The Taliban are sitting on $1 trillion worth of minerals the world desperately needs
OK--which multinational corporation(s) are funding THIS takeover?
Article by Julia Horowitz in CNN Business News
The Taliban are sitting on $1 trillion worth of minerals the world desperately needs
London (CNN Business)The swift fall of Afghanistan to Taliban fighters two decades after the United States invaded the country has triggered a political and humanitarian crisis. It's also causing security experts to wonder: What's going to happen to the country's vast untapped mineral wealth?
Afghanistan
is one of the poorest nations in the world. But in 2010, US military
officials and geologists revealed that the country, which lies at the
crossroads of Central and South Asia, was sitting on mineral deposits worth nearly $1 trillion that could dramatically transform its economic prospects.
Supplies
of minerals such as iron, copper and gold are scattered across
provinces. There are also rare earth minerals and, perhaps most
importantly, what could be one of the world's biggest deposits of
lithium — an essential but scarce component in rechargeable batteries
and other technologies vital to tackling the climate crisis.
"Afghanistan
is certainly one of the regions richest in traditional precious metals,
but also the metals [needed] for the emerging economy of the 21st
century," said Rod Schoonover, a scientist and security expert who
founded the Ecological Futures Group. 
Security
challenges, a lack of infrastructure and severe droughts have prevented
the extraction of most valuable minerals in the past. That's unlikely
to change soon under Taliban control. Still, there's interest from
countries including China, Pakistan and India, which may try to engage
despite the chaos.
"It's a big question mark," Schoonover said.
Huge potential
Even
before President Joe Biden announced that he would withdraw US troops
from Afghanistan earlier this year, setting the stage for the return of
Taliban control, the country's economic prospects were dim.
As
of 2020, an estimated 90% of Afghans were living below the
government-determined poverty level of $2 per day, according to a report
from the US Congressional Research Service published in June. In its
latest country profile, the World Bank said that the economy remains
"shaped by fragility and aid dependence."
"Private
sector development and diversification is constrained by insecurity,
political instability, weak institutions, inadequate infrastructure,
widespread corruption, and a difficult business environment," it said in March.
Many
countries with weak governments suffer from what's known as the
"resource curse," in which efforts to exploit natural resources fail to
provide benefits to local people and the domestic economy. Even so,
revelations about Afghanistan's mineral wealth, which built on earlier
surveys conducted by the Soviet Union, have offered huge promise.
Demand
for metals like lithium and cobalt, as well as rare earth elements such
as neodymium, is soaring as countries try to switch to electric cars
and other clean technologies to slash carbon emissions.
The International Energy Agency said in May
that global supplies of lithium, copper, nickel, cobalt and rare earth
elements needed to increase sharply or the world would fail in its
attempt to tackle the climate crisis. Three countries — China, the
Democratic Republic of Congo and Australia — currently account for 75%
of the global output of lithium, cobalt and rare earths.
The
average electric car requires six times more minerals than a
conventional car, according to the IEA. Lithium, nickel and cobalt are
crucial to batteries. Electricity networks also require huge amounts of
copper and aluminum, while rare earth elements are used in the magnets
needed to make wind turbines work.
The US government has reportedly estimated that lithium deposits in Afghanistan could rival those in Bolivia, home to the world's largest known reserves.
"If
Afghanistan has a few years of calm, allowing the development of its
mineral resources, it could become one of the richest countries in the
area within a decade," Said Mirzad of the US Geological Survey told
Science magazine in 2010.
Even more obstacles
That
calm never arrived, and most of Afghanistan's mineral wealth has
remained in the ground, said Mosin Khan, a nonresident senior fellow at
the Atlantic Council and former Middle East and central Asia director at
the International Monetary Fund.
While
there has been some extraction of gold, copper and iron, exploiting
lithium and rare earth minerals requires much greater investment and
technical know-how, as well as time. The IEA estimates that it takes 16
years on average from the discovery of a deposit for a mine to start
production.
Right
now, minerals generate just $1 billion in Afghanistan per year,
according to Khan. He estimates that 30% to 40% has been siphoned off by
corruption, as well as by warlords and the Taliban, which has presided
over small mining projects.
Still, there's a chance the Taliban uses its new power to develop the mining sector, Schoonover said.
"You
can imagine one trajectory is maybe there's some consolidation, and
some of this mining will no longer need to be unregulated," he said.
But,
Schoonover continued, the "odds are against it," given that the Taliban
will need to devote its immediate attention to a wide range of security
and humanitarian issues.
"The
Taliban has taken power but the transition from insurgent group to
national government will be far from straightforward," said Joseph
Parkes, Asia security analyst at risk intelligence firm Verisk
Maplecroft. "Functional governance of the nascent mineral sector is
likely many years away."
Khan
notes that foreign investment was hard to come by before the Taliban
ousted Afghanistan's civilian Western-backed government. Attracting
private capital will be even more difficult now, particularly
as many global businesses and investors are being held to ever higher
environmental, social and governance standards.
"Who's
going to invest in Afghanistan when they weren't willing to invest
before?" Khan said. "Private investors are not going to take the risk."
US
restrictions could also present a challenge. The Taliban has not been
officially designated as a Foreign Terrorist Organization by the United
States. However, the group was placed on a US Treasury Department list
of Specially Designated Global Terrorists and a Specially Designated
Nationals list.
An opportunity for China?
State-backed
projects motivated in part by geopolitics could be a different story.
China, the world leader in mining rare earths, said Monday that it has
"maintained contact and communication with the Afghan Taliban."
"China,
the next-door neighbor, is embarking on a very significant green energy
development program," Schoonover said. "Lithium and the rare earths are
so far irreplaceable because of their density and physical properties.
Those minerals factor into their long-term plans."
Should
China step in, Schoonover said there would be concerns about the
sustainability of mining projects given China's track record.
"When
mining isn't done carefully it can be ecologically devastating, which
harms certain segments of the population without a lot of voice," he
said.
Beijing
could be skeptical of partnering on ventures with the Taliban given
ongoing instability, however, and may focus on other regions. Khan
pointed out that China has been burned before, having previously tried
to invest in a copper project that later stalled.
"I
believe they will prioritize other emerging/frontier geographies well
before Taliban-led Afghanistan," said RK Equity partner Howard Klein,
who advises investors on lithium.
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