Element of the future, war of the present, and a rough, old land

Like us on Facebook

What links a factory in Michigan to a poor, war-torn country more than half a world away? Lithium.

Lithium is an element, atomic number 3. It has numerous applications, most commonly as a component in the production of glass and ceramics. But it is used almost as often, and more and more in our digital age, in batteries - rechargeable, lithium-ion batteries in laptops, cell phones, iPods, Blackberries and other PDAs.

And lithium is used in the new electric vehicle batteries, like the ones that will be produced in Holland, Michigan for use in the Chevy Volt and the Ford Focus, with the development of more efficient lithium batteries for electric cars - that is, so they can run as powerfully as gasoline cars - a vibrant, ongoing process.

The U.S. produces some lithium, but it imports most of the lithium it uses. Indeed, the U.S. is the number one importer of lithium in the world, with almost all of it coming from mines in Chile and Argentina, which countries are the world's two largest producers.

As people in the United States and throughout the world become more and more enamored of personal digital devices, and as motor vehicle industries and national economies become greener, it is highly probable that demand for lithium will increase. To address the prospective rise in demand, nations and private sector interests have been looking for additional, exploitable lithium deposits.

New sources

In recent years, two countries have emerged as potentially rich sources of the increasingly popular element. One is Bolivia. The other, Afghanistan.

According to the U.S. Geological Survey, 5.4 million tons of lithium could potentially be extracted in Bolivia, compared with 3 million in Chile, the current leading producer. Japanese companies, like Mitsubishi and Sumitomo are interested in extracting Bolivian lithium, as are European consortiums and other companies. But the Bolivian government under President Evo Morales is wary of outside exploitation, especially from the United States.

Morales said in his second-term inauguration speech that Bolivia, South America's poorest nation, will develop the lithium on its own, to ensure that the benefits will be reinvested in the country and the region. Bolivia is moving ahead with a pilot program, but there are still many obstacles for the country to overcome before it can begin to extract the element and reap the rewards.

Afghanistan has several things in common with Bolivia. It also is a poor country - the poorest country, outside of Africa, on the planet.  It, like Bolivia, is landlocked, which adds significant problems to benefitting from mined materials. And the lithium in both nations is mostly in remote, mountainous regions.

But, unlike Bolivia, Afghanistan has a war going on.

And, although both nations have been called "the Saudi Arabia of lithium," there is not yet a scientific estimate of how much lithium is in Afghanistan.

"We know that there is lithium there, in two forms, but we will not be able to estimate how much until our chemical assessments are in," said Jack Medlin, a scientist with the U.S. Geological Survey, adding that the USGS, working in conjunction with the U.S.  Task Force for Business and Stability Operations, has a plan in place to take a sampling of lithium from certain dry lake beds.

Medlin was part of the USGS team that, after aerial surveys with highly sophisticated instruments, announced large deposits of iron and copper in the country in 2007, as well as gold and rare earths. But, although the USGS estimated the amount of iron, copper, gold and other minerals they found, they did not try to quantify the lithium.

"There was very little interest in lithium in 2007," Medlin said. "But lithium has come to the fore in the last year or so."

The element occurs in Afghanistan in a hard-rock mineral form, which would be found in the mountains, and in a granular form in brine and dry lake beds.

"In rock sources, lithium is hard work to mine and extract," Medlin said. "But it is a lot easier to extract from dry lake beds, and not a very high tech operation. Conceivably, a mining operation could start extracting lithium from dry lake beds in a year or two."

Difficulties

Still, even if the USGS assessment does show that there are vast amounts of lithium in Afghanistan's dry lake beds, mining it will not be easy, for several reasons.

For one, as said, there's a war going on, and the people involved in mining operations are as averse as anyone else to having bullets flying about them.

The lithium deposits that have been identified are mainly in Ghazni Province, in the south central part of the country, between Kabul and Kandahar, where there is significant Taliban activity, disorder and violence.

