources. Suddenly, they are sitting on (Known) reserves of strategic resources with an estimated worth of a trillion dollars, which affords them the basis to participate in the world economy, and allows them to develop internationally and prosper locally. If this is for real, the rest of the world will come rushing in to help them develop and spend their new found wealth. New technology and better goods and services will be brought in, and will trickle down to and be embraced by the majority of Afghani's; standards of living will improve. They won't be a undeveloped backwater anymore, with valuable goods to export and cash coming in for for imports. A reasonable person would conclude that this discovery and the potential for growth is of long term importance to the Afghanis. In fact this scenario sounds a lot like Saudi Arabia in the 50's to me...

Most concerning to me is why would you think that they would instantly revert back to the Stone Age when this (first) identified deposit runs out? This is is an insult to the people of Afghanistan who do want better lives for their children and grandchildren, and have been willing to stand up to the Soviets and the Taliban to get it.
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Old 06-15-2010, 03:54 PM   #14
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Why again are we there?
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Old 06-15-2010, 04:16 PM   #15
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How about a battery factory. How about sustainable agriculture (poppies?)?
1. What would they put the batteries in? Any manufacturing investment would need to be market-driven.
2. ....a sustainable economy based on illegal drugs? Oh, a joke...
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Old 06-15-2010, 04:24 PM   #16
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Interesting observations. But 'we' shouldn't be having this conversation, the Afghani's should, in conjunction with other NGO entities who can coach them (not guide them, not take over for them) in making the choices they need to make for their country.

All it takes is:

A stable government, relatively free of graft and corruption
Freely & legally elected leadership
An educated populace

This info on mineral wealth has been known for more than 20 years, but the in-country situation has not allowed it to be developed to create wealth. Having this knowledge, won't erase centuries of segregation and tribal differences. It may be another 20 years before it can be exploited -- and it won't end the conflict between the Afghani's and the Taliban and the Pakistani's and the . . .

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Old 06-15-2010, 04:36 PM   #17
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All it takes is:

A stable government, relatively free of graft and corruption
Freely & legally elected leadership
An educated populace
I would suggest it also takes internal and external security. A stable political system can't develop when the Taliban is assassinating freely elected local leaders. Education can't happen when the Taliban is burning down schools. Economic development will be slowed if the roads are rife with IEDs and pop-up roadblocks and "tax collectors". But the insurgents, extremists, and terrorists will have more trouble making progress when the people have hope--and a few coins in their pocket. And folks will do less dying in hopes for some great reward in the hereafter if life in the here-and-now is a little more bearable.

And the Afghanis can ask whoever they want for help. NGOs are fine and do good work, but mining companies know how to get minerals out of the ground.

And I think we can discuss this here. We discuss everything here.
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Old 06-15-2010, 04:40 PM   #18
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And the Afghanis can ask whoever they want for help. NGOs are fine and do good work, but mining companies know how to get minerals out of the ground.
The average Afghani will see more wealth in his lifetime if they had RioTinto, BHP, or FreeportMcMoran running the mines than any NGO mired in bureaucracy with no profit motive. ...
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Old 06-15-2010, 04:53 PM   #19
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1. What would they put the batteries in? Any manufacturing investment would need to be market-driven.
2. ....a sustainable economy based on illegal drugs? Oh, a joke...
If they have lithium why not build lithium ion battery factories to train and employ far more people than the extraction industry would...as someone noted above. The batteries would be a high value export and could likely be produced at lower cost than in Japan or Korea. Maybe Afghanistan can even become a center for battery technology research and development. That would be sustainable. Even after the lithium runs out they can still import lithium or whatever teh necessary metal is then and continue to manufacture.

Illegal drugs are not the only use of poppies. They are used for legal pharmaceuticals as well. And the same fields could be used for other cash crops

I meant no disrespect to Afghanis. But the 7x factor does not apply in every situation. You will not get a 7x factor in a tribal culture where the GDP comes from mining. As you say, it will be somewhat like SA in the 1950s. Oil accounts for 45% of SA GDP meaning the "factor" is more like 2. And all that oil has only benefited a relative few.
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Old 06-15-2010, 05:01 PM   #20
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The average Afghani will see more wealth in his lifetime if they had RioTinto, BHP, or FreeportMcMoran running the mines than any NGO mired in bureaucracy with no profit motive. ...
I do agree with that. But it still does not mean they are likely to see very much money.
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