DOD Helps Afghans Develop Mineral Enterprise

By Cheryl Pellerin
American Forces Press Service

WASHINGTON, Dec. 7, 2011 – A Defense Department task force working with the U.S. Geological Survey is modernizing Afghanistan’s geological enterprise so the war-torn nation can stimulate international investment in its rich deposits of minerals, fossil fuels and rare-earth elements.

The DOD Task Force for Business and Stability Operations is providing state-of-the-art equipment and, with USGS, training for geophysicists at the Afghanistan Geological Survey so the government eventually can use modern tools to conduct and oversee mineral exploration there.

“We’ve been working with the USGS on this program since September 2009,” Emily Scott, task force director of natural resource development, told American Forces Press Service.

“We just signed another interagency agreement to continue working with the USGS on geophysics capacity training for the next fiscal year,” she added. The fiscal year ends Sept. 30, 2012.

After several months of mainly classroom training for five Afghan scientists at the USGS in Denver, Colo., Scott said, “this year we will focus on [getting the scientists] out in the field in Afghanistan and collecting ground geophysics data with the equipment we purchased.”

Geophysics is the study of Earth’s shape, gravitation, magnetism, internal structure, composition and other features.

For the purpose of mining, geophysicists can figure out what’s in the ground by measuring characteristics of the surface material and the subsurface rocks.

These include the chemical composition of the surface material and, for subsurface rocks, electrical conductivity, tiny variations in the earth’s magnetic and gravity fields, and how different rocks absorb light, called infrared spectral reflectance.

“Each rock has its own characteristic density,” Dr. Victor F. Labson, director of the USGS Crustal Geophysics and Geochemistry Science Center in Denver, told American Forces Press Service.

“By understanding the density distribution and understanding which rocks have what density -- and we [know] that from a hundred years of laboratory measurements -- we can then discern what sort of rocks are in the subsurface from the gravity variations.”

The same thing is true for magnetics, conductivity and light absorption, he added -- each kind of rock responds differently to each measuring instrument.

These properties can be measured on the ground and, since 1943 when magnetic anomaly detectors were used on planes over the ocean to hunt for enemy submarines during World War II, from the air.

The Afghan geophysicists are being trained in ground geophysics but the real need is to enable them to work with companies that invest in exploring Afghan mineral deposits and bring in their own contractors to do the flights and data collection.

“There’s a huge commercial industry that supports airborne geophysics,” Labson said, “So we hope they’ll have the understanding and the ability to write [specifications for and to monitor] contracts, and then interpret the data resulting from airborne surveys.”

The USGS has just completed and published on its website more than 20 highly prospective area reports for deposits in Afghanistan that seem to have particular potential, he said.

“The idea is to help create a stable economy, that’s really the underlying mission of the task force,” Labson said.

“Developing the resources would be an economic boost,” he added, “but there are a lot of jobs associated with it as well.”

Afghanistan’s Ministry of Mines, supported by the task force, made progress on its goals yesterday in London at an international conference called Mines and Money.

There, the ministry opened tender processes, or auctions, for exploration and later exploitation of four project areas with deposits containing gold and copper.

“Afghanistan is a geologically rich country,” Minister of Mines Wahidullah Shahrani said yesterday in a statement. “Assessments of only a fraction of the country’s land area indicate the potential for considerable mineral resources.”

What this means, Scott explained, “is that international investors will compete for each deposit for the next year.”

The companies will have until March, she added, “to submit what we call their expressions of interest, at which time we’ll begin qualifying the companies and determining who’s qualified to bid. Then they’ll be invited to put bids together for each deposit.”

The four copper and gold tenders will be marketed in parallel, Scott said. A lithium deposit in the Herat province will be marketed separately.

Of the first four deposits, one is a copper deposit in Herat province called Shaida, Zarkashan is a copper and gold deposit in Ghazni province, Badakhshan is a gold deposit in the country’s north, and Balkhab is a copper deposit in Sar-I-Pul and Balkh provinces.

“These are exploration deposits,,” Scott said, “so at this point the companies will have to come in and do ground geophysics, airborne geophysics and drilling in order for them to come to a value on the deposit at that level.”

She added: “Copper and gold deposits of this size tend to be worth billions of dollars.”

Security, Economy in Iraq Improving From Local Level Up

By Jim Garamone
American Forces Press Service

Dec. 6, 2007 - A focus on security in local areas has brought about an improvement in security throughout Iraq, and officials believe the country's economy needs to follow a similar track, a Defense Department business transformation official said. "The security progress we've made in Iraq is because of our realization that everything in Iraq is local," Paul A. Brinkley, deputy undersecretary for business transformation, said in an interview. Brinkley leads the Task Force for Business and Stability Operations in Iraq.

And the security situation is improving. Attacks throughout the country are down, Multinational Force Iraq officials have said. Brinkley said the improvement was like someone flipped a switch. "I would never have forecast in September this suddenness of normal," he said.

He said the economic reconstruction in Iraq must follow the same path. Coalition officials made a mistake in 2003 by thinking that macroeconomic policies would work in Iraq, policies in Qaim, in the west, would also work in Basra, in the south, for example, Brinkley said. "We went in thinking it was a centrist, Baathist, Soviet-style centrally run economy; it wasn't," he said. He explained that every local sheikh or local leader had his own unique deal with the central government.

