Afghanistan's untapped mineral resources- an opportunity for China or a "Graveyard of Resources"?
As the United States leaves Afghanistan in a dire state, what will be the fate of the untapped mineral resources?
Returning to power in Afghanistan after a 20-year struggle, the Taliban have regained control of the country’s natural resources worth up to $3 trillion. This estimate was made toward the top of the last commodities super-cycle in 2010. It will be worth even more now, after a world economic recovery from the COVID -19 pandemic shock sent prices for everything from copper to lithium soaring this year. Afghanistan is rich in copper, gold, natural gas, bauxite, uranium, rare earth, lithium, gemstones, and marble.
The article below gives a breakdown of many of Afghanistan's essential resources, as calculated/estimated by the country's mining ministry and the U.S. government.
A 2019 report by Afghanistan's Ministry of Mines and Petroleum pointed out that the country's copper resource could be almost 30 million tonnes. A roadmap published by the ministry said there are another 28.5 million tonnes of copper in undiscovered porphyry deposits that could bring the entire near 60 million tonnes, worth billions of dollars. As a result, a consortium of Metallurgical Corp of China (MCC) and Jiangxi Copper took on a 30-year lease for an important copper project, Mes Aynak, in 2008. This tremendous asset remains to be developed, but the 11.08 million tonnes of copper MCC estimates it should be worth over $100 billion at current London Metal Exchange prices.
Similarly, the report also said Afghanistan had 2.2 billion tonnes of steelmaking ore, worth over $350 billion at current market prices. Gold resources were at an estimated 2,700 kg, worth almost $170 million. At the same time, the Afghan ministry believed that base metals, such as aluminium, tin, lead and zinc, were located in multiple country areas.
Perhaps the foremost crucial resource is lithium. The US Department of Defense memo in 2010 reportedly described Afghanistan as "the Saudi Arabia of lithium," meaning it may well be as crucial for the global supply of the battery metal. The comparison was made when lithium was already widely utilized in batteries for electronic devices. Still, before, it had become apparent what proportion of lithium would be needed for electric vehicle (EV) batteries and the world's low-carbon transition. Lithium, one of the most important metals, is required in abundance and still is in short supply.
Moreover, the 2019 mines ministry reports suggest that Afghanistan holds 1.4 million tonnes of rare-earth element minerals.
Afghanistan has historically been an abundant source of lapis lazuli. This deep blue, semi-precious stone has been mined within the country's northern Badakhshan province for thousands of years, further as other gemstones like rubies and emeralds. Lapis lazuli has been historically used for creating ornaments and amulets. The most satisfactory grades of lazuli can cost up to $150 per carat.
Few Western investors are willing to dip their toes in a country run by hardliners with the Taliban at the helm. That creates a chance for China and Russia.
Many observers believe China could play a constructive role in Afghanistan because the country needed foreign investment and, therefore, the Asian giant had the financial and technical resources to supply such support. But such a program was always considered within the context of getting a government in Kabul that respected basic principles of representative governance, human rights, the rule of law. That's not the case with the return of the Taliban to power.
Given China’s stranglehold on the (rare-earth elements) market — and therefore the West’s commitment in blood and treasure to Afghanistan — allowing China to walk in and harvest Afghanistan’s rare-earth riches seems both unwise and unfair. But the West’s options are limited.
With limited resources at its disposal, the Taliban is also desperate to obtain funds after the US freezing Afghan Central Bank assets worth $9.5 billion. With little government recognition, the Taliban is eager to make the most of the world electric vehicle boom by supplying raw materials.
In 2007, Metallurgical Corp of China Ltd. (MCC) won a lease to develop the flagship Mes Aynak copper project, Afghanistan’s largest mine, with six million tonnes estimated reserves. But development stalled and was ultimately cancelled in 2015 because the project had been awarded “using a non-transparent process,” in step with the USGS. The MCC and the Afghan government have been negotiating new terms in recent months. Still, the government became distracted by more pressing issues.
Russia has also long eyed several of Afghanistan’s resources, but the Afghan government led by Ashraf Ghani was suspicious of Moscow’s ties to the Taliban. The Russians were the first who did surveys of all these mines in the 1970s when they invaded the country. The Russian government is interested in keeping ties with the Taliban government in Kabul, giving them access to its vast resources. China also has a similar objective, with the Chinese eyeing domination in areas such as technology. These resources are a crucial part of the roadmap. It is no wonder that both China and Russia have reportedly kept their embassies open in the country.
The Taliban still need expertise, machinery and basic infrastructure, something which the extremists lack. The resources are also hard to extract, and much more knowledge is required to tap into the minerals. With the “Graveyard of Empires” also being the “Graveyard of Resources”, it may not be that easy to extract the total value of the natural resources available. More information and less corruption are required to attain the fullest potential possible, which is rare in this part of the world.
Great job. Keep it up 👍
Good work. Keep it up!!