A Chinese company has expressed its interest in investing $10 billion to mine Afghanistan’s massive lithium reserves and build other infrastructure, the Taliban government said on Thursday. Lithium is a key element of batteries that power electric vehicles, mobile phones, and laptops.
What’s on the table: In a statement, the Afghanistan Ministry of Mines and Petroleum said Minister Shahabuddin Delawar met with representatives of a Chinese company it identified as “Gochin.”
Gochin also reportedly offered to develop other infrastructure, including a hydroelectric dam and a new tunnel in the critical Salang gateway connecting eastern Afghanistan with its northern gateway to China and Russia.
The Afghanistan lithium backstory:
- In 2010, at the height of the U.S. war in Afghanistan, a Pentagon task force assessed that the country was home to upwards of $1 trillion in mineral wealth. These deposits included copper, iron ore, gold, as well as lithium. The task force produced internal that described the country as a potential “Saudi Arabia of lithium.”
- In 2012, the U.S. Geological Survey (USGS) released a map depicting Afghanistan’s vast mineral and rare earth deposits.
- While the U.S. helped develop Afghanistan’s mining ministry, initial contracts for copper and iron ore projects went to Chinese and Indian companies. These projects went nowhere due to corruption and insecurity during the previous regime.
- Months after the U.S. withdrawal in 2021, a delegation of Chinese companies visited Afghanistan to explore lithium mining opportunities.
Key data:
- Chile is home to the world’s largest lithium reserves, while Australia is the world’s largest producer, according to the USGS.
- There are no reliable public figures on Afghanistan’s lithium reserves. The previous regime’s Afghanistan Geological Survey identified lithium brine deposits in Ghazni and Herat provinces and lithium hard rock deposits in central and eastern Afghanistan.
So will the deal really happen? The prospects for this agreement moving forward are slim. For starters, the company is unknown. Chinese companies, including Ganfeng Lithium and Tianqi Lithium, are among the world’s top lithium miners. But it’s unclear whether Gochin has any experience in the mining sector or operating in challenging environments like Afghanistan.
Obtaining financing for a project in the billions in an environment with limited legal and security protection will be an uphill task. While security is improved in Afghanistan, the local affiliate of the so-called Islamic State (ISIS-Khurasan or ISIS-K) has been targeting Chinese nationals in Afghanistan. And no government, including China, has recognized the Taliban regime.
An expert’s view: Haiyun Ma, a professor at Frostburg State University who studies China’s relations with the Muslim world, views the Taliban claims of a $10 billion investment proposal with skepticism. He notes that there is no indication that the company conducted due diligence before Thursday’s meeting.
Ma said that “even if the reported investment is sincere, it could be just for holding [the] lithium mine” without developing it, enabling China to control the market and “form a powerful lithium cartel.” He also speculated that Beijing could be dangling “big bait” to incentivize the Taliban to take action against Uyghur groups based in Afghanistan.
The big picture: While Afghanistan has seen a dramatic reduction in violence since the Taliban takeover in 2021, economic conditions have worsened and personal freedoms, particularly for women, are far more reduced.
Afghanistan is, to an extent, isolated. No state has officially recognized the Taliban regime. But Afghanistan’s neighbors, including China, are treating it as its de-facto government.
On Thursday, senior diplomats of China, Iran, Pakistan, and Russia met in Uzbekistan on Afghanistan and called on Western countries to “instantly lift unilateral sanctions against Afghanistan.”
Given their proximity and the potential of a spillover of violence, they have an interest in seeing a stable Afghanistan. Extractive industries could provide the Taliban regime with the type of revenue to finance its budgets in the absence of foreign aid.
The road ahead: Lithium prices are down 60 percent from last year’s peak. And China’s CATL, the world’s largest EV battery manufacturer, has begun producing sodium-ion batteries — a much cheaper alternative to lithium-ion. The battery industry is fast-changing. This current lithium wave could pass Afghanistan by.
Source: globelynews
