DUBAI: From India to Poland, investors are tempted by the promise of lucrative returns in Afghanistan's mining and energy industry, but most say they will see how a raging insurgency plays out before putting down their money. Afghanistan is estimated to be sitting on up to billions of dollars worth of untapped mineral deposits but a near decade-old war and weak infrastructure in swathes of the country mean it could take years to start large-scale production in many areas. The Afghan government, keen to cut back dependence on foreign aid money, is trying to lure in investors from a sector known for operating in hostile environments with promises of improving stability and official protection. The rewards are not enough though to convince many to brave the insurgency, which is at its most violent since the overthrow of Taliban in 2001, or to take a gamble on whether the current government will survive the planned withdrawal of foreign troops. "Everyone is ready to go invest over there but their only concern is the security," said a Dubai-based Indian businessman, who wanted to remain anonymous. "When the security is just slightly better, people will go over there because there is a scoop in that country." The bulk of projects likely to lure serious foreign money for now are in the mining and energy sector. On Tuesday, the Italian Foreign Affairs Minister said Italian oil and gas group Eni was looking into investing in Afghanistan's energy sector. Work has started on the Aynak copper mine, a project worth more than $4 billion secured by the Metallurgical Corporation of China Limited (MCC), with production expected from 2013. Government security there shows Kabul is serious about its promises to protect major investments. "We are pushing the project forward currently with 1,500 police patrolling around the project area hired professionally by the government," said Zou Jianhui, head of the MCC's Aynak joint venture, told the investment conference. High Returns? The upfront investment in security is because Afghanistan aims to gain annual revenues of up to $1.5 billion from mining and energy investments in 5 years time, said Minister of Mines Wahidullah Shahrani. Untapped mineral resources include iron ore, copper, lithium, oil and gas, and gemstones and precious metal. "In the long-run, like 15 years, the state revenue related to mines will annually be $3 billion to $3.5 billion," he said. Potential revenues from lithium production are being studied now, and are not included in these figures he added. The highly reactive metal, which is used in batteries for electric and hybrid vehicles, could be a key resource for Afghanistan, along with copper and iron. Demand is likely to double over the next decade as more electric vehicles arrive on the road. "We are closely watching what they are doing on their lithium reserves," said a Japanese banker, whose company does not currently have any investments in Afghanistan. "We are looking into investing in this sector, but not now, perhaps in the next couple of years," he said. But for the bravest investors, the security problems that put others off are a sign of bigger potential rewards. "The best thing is at the moment, where there's risk, there's good profit," said Dayani Hayat, an Afghan businessman who operates in construction sector and returned to Kabul after spending 20 years in Germany. "For business people, the best time to come to invest, I would suggest that investors don't watch so much TV and don't read too many newspapers. Because to judge Afghanistan just by the media is not good, because bad news sells."
