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Can Afghanistan economy thrive without poppy?

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Mining is currently a $52 million a year industry – less than 1 percent of the economy. But a few big-name projects highlight its potential. In a deal with the Chinese in 2007, the Aynak copper mine will bring in $1 billion of annual revenue for Kabul. And bids were due Feb. 15 to exploit Hajigak, a massive iron ore deposit.

"That's estimated to bring in up to $3 billion a year in government revenues for centuries," says Craig Steffensen, Afghanistan country director for the Asian Development Bank. "I think the mining sector is this magic bullet that everyone is looking for to sustain things without [foreign donors] having to cover costs until kingdom come."

Of course, magic bullets are rare. Western investors have hesitated to enter Afghanistan because of an uncertain regulatory environment, corruption, lack of transparency, and lack of security, says James Yeager, an American geologist who advised the Afghan Ministry of Mines.

Mining: the Chilean model

Still, he points to Chile as what's possible for Afghanistan. Thirty years ago it had a fledgling mining industry, he says. "They changed their laws to make mining very favorable. They cleaned up their corruption act. Today they are the world's leading producer of copper."

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