His task force learned this firsthand when they started operations in November 2006. "In every factory they went to, the situation and relationship with Baghdad was different," he said. "It ranged from near-capitalistic to completely centrally run; there was nothing in common."

Any economic policy must realize that Iraq is a very complicated, diverse society. "It's tribes; it's sects; it's local leaders; it's centuries of built-up relationships among people," he said. The country's economy will not respond to centrally issued edicts but instead needed more tailored efforts, Brinkley said.

In January 2007, the surge of U.S. troops into Baghdad allowed the coalition to begin working more at the local level, Brinkley said. Now economic planners must continue thinking locally, he added. "To get the economy going, you have to roll up your sleeves and do the hard work of understanding what exists locally and how you get it going again," he said. "That's just not a free lunch."

The United States has sufficient expertise at the high end, or macro-level, of the economy and the low end, or micro-level. Now the coalition needs to address the middle -- and largest -- part of the economy, Brinkley said.

Still, the Iraqi government and the coalition do have some macroeconomic work to do, he said. "Iraq needs a legal framework; it needs policy; it needs a central banking system; it needs justice, a legal framework, and a trade policy. That's what we do well," Brinkley said, adding that the Iraqi government is working on programs that will address these high-end portions of the economy eventually.

The low end (micro-level) of Iraq's economic issues includes humanitarian missions aimed at improving local conditions. The U.S. Agency for International Development and the Commander's Emergency Response Program help cover this aspect of coalition support to the Iraqi economy.

Long-term economic solutions in Iraq will include creating jobs for the vast number of people in the middle, getting private businesses to flourish, and spurring industry to reopen. "What was missing in Iraq was an acknowledgment that this was an industrial economy; we're not dealing with Afghanistan," Brinkley said. "There is an existing industrial economy; there is a well-educated workforce; there were engineers and accountants. (In 2003,) these were people who thought they were going to see their prosperity take off, and four years later they are still out of work."

A moribund industrial economy means that all businesses that rely on it are also on their knees. "Shut down a factory in Gary, Ind., it's not just the factory workers who suffer," Brinkley said. "It's all the surrounding infrastructure that supports the factory."

The task force is working to restart the economy and take the differences throughout the country under consideration. Officials intend to use as much of the $10 billion a month in coalition spending in Iraq to stimulate economic growth, Brinkley said.

The concepts are tied together. "All of our non-secure communications in Iraq were being done via satellite. It's the most expensive way to do communications," Brinkley said. "We've used DoD spending to light fiber optic circuits with a private Iraqi telecomm provider so now we're moving our non-secure traffic onto that fiber.

"By getting the fiber lit, that creates a backbone the rest of the Iraqi economy can take advantage of," he continued. "So now everybody doesn't have to mount a satellite dish on the roof to get access to a computer."

Banking is another example. "There's a consortium of 10 major financial institutions that have 160-plus bank branches open in Iraq today," he said. These banks are linked together, and the task force is steering Iraqi companies to open accounts with these financial institutions.

In September, coalition contracting officials let $400 million in contracts. Iraqi companies bid on these contracts, but if the companies want to be paid, they must have accounts in the Iraqi banks. "We're steering them to the process. We're not building it for them; we're 'incenting' them to use these practices," he said.

Iraq had a huge number of state-owned businesses. "We have restarted 17 state-owned factories between January and September," he said. "Opening 17 factories in Iraq wasn't easy; just try opening factories in America that have been shut-down for four years. We have 30 more in process that we will lay in between now and March of next year."

These factories run the gamut from labor-intensive garment factories, to mechanical assembly plants and tractor factories. Overall, for every job created in manufacturing, four or five related jobs are created in servicing the factory.

Addressing the 50 percent unemployment problem in Iraq is critical to fostering a stable and secure enough environment required to encourage reconciliation between the various groups, Brinkley said.

Regional differences abound even in state-owned businesses because of the nature of Saddam Hussein's regime, Brinkley said. "If you think of the way Saddam's regime worked, the knowledge work went to the Sunni areas, the labor (-intensive work) went to the Shiia areas," he said. This arrangement is why it is easier to create a larger number of jobs in the Shiia areas, which feeds Sunni concerns that they are being overlooked, Brinkley added.

The problem with the large factories, such as cement plants, being located in Sunni areas is that they are electricity intensive, and the Iraqi electric grid is not ready to handle restarting these factories, Brinkley said.

Brinkley is most excited about getting foreign capital interested in Iraq. There are only two ultimate outcomes in Iraq: chaos ... or extreme prosperity, he said. "The question is, how long is it going to take for them to become prosperous?"

Because of the oil treasure lying under the country, Brinkley said, people who support the hydrocarbon industry are going to do well in Iraq. "What we offer is a chance for businesses to come in at a time when security has improved dramatically and get in on the ground floor," he said.

Brinkley said his task force is a catalyst. The group can link interested businesses with appropriate Iraqi government agencies or private businesses. "Once private companies come in and start to close deals with the Iraqi government, we can all come home," he said.

"I have more optimism today in Iraq than I had in the 19 months we've been doing business there," he said.

The United States will deliver on industrial restarts and banking and other economic areas, Brinkley said. "We really have a moment where, if we can deliver that, (we're reaching) the tipping point," he said.