How to build Afghanistan’s mining of the Future and make Afghans one of the most prosperous people in the world

In previous guidance article industry expert & business advisor Alex Steinberg explained the many challenges in Afghanistan’s mining sector. Understand the many challenges before entering the mining business in Afghanistan | LinkedIn

This article offers now recommendations for government advisors, businesspeople, company owners and investors on how to develop the Mining Sector in Afghanistan.

Understand the current local Afghan approach toward mining

Over one hundred Afghan businesspeople/ companies are said to have received mining concessions. Many large potential mining areas are split in parcels of kilometers and assigned to different leasers. Most of those companies are private individuals/ businesses backed by groups of other local investors. Most have no or little mining experience.

Most lack a detailed understanding of the proper mining processes. Their technical people often lack the expertise of modeling & designing the mines. Their approaches are ad hoc, quick and dirty exploitation, without much planning or careful exploration.

Their result can be mediocre at best. They often just drill for the most promising areas, neglecting and wasting other reservoirs. Focus is on cheaper surface mining. Their efforts destroy the environment and future prospects of properly developing the mines economically.

In their brute force attempt – sometimes with unprofessional, dangerous explosions - they destroy precious minerals & other natural resources and their prospects of properly using the mines. Doing so, they may only get less than 20 percent of the mine. Wasting more than 80 percent!

For many of those companies the mining experience will be disappointing and probably unprofitable. Overall, they will have destroyed USD hundreds of millions of precious resources...And giving mining such a negative reputation, it will be difficult to attract serious and professional (international investors) later...

Like one observer put it: “Who wants to marry a woman who was horribly raped before?! That is how the land looks after those inexperienced, unprofessional “miners” have abused their mining area...!”

A different, possibly better approach?

Imagine the follow: The authorities give only mining concessions to the best ten local companies. These companies do then proper exploration. They may enter into Joint Ventures with other recognized international mining companies & investors. The mining is done in a professional way. The mine properly designed, planned and fully exploited.

These companies will apply sound mining procedures and subscribe to high quality standards respective to mining, environmental issues, community development, and health & safety.

The government will find it much easier to monitor those mining operations and gain important learning lessons. Each year the ten companies are evaluated and ranked according to sound key performance criteria (KPIs). The best of the ten mining companies are then rewarded with more mining rights in other areas.

Companies will have a continuous incentive to strive for excellence. Mining will maintain very high standards and professionalism. The exploration & exploitation will reach near optimal results.

Given the good experience in the mining sector, Afghanistan will be able to attract more high-profile international investors and mining companies. It will generate revenue of USD billions! ?

Overall, it will be a win-win situation for all: Government, mining companies, investors and Afghan people.

A trillion-dollar industry requires a well-thought out, systematic, end-to-end masterplan!

A trillion-dollar-industry does not just happen. Yes, there are trillions of dollar worth of minerals and other precious resources in Afghan mountains. But they do not have value for the Afghan people until they are carefully identified, excavated, process, shipped to end customers and paid for!

A diligent master plan is necessary that maps each step in the process and diligently plans the necessary inputs/ outputs along this value chain.

Conduct diligent, in-depth geological/ geospatial surveys for each mining area

Prevailing opinion proposes that most areas have been already surveyed by different foreign efforts at different times through the last decades. However, local mining experts interviewed insist that those surveys are incomplete and do not have the necessary details. It makes sense to have good and accurate information on granular details to effectively discuss and negotiate with interested local and international mining companies and investors.

The more accurate and detailed the surveys, the lower the risk for the investors, the easier to attract international investors, the easier for the Afghan authorities to negotiate good deals.

Surveying is a great and necessary investment to take full advantage of this trillions-of-dollars potential.

Plan the entire value chain and develop plan to build the necessary!

Excavation without processing does not help! Government ruled that all processing of mining resources shall be done in Afghanistan. This means an entire processing industry needs to be designed, financed and built. This effort will take years to become operational and must start now.

It requires:

1. Processing plants for different excavated mining natural resources
2. Powerplants, water supply, waste treatment facilities, and other support facilities
3. Housing & community services for thousands of workers
4. Hospitals, schools, and other care facilities
5. Transportation ways to bring processed materials to key markets including Central Asia, China, Iran, Pakistan
6. Other

Above efforts constitute creating an entire industry. It will take many years to build

Time and synchronize all steps

All efforts across the entire value chain need to be well-aligned and developed/ built in parallel.

If one step is not ready in time, it will be a bottleneck that will cost billions of dollars as nobody in the entire value chain is paid until the processed materials are shipped and sold!

Conclusion

Afghanistan is blessed with resources worth trillions of dollars. Afghanistan could be one of the richest countries in the world! What oil is for Saudi Arabia, minerals & other mining natural resources could be for Afghanistan.

However, it requires diligent planning and professional execution to turn richest in the Afghan mountains into riches for the Afghan people.

This article suggests a logical, systematic approach of how to succeed.

The author is ready to discuss with government, business and other industry leaders how to further detail and implement the plan.

If you are currently working in mining as investor, business owner, shareholder, expert, analyst or government advisor, please schedule a meeting to get to know each other and share expertise.

You can reach out to Alex Steinberg by connecting with him through LinkedIn, WhatsApp +966 531824178, or email at [email protected]

About the author

Alex Steinberg is an industry expert and business advisor who has helped develop and transform 30+ multinational companies and has guided governments to build their countries across key industry sectors.

Alex is currently in Afghanistan to help build the country focusing on key initiatives that positively impact the lives of millions of Afghans including Food & Agriculture, Telecommunications, Energy & Water, Mining, Manufacturing, Healthcare, Education, and other.

Alex’s life mission is to help and positively impact 700 million people using his business & technology expertise, methodologies of working with world-leading consulting firms, as well as insights into 230+ projects across all business functions, process, and value chains.

Legal Disclaimer

This article reflects the opinion of Alex Steinberg only. It does not claim to represent the viewpoints of any present/ former client, employer, or partner. The author acknowledges that there are often different viewpoints on a topic, which are equally valid. Constructive discussion rather than criticism can lead to better ideas and positive outcome & value to business and society.

If you are an expert, government advisor or business owner, you may reach out to Alex Steinberg through WhatsApp at +966531824178. (Alex is in Kabul, but continues to use his international number).

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