Hunting for Afghan Gold

May 12, 2011 9:56am by Barry Ritholtz

Fascinating story in Fortune about a JV in Afghanistan by J.P. Morgan (JPM) and the Pentagon seeking to tap the country’s vast mineral riches:

“Investing in conflict zones is often thrilling, but the great commodities rush that J.P. Morgan and the Pentagon are trying to spark in Afghanistan creates a risk/reward equation of a different magnitude. It’s extreme at both ends.

When J.P. Morgan launched its Afghan initiative in 2010, violence was at its worst since the American-led occupation began in 2001. The Taliban have made a point of killing Westerners and have specifically said they would attack any companies involved in mining. Before our trip to the mine was done, our group would get a taste of the insurgents’ ability to strike violently and unpredictably.

Then there’s the Afghan infrastructure — or rather, there isn’t. Big mines need power, lots of it. Outside of cities, only 15% of Afghanistan is electrified. The mountain roads — ungraded and often without guardrails — are perilous, I learned the hard way, particularly in winter. Seat belts? No one bothers. You crash, you die.”

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Source:
J.P. Morgan’s hunt for Afghan gold
James Bandler
Fortune, May 11, 2011
http://management.fortune.cnn.com/2011/05/11/jp-morgan-hunt-afghan-gold/

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