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The complexity of Afghanistan’s $1T untapped mineral deposits discovery

admin — Mon, 14 Jun 2010 12:12:28 +0000

The New York Times (see image and clips below) reported Sunday that US geologists have discovered nearly $1 trillion of untapped mineral deposits, including iron, copper, cobalt, gold, and lithium. While this is potentially much needed positive game-changing news for the Afghan economy, the NYT cites the cognizance of American officials fearing a ‘double-edged impact’ of the find, referring, for instance, to (1) the possibility of exacerbated instability as the Taliban may elevate its efforts to try and take control of the country, (2) a possible run-in with resource-hungry China, and (3) a lack of mining and basic overall infrastructure (including human capital in both government and industry) in Afghanistan necessary to exploit the deposits — creating the likelihood that meaningful proceeds from any finds are years, if not a decade or two, out. Nevertheless, should Afghanistan somehow manage to arrive at even a modest level of sustained stability, the wheels of commerce will begin to roll and hopefully bring days of ever more peace and prosperity to an impoverished, war-torn country.

clipped from www.nytimes.com

WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.

While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.

“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.

Four reasons why Dubai will survive

LN — Wed, 09 Dec 2009 23:37:26 +0000

1) Actual (Strategic) Value of “Distressed” Real Estate: Dubai World, the government-affiliated parent company under scrutiny, is strapped with an estimated $24B in debt,including $7.3B in deteriorating real estate assets held by their Nakheel subsidiary. On paper, these assets are distressed. In brick-and-mortar reality, they include new-to-market commercial and residential units that help define the Dubai skyline. Vacancy rates are transitory, but quality real estate will return value if strategically positioned as part of a larger initiative or economic plan. A shift, for example, in the commercial focus from financial services and tourism to energy, such as the creation of a solar-powered city, could restart investment and development.

2) Primacy of DP World: Dubai World’s marine and port subsidiary, DP World, maintains deep-water terminals in over 30 countries from the Americas to Asia. It is simply too valuable a commodity (commercially and politically) for the government to abandon to creditors in courts. DP World’s port presence across the globe is central to the UAE’s identity and prestige.

3) Capitalism 2.0: The Dubai crisis was an inevitable and necessary step in the maturation process of an emerging free-market economy. Sheik Mohammed bin Rashid Al Maktoum’s undisciplined approach to development, coupled with investors who naively assumed their bets were covered by state revenues derived from oil, created conditions that plunged the Emirate $80B in debt. Despite the poor timing of Dubai World’s announcement of a standstill just prior to the Muslim holiday of Eid al-Adha, Dubai and its flagship company should emerge from the crisis with a new sense of purpose and propriety. Abu Dhabi will likely take the lead in helping Dubai restructure its financial institutions and reshape its strategic thinking as part of a wider effort to regain a measure of market integrity and public trust.

4) Human Capital: Dubai’s “oil reserves” are its people. They are educated (77.9% literacy rate), able, and multi-lingual with commands of Arabic, Persian, English, Hindi, and Urdu. The serious, sophisticated investor recognizes this as a key attribute in any successful venture. Human capital is the critical “X factor” on a balance sheet.

New US Ambassador to Saudi Arabia addresses the facts

admin — Mon, 26 Oct 2009 02:52:44 +0000

See clips below from The National Newspaper’s coverage of James B. Smith’s (the recently appointed U.S. Ambassador to Saudi Arabia) poignant talk to approximately 100 U.S. company representatives in Riyadh. TradeFlow21 lauds Ambassador Smith for his timely and critical assessment — hopefully a wake up call for businesses.

For information on the latest global economic competitiveness ranking and how the GCC ranks (note Saudi Arabia moved up to #13 this year and is knocking on the door for a top-10 spot), see Doing Business 2010: Saudi Arabia nears goal; UAE climbs ranks.

clipped from www.thenational.ae

Diplomat warns US firms are losing edge

RIYADH // The new US ambassador to Saudi Arabia yesterday warned American businesses to wake up to the fact that they are losing their edge in an increasingly competitive Saudi market.
Ambassador James B Smith, a retired air force general, also told his audience of about 100 US company representatives that it was time for both Saudis and Americans to “rethink some opinions” of each other forged in the wake of the September 11 terrorist attacks.

Noting that many US companies are “on the sidelines waiting to see what’s going to happen in Saudi Arabia”, he added: “My message back to them is: What’s happening is the train has already left the station. You are losing market share to India, China, Russia and if you don’t move you’re never gonna catch the train.”

Doing Business 2010: Saudi Arabia nears goal; UAE climbs ranks

admin — Sun, 13 Sep 2009 18:52:48 +0000

Doing Business 2010: Reforming through difficult times, which features the latest ranking of economic competitiveness (published on Thursday by the International Finance Corporation – The World Bank), contains some especially positive news for The Kingdom of Saudi Arabia and the United Arab Emirates.

As for Saudi Arabia, the Kingdom moved up two spots to number 13, surpassing Iceland and Japan, respectively, while inching closer to a coveted top-10 spot. The Kingdom is striving to become a top-10 competitive economy by 2010 (which coincides with next year’s Doing Business). TradeFlow21 managing partners Lewis Nescott and Steven Towns recently met with officials at the Royal Embassy of Saudi Arabia and had a very productive discussion — including the unequivocal significance of the Kingdom’s “10 x 10″ goal. See the next edition of Trade and Transactions, TradeFlow21′s monthly e-newsletter, for more details. (Contact us for a free subscription.)

