Chinese mining groups scour Afghanistan for opportunities

Chinese mining groups are scouting opportunities in Afghanistan to access the country’s lithium and copper deposits, as Beijing steps into the void left by the US and its allies just months after the Taliban seized power.

A group of mining industry representatives has visited Afghanistan in recent weeks, according to a senior official in Kabul and a representative from a Chinese industry association.

China’s efforts to secure mining rights comes as Afghanistan faces an acute financial and humanitarian crisis following the exit of US and coalition forces in August and after Beijing and Taliban leaders held talks before the American withdrawal.

“China has managed to maintain a direct line of communication with the Taliban since August 2021 and being among the first few countries to send aid definitely boosted its relations with the Taliban which are eager for finances to stabilise the Afghan economy,” said Claudia Chia, an analyst at the National University of Singapore’s Institute of South Asian Studies.

Leading economies are rushing to secure access to lithium and copper, crucial resources used to develop technologies such as electric vehicle batteries and smartphones. Some reports have said Afghanistan’s lithium deposits could rival those of the world’s biggest known reserves in Bolivia, according to Nomura.

Talks were held over recent weeks with the Taliban over access to Mes Aynak, south-east of Kabul, one of the world’s biggest copper deposits which Chinese groups previously had a licence to mine.

At least one Chinese private sector group also travelled to the eastern Nangarhar and Laghman provinces to research access to other minerals, according to people with knowledge of the trip.

But the talks were at an early stage and did not guarantee that Chinese miners would return to tap Afghanistan’s minerals, the people said.

The Chinese industry association said dozens more companies have made inquiries over the potential for exploring Afghanistan’s resources, including lithium.

Nomura analysts said in a report that as “tier-1 lithium players”, the companies would be “unlikely” to be involved in Afghanistan given concerns over environmental, social and governance problems.

Chart showing global identified lithium resources

Two Chinese miners mentioned in the report — Ganfeng Lithium, the world’s largest lithium producer, and Tianqi Lithium, one of China’s biggest listed lithium miners — both denied any involvement in the latest trip.

Mining projects in Afghanistan have long been riddled with immense logistical and security challenges. Laghman, for example, is the birthplace and final stronghold of Isis-K, an Isis-inspired militant group fighting a low-level insurgency against the Taliban.

China has been worried over the approach of the Taliban to Xinjiang, the western region which borders Afghanistan and where Beijing has detrained more than 1m Uyghurs and other Muslim minorities.

Any mining and production would hinge on the Taliban ensuring security guarantees for Chinese investments, analysts said.

“The Taliban may consider providing security personnel for Chinese projects, similar to what Pakistan did for CPEC projects,” Chia said, referring to Beijing-backed infrastructure projects under the China-Pakistan Economic Corridor.

“Alternatively, Chinese private security companies, who already have a presence in Central Asia and Pakistan, could be hired to provide security . . . That being said, security on the ground would still be hard to manage,” she said.

China has called for the lifting of economic sanctions on Afghanistan and for the Taliban to be given access to billions of dollars in frozen foreign exchange reserves held by multilateral financial institutions, including the World Bank and the IMF.

Additional reporting by Maiqi Ding in Beijing

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