Markets shrug off Afghan minerals 'discovery'
Commentary: Afghanistan's vast resources not news.
NEW YORK (MarketWatch) -- Nothing like a complete shrug from markets to contradict a sensationalistic headline on the front page of the New York Times.
If the existence of nearly $1 trillion worth of "previously unknown" deposits of iron, copper, gold and many other key minerals in Afghanistan was breaking news, shouldn't we see a huge slump in the price of those metals, at least temporarily? Read New York Times coverage of the discovery.
Yet, as of last check, futures for metals such as copper, silver, platinum and palladium all traded higher at the New York Mercantile Exchange. Gold futures fell, but this had mostly to do with today's more optimistic take on Europe and global growth, which reduced demand for the safe haven of the precious metal.
The existence of huge untapped mineral resources in Afghanistan is well known as is the fact that for the past 35 years, war has prevented the country from benefiting from this natural wealth.
The New York Times article, far below its big headline, reveals that geological surveys conducted during the Soviet era were hidden and only came back to light after the ouster of the Taliban in 2001.
Results of geological surveys conducted from 2004 through 2007 have likewise been set aside so far, possibly because no one knew exactly what to do with them.
The latest results of the surveys provided to the New York Times might very well be accurate.
But what's more interesting is the report, filled with comments from U.S. officials, might signal a willingness from the U.S. and the Karzai government to take control of mining efforts in Afghanistan.
As the Times article also mentions, the Obama administration is in need of positive headlines from Afghanistan, which just recently became America's longest war.
And so far, Chinese firms are among the few that have dared bidding for mining rights to Afghanistan's treacherous and danger-filled terrains.
But the report does have an optimistic Pentagon assessment that Afghanistan could become "the Saudi Arabia of lithium," a metal increasingly used in rechargeable batteries for everything from Apple's iPhones /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 274.00, -0.07, -0.03%) to electric or hybrid cars.
That might explain why the market reaction was not to be found in metals themselves, but in the stock of some lithium-battery producing firms, such as Arotech Corp /quotes/comstock/15*!artx/quotes/nls/artx (ARTX 1.74, 0.00, 0.00%) and Altair Nanotechnologies /quotes/comstock/15*!alti/quotes/nls/alti (ALTI 0.46, +0.02, +4.33%) , both of which rose about 8% in recent action. http://www.marketwatch.com/story/market ... 2010-06-14