Meanwhile, the United Arab Emirates continued its impressive climbing of the rankings in recent years, moving up 14 spots to number 33. Among Gulf Cooperation Council (GCC) members, only Saudi Arabia and the UAE improved their competitiveness in the ranking. While other GCC members also instituted reforms, the global landscape is quite competitive and therefore, on a relative basis, they lost some ground.

Following is a list of select countries with their 2010 rankings and year-over-year change.

Top-10
1. Singapore
2. New Zealand
3. Hong Kong, China
4. United States
5. United Kingdom
6. Denmark
7. Ireland
8. Canada
9. Australia
10. Norway
* Among the top-10, all were unchanged except a switch in places between the U.K. and Denmark.

GCC
13. Saudi Arabia (+2)
20. Bahrain (-2)
33. United Arab Emirates (+14)
39. Qatar (-2)
61. Kuwait (-9)
65. Oman (-5)

“BRIC”
89. China (-3)
120. Russian Federation (-2)
129. Brazil (-2)
133. India (-1)

TF21 embraces President Obama’s unequivocal message in Cairo

LN — Thu, 04 Jun 2009 19:37:16 +0000

In a commentary posted on the TradeFlow21 website in advance of President Obama’s speech, we wrote that necessity:

1) demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question

2) requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region

3) dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all

In his long-awaited speech on American-Muslim relations today in Cairo, President Obama responded, arguing that

1) “America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity and a state of their own”

2) “as long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace…conflict rather than cooperation…this cycle of suspicion and discord must end”

3) “on economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries…I will host a summit on entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world”

Thank you, Mr. President. The partners of TradeFlow21 will join you in the cause to build a prosperous, secure Middle East through commerce and trade. Let us now begin our work.

TradeFlow21 Commentary: Will President Obama finally turn the page in U.S. – Middle East relations?

LN — Wed, 03 Jun 2009 16:29:15 +0000

When President Barack Obama delivers his address tomorrow in Cairo to the wider Muslim world, he will do so at great political risk to himself and his administration. But it is a risk that demonstrates the political courage of a first-term president who acts out of necessity, and not expediency.

Necessity demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question.

Necessity now requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region.

Necessity dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all.

For over 60 years, the Middle East, which is comprised of over 20 nations spanning Northern Africa in the west to Southern Asia in the east, has been defined by conflict and oil. This is a new era. Real GDP non-oil growth in the region, which is projected to expand by more than 3.5 percent this year, suggests that Middle Eastern nations are actively pursuing commercial diversification as they seek to become full partners and competitors in the global economy. It also presents tremendous export opportunities for companies who want access to an emerging market of 500 million consumers.

The world is waiting for President Obama to signal a new turn in U.S. – Middle East relations where strategic alliances are built principally on commerce and trade. The partners of TradeFlow21 welcome such a change as both vital and necessary.

In January, a cease-file and an overture from a new American President

LN — Sun, 01 Feb 2009 23:03:31 +0000

As global markets brace for a year of pain, Middle East nations may find solace in the recent cease-fire in Gaza and the promise of President Barack Obama to find a “new way forward” with the Muslim world. While even the wealthiest of Middle East nations may be challenged by mounting deficits and debt in the year ahead, the current tone in Washington should give hope to those who embrace trade and investment as primary tools in creating a more prosperous, secure world for all.

Wall Street crash may offer Gulf investors unparallelled access to U.S. markets

LN — Mon, 29 Sep 2008 04:28:28 +0000

Though Gulf nations have certainly felt the aftershocks of Wall Street’s crash, including the UAE, which had to pump billions into their public market to sustain liquidity levels, the region may soon join a growing list of institutional and sovereign suitors seeking bargains among the ruins. As the U.S. Congress fiddles with the terms (and moral hazards) of a $700 billion bailout, Wall Street continues to burn. Even with the passage of the bailout, the wholesale collapse of over-leveraged companies and industries burdened by subprime toxic waste is likely to proceed, largely unabated and at an accelerated pace.

Prospecting in Saudi Arabia

LN — Sun, 24 Aug 2008 15:55:03 +0000

With undetermined reserves of precious metals, including gold, copper, phosphate, and bauxite, Saudia Arabia may soon rival the output of global producers such as Canada and Australia. In addition to oil, mineral wealth will undoubtedly accellerate Saudi’s drive to diversify their economy, as evidenced by the government’s planned construction of four new cities. For more, see article in CNN Money/Fortune Magazine.

Saudi Arabia’s Maaden to Raise $2.5B in July IPO

admin — Tue, 13 May 2008 09:31:24 +0000

Saudi Arabia’s state-owned Mining Co, Maaden, is eying a 9.25 billion riyals ($2.47b) IPO in July, according to the Saudi exchange. Maaden has an existing aluminum venture with Rio Tinto Alcan (NYSE: RTP; formed prior to Rio’s acquisition of Alcan last year) involving a $7b project — said to be one of the world’s largest (Reuters). Gold is currently Maaden’s leading revenue driver. The exchange’s regulator said that only Saudi investors will be able to invest in the company, with 50% of equity being offered to institutions and individuals, with the remaining half to be held by the Public Investment Fund (PIF).