Another difficulty is infrastructure or, more accurately, the lack of infrastructure.

There are few usable roads, and no freight rail system.

"You can have all the minerals in the world, but if you have no way of getting them out, they're not worth anything," Medlin said.

There are additional problems. The Afghan government is struggling to establish governance - that is, not only military and security forces, but also a workable, day-to-day bureaucracy, where institutions are fostered and standards of commerce maintained.

Corruption is rampant in Afghanistan. Illiteracy is rife. Although the Afghan government and the U.S. Command are working to change both the reality and the image, southern Afghanistan cannot be called a healthy, reliable or safe environment for business.

Medlin said that Western mining companies consult a list of factors when determining whether to invest in a business venture in a foreign country. Among these factors are security, stability, transparency and a minimum of corruption. Afghanistan does not score well on any part of such a test.

"Doing business in Afghanistan is very risky proposition, and American companies are risk-averse," said Jason Campbell, a central Asian analyst with the RAND Corporation.

But some entities other than Western countries and companies are more willing to take a gamble on exploiting Afghanistan's potential mineral riches. Namely, China.

Enter China

In late 2007, Afghanistan awarded the China Metallurgical Group, a state-owned company, with a contract to develop the Anyak copper field in Lowgar Province, which abuts Ghazni Province and is about 20 miles southwest of Kabul. Anyak is, by some estimates, the largest undeveloped copper field on earth.

Former Afghan Mining Minister Mohammed Ibrahim Adel said at the time that the Chinese company agreed to invest nearly $3 billion to both set up the mining operations and overcome the lack of basic infrastructure.

"With this mining project at the Aynak copper field, we will have about $2.8 billion of direct investment," Adel said. "About $500 million will be invested in building an electrical power plant. And a large amount of money also will be invested in building a railroad."

Adel was later accused of accepting a $20 million bribe from the Chinese company to accept their bid. In February of this year, a few months after Afghan President Hamid Karzai won re-election, Adel was booted from the government.

China Metallurgical, however, retained the contract, although progress on electrical power and Afghanistan's first freight railway is not yet apparent.

"The Bush administration did everything right in helping Afghanistan tender the mining opportunity to the world business community," said Frederick Starr, research professor at Johns Hopkins University and chairman of the school's Central Asia-Caucasus Institute.

But despite President George W. Bush's efforts, there was little interest among American companies, he said.

"Then China swaggered in with a lot of spending cash, including plenty for local bribes, and walked away with the contract," Starr said.

Experts agree that Chinese companies not only have plenty of money to throw around, but they are less risk-averse and much more patient regarding time frames than are Western companies, because they are owned and ultimately run by the centralized state.

"China is willing to wait the 30 or 40 years it may take to develop a copper mine, even in averse conditions," USGS' Medlin said.

"China has massive amounts of cash and is not restrained by shareholders," Starr said. "And China is looking to scoop up mineral deals where they can be found."

China has made overtures to Brazil regarding its lithium fields and has to be considered a likely wooer of Afghanistan for its Ghazni Province lithium when the numbers come in.

"The great shame here is that the U.S. and its troops are making all the sacrifices to stabilize Afghanistan and China could well walk away with the prize," Starr said.

Transportation is the key

Starr emphasized that, beyond the serious military, security and bureaucratic difficulties facing Afghanistan, looms the even larger problem of transportation.

"You not only have to have transport before you can do mining, but a transportation network is a benefit for other enterprises, like agriculture, and becomes a benefit in and of itself, by the services it brings to the people and all the accompanying businesses it promotes," he said. "A transport network will give Afghanistan a life of its own."

Starr noted that a freight railroad is currently being constructed in neighboring Uzbekistan, with financial backing from Japan, and the possibility for feeder lines into Afghanistan will be realistic comparatively soon. There are hydroelectric projects in Tajikistan, a nation that also abuts Afghanistan, which could eventually bring power to Afghan mining operations.

