Thursday, July 1, 2010
Don't Panic Don't Panic!: Is it good to live in a country with mineral wealth?
Posted by Andisheh Nouraee on Thu, Jul 1, 2010 at 5:05 PM
I’m not up on my mining slang, so I don’t know the precise slang one is supposed to use to indicate a mineral deposit larger than a mother lode. A maternity ward lode? A crowded OB/GYN waiting room lode? A mall restaurant happy hour with a half-off Pinot Grigio MILF special lode?
What exactly did the geologists find? Enough iron and copper to make Afghanistan one of the largest exporters of both. Enough gold to blingee all of south and central Asia. And enough niobium to do a lot of whatever the heck niobium does. (Writer Googles niobium and determines it's used for metal alloys in jet and rocket engines, as well as MRI machines. Writer is more-than-willing to “Bing” instead of “Google” in future columns, if Microsoft gives him an xbox 360.)
Our nosey geologists seem most excited about the vast sea of lithium baked into the earth underneath Afghanistan’s Ghazni province. Early indications suggest it’s one of, if not the biggest lithium deposit in the world.
Lithium is indispensable to modern life. Psychiatrists rely on it to treat severe mood disorders. Electronics makers rely on it as the key ingredient in rechargeable batteries. The original Star Trek crew relied on it for the dilithium crystals that powered the Enterprise to speeds faster than light. And Nirvana relied on it as the fifth song on its seminal Nevermind album.
You see, without “Lithium,” Nevermind would have gone straight from song four (“Breed”) to song six (“Polly”) which have wrecked the flow. No lithium, no entire 1990s. Think about it.
How much is all that metal worth? Approximately $1 trillion (incidentally, the approximate cost thus far of the War on Terror™). That’s a lot of money by anyone’s standards, but an astronomical amount by Afghan standards. Afghanistan is one of the poorest countries in the world. Its GDP is about $500 per capita. By comparison, GDP per capita in the U.S. is roughly $47,000.
If you were digging a hole to plant an azalea in your back yard and discovered, say, a diamond mine, you’d be set for life. “Hey, mom, there’s a diamond mine back here. Woohoo! I’m rich. Let’s all go to Golden Corral. My treat.”
But mineral wealth under your house and mineral wealth under your country are two very different things. For some reason, mineral wealth under your country is more often a bad thing than a good thing.
If you think I’m off-base, try saying the following sentences with a straight face. “Sweetheart, let’s move to lithium-rich Bolivia. We can make a better life there.”
Also try this. Here’s a list of the world’s top 15 exporters of petroleum, in descending order: Saudi Arabia, Russia, United Arab Emirates, Iran, Kuwait, Norway, Angola, Venezuela, Algeria, Nigeria, Iraq, Libya, Kazakhstan, Canada, Qatar.
Find the two countries on the list that are prosperous, free democracies. They are No. 6 Norway and No. 14 Canada. What do they have in common other than quality ski resorts? They were both prosperous, free democracies free democracies before they had oil. Mineral wealth didn’t make them great places. They’re great places that just happen to have mineral wealth.
$1 trillion in mineral deposits under Afghanistan is likely to fuel the tribalism and warlordism that makes Afghanistan such a lousy place already. Afghanistan is already is already subject to violent territorialism. Do you think billion-dollar lithium mines under the ground are going to make that territorialism better or worse? The simple fact is countries where the economy relies on natural wealth are almost always worse off than countries that actually make stuff.
Luckily, those Obama people know their history and have assigned U.S. government teams to help Afghanistan prepare its mining management office for an influx of big mining corporations. You see, if there’s one thing we Americans are great at, it’s managing big corporations who make billions by digging things out of the ground.
Ask a West Virginia coal miner or a Gulf Coast fisherman if you don’t believe me.
Comments (10)
Showing 1-10 of 10
i'm so happy, cuz today i struck a lode
the mother lode
i'm so excited, i can't wait to take my share
me rich faqir
(Eh, that's as far as i got. Interesting report.)
like
dislike
My hope is that Afghanistan can use this to better themselves and get into a better standard of living for their people. Things like maybe; roads, schools, running water...something for the betterment of their people.
Am I hoping for too much?
I don't have that much trust in our government with resources including money and minerals. I find that Government is wasteful and that the money typically ends up lining their own pockets instead of what it was intended for.
Most recently I was a little displeased with our Government MMS team's handling of the Gulf Spill - but maybe Andisheh is right and the Government is where all our trust and hope should lie.
>>but maybe Andisheh is right and the Government is where all our trust and hope should lie.
Huh?
I thought your last paragraph seemed a little pro US Government of taking over Afghanistan's Minerals. Afghanistan could really use this to their betterment not ours.
You're probably right Andisheh. Large mineral wealth seems like it should lead to prosperity. There's no real reason that money from nationalized resource extraction can't be put into infrastructure and education to develop a modern economy, but for people in charge that rarely seems like a good idea if it's not a democracy. Afghanistan may be different. Sure, it's election seemed to have lots of fraud involved, but there was an election and at least some attempt to win it fairly. I don't actually have a huge amount of optimism here, but it could be better than the countries that started out with nothing resembling a democracy.
And Pete, this is where your anti-government argument fall flat. You seem to not want government involvement (unless maybe you were just talking about US involvement), but the only way this can possibly help Afghanistan is if the government is very involved. Otherwise you'll just get some big companies that come in, raze the land, get rich, and leave most of the country worse off. There's no way to leave this to private market forces and to improve the country at the same time.
Jason - you are right their Government needs to intervene here. I think this is a big moment for Afghanistan to improve their country.
The problem with a lot of mining countries is that they have two choices:
1) Private mine control. This almost always comes from foreign companies who ship in their own engineers and workers, and send all the profits back to their home country. If a french mining company, using almost all french workers, mines the hell out of lithium, it doesnt do much for Afghanistan. You just get really rich foreign workers next to the really poor local population. Which leads to....
2) Government appropriation of mines. Local population says we are poor, they are all rich even though it is 'our' copper they are mining. So the government nationalizes the mines or taxes the hell out of them. Leading to government corruption as well as the USA calling such country socialist/communist, and foreign companies pull out while secretly financing rebellions which leads to civil unrest. (See: Bolivia).
The arab oil rich countries are a little different. But for the most part in mining countries, it is extremely difficult to get the right combination of foreign investment with taxes so that the local population actually *sees* any of the wealth.
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