natural resources

J.P. Morgan's hunt for Afghan gold

May 11, 2011: 5:00 AM ET

A team of bankers starts to tap the country's vast mineral riches, with help from the Pentagon.

By James Bandler, editor-at-large

Villagers assembled for a ribbon-cutting ceremony at the gold mine in Qara Zaghan. The U.S. government estimates that minerals worth nearly $1 trillion lie beneath Afghanistan's soil.

FORTUNE -- Qara Zaghan, Afghanistan: The four Black Hawk helicopters sweep down on this remote river valley, flying fast and single file. Snow covers the mountains' peaks, but the lower slopes look like rust -- dry, rocky, and bare. As we bank around the river bend, we see our first flash of green in the fields below and then the rectangular mud huts of the village, where hundreds of Afghans mass to greet us.

"That's the mine over there," one of my companions says, pointing to the cliffs rising above the village.

That's it? That's the gold mine? It doesn't look all that different from the forbidding country we've been traversing: just another pile of rocks and scree. The jet-lagged man in the seat across from me knows better. His sleepy eyes are suddenly alert. If anyone can wrest a fortune from Afghanistan's rubble, it is this man, Ian Hannam.

Arriving in a developing nation with his iPad and his enigmatic smile, Hannam personifies the soft side of Western power. He doesn't bend people to his will with weapons or threats. But there is no mistaking the dealmaker's impact: In his wake, mountains are razed, villages electrified, schools built, and fortunes made.

To Hannam, chairman of J.P. Morgan Capital Markets, Afghanistan represents a gigantic, untapped opportunity -- one of the last great natural-resource frontiers. Landlocked and pinioned by imperial invaders, Afghanistan has been cursed by its geography for thousands of years. Now, for the first time, Hannam believes, that geography could be an asset. The two most resource-starved nations on the planet, China and India, sit next door to Afghanistan, where, according to Pentagon estimates, minerals worth nearly $1 trillion lie buried. True, there is a war under way. And it's unclear how the death of Osama bin Laden will impact the country's political and economic environment. But Hannam is not your usual investment banker: A former soldier, he has done business in plenty of strife-torn countries. So have all the members of his team, two of them former special forces soldiers who have fought here. More

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