The Karzai government, Starr said, is currently making the right moves in wanting to exploit its untapped mineral wealth.

"They need skilled individuals, yes, and they need infrastructure improvements," Starr said. "But Karzai recognizes these needs. The question is: Does the U.S. recognize the importance of assisting Afghanistan in getting there?"

Starr said the transportation system, the power lines, and the extraction of the minerals, including lithium, will happen eventually, with or without U.S. participation.

U.S. policy

"The biggest disincentive to stabilizing the Afghan government so that transportation and other infrastructure improvements can be developed is the Obama administration's announced schedule for pulling out of the country," Starr said.

President Obama has set July 2011 as a date for a "draw down" of U.S. military forces in Afghanistan.  Central Asian experts agree that, were the U.S. to actually leave Afghanistan a year from now, the results would not be good.

"A premature withdrawal of U.S. forces would be disastrous," said Ahmad Majidyer of the American Enterprise Institute. "Afghan troops and security forces are simply not ready to take over."

Experts also agree that a U.S. withdrawal is highly unlikely.

"Gen. Petraeus has indicated that we will stay until the job is done. Hillary Clinton has told the Afghans that we will not desert them," Starr said.

Gen. David Petraeus, the U.S. and NATO Commander in Afghanistan, while publicly endorsing the Obama policy for a gradual troop withdrawal beginning next July, has said he may propose to the President  "some significant changes" to the war strategy.

"We know the road ahead will not be easy," Secretary of State Hillary Clinton said recently at a multinational conference in Kabul. "Citizens of many nations represented here, including my own, wonder whether success is even possible - and, if so, whether we all have the commitment to achieve it. We will answer these questions with our actions."

Karzai himself has said that it will take until at least 2014 before his nation can manage its own security.

Experts say that high-ranking U.S. officials and diplomats have been assuring Karzai and Afghan officials that they will not be abandoned. But Starr said the Afghan people, the governments of the region and the enemy - the Taliban and al Qaeda - need to hear this from Obama.

"The Afghans are saying, why should we deal with the U.S. when the U.S. is going to leave?" Starr said, adding that the U.S. has abandoned Afghanistan in the past, after the Soviet Union ended its occupation of the country in the late 1980's

"They need the President's assurance, so that the whole project - the military, the bureaucratic and the economic aspects of it -- can go forward," he said.

Obama's withdrawal pledge is for political reasons in the U.S., but the administration does not seem to realize the harm it does U.S. policy in central Asia. Starr said.

Starr repeated a saying attributed to the Taliban, who are waiting for the U.S. to leave so that they can re-assert control over Afghan society:  "You have the watches; we have the time."

South Korean model

Some of the criticism of U.S. policy in Afghanistan is its great expense. But Starr pointed out that the U.S. has spent much more time and money in protecting and helping to develop South Korea, and the commitment has paid dividends.

"South Korea has been transformed through U.S. involvement into a viable government and a vibrant economy," Starr said. "I truly believe such a transformation can take place in Afghanistan if the U.S. focuses its efforts and remains committed."

The South Korean economic transformation is evident in many ways, from Samsung to Hyundai, from democratic reforms in government to a higher standard of living for the South Korean people.

 LG Chem Ltd. has emerged through the U.S.-supported South Korean transformation, which brings us full circle, back to Holland, Michigan. LG Chem is the parent company of Compact Power, the firm that earlier this month broke ground for an electric car factory, using U.S. stimulus funding provided by the Obama administration.

At the groundbreaking, President Obama said the jobs being created at Compact Power were "the jobs of the future."

South Korea could not have done it without U.S. assistance. Compact Power could not have done it without U.S. assistance. But Compact Power, as well as the digital and green revolutions, will need lithium, a lot of lithium, to continue to grow. That lithium can be found in Afghanistan.

But to make that lithium available will also take U.S. assistance - that is, if the U.S. wants to be more than just some other nation's customer for the element of the future.