Economic Superpowers and their competition over Afghanistan mines
Afghanistan owns crucial and valuable natural resources that their estimated value is more than 3 trillion dollars. Now, Economic powers are eyeing natural resources of Afghanistan, and currently this country’s mines have turned into a sensitive issue. Russia, China and the United Stated all pay special attention to these mines. During the one year of Taliban’s rule, China has conducted the most negotiations with the Taliban, and recently, Russia has also entered the negotiation process. The United States which spent billions of dollars in Afghanistan for 20 years, is away from this procedure, but evidence shows it is observing the developments.
By: Seyed Mohamad Hadi Lankarani
The economic powers are eyeing the natural resources of Afghanistan, which is now under Taliban’s control, and Afghanistan’s mines have become one of the most sensitive spots in this land for foreign countries. The three countries of Russia, China and the United States, all pay special attention to these mines.
Afghanistan owns important and valuable natural resources like iron, Copper, Chromium, Zinc, Lead, as well as abundance of gemstones and key materials for technology such as Lithium and Cobalt. In addition, there are oil and natural gas resources in the north of this country. According to assessments made by America’s geologists a decade ago, Afghanistan’s minerals could worth more than one trillion dollars. In another report by the then government of Afghanistan in 2017, it was also estimated that the total value of mineral wealth, including fossil fuels, is more than 3 trillion dollars.
In spite of Afghanistan’s great potentials, the continuous years of war and instability has made the exploitation of mines and resources problematic. Additionally, the ethnic tensions and internal conflicts of some influential figures over these great mineral treasures, have intensified. Disputes over managing natural resources, such as agricultural fields, water, timber and wood, minerals and even narcotics, are considered as the basis for many of these conflicts and often contributed to intensify ethnic, political and regional disputes in Afghanistan.
Progressing negotiations between Taliban and Russia
The Taliban government has started trade negotiations with Russia, which includes bartering Russian oil with mineral and herbal medicines. Nooruddin Azizi, the Minister of Commerce and Industry of the Taliban government, has recently discussed this issue with Pavel Sorokin, the Deputy Minister of Energy of Russia, in Moscow.
Afghnistan under Taliban control is not among the first countries to offer bartering to Russia. India and some other countries are working on this old trading system. Both during the Soviet era and in the early years after the Eastern Bloc collapsed, Russians had a lot of experience in barter trade. They also have a history of presence in Afghanistan, and given to the new geopolitical circumstances, they are probably willing to be present in the Afghan market. During the Soviet invasion to Afghanistan, Moscow had started extracting materials such as Chrome, Uranium, Emeralds and Hydrocarbons from this country.
Last Month, Habib-ur-Rahman Habib, the spokesman of the Ministry of Finance of the Afghan Taliban government, announced that they were about to sign an agreement to buy oil and wheat from Russia. He added that a delegation of officials from the Taliban government, is negotiating with the Russian government to sign an agreement to purchase wheat, gas and oil from this country. It seems that the negotiations between the two countries have progressed and gasoline purchase has been finalized.
Reportedley, Nooruddin Azizi, the Minister of Commerce and Industry of the Taliban interim government has stated that if barter trade between Afghanistan and Russia is not possible, they will buy oil from Russia through third countries, in exchange for money transfer by merchants.
American conservatives' plan to manage Afghanistan's mines
Following the news release of the Taliban's negotiations with Russia - and before that, China's efforts in managing Afghanistan's mines - the US conservatives talked about the issue of Afghanistan's mines and declared that investing in these mines is the path to stability in this country. In an article by Fox News which specified to this issue, it is stated that the role of America is to pave the way for Afghanistan towards self-sufficiency and this is a task that no country can do it, but America. It added, Afghanistan has such vast mineral resources that its economy can be revolutionized by investing in them, but what are the benefits of such investment for the United States? Investing in Afghanistan's mines is aimed at helping two very important plans that have been approved by the U.S Congress during this period of time: the microchips production plan and the clean energies plan, both of which require huge amounts of mineral resources. The existing problem for the production of microchips and lithium batteries for electric cars, which according to these two plans must be made by the United States itself, is that China has domination over most of the world's minerals.
Therefore, Jake Auchincloss, an American conservative writer, referring to these two plans and said: "It cannot be delayed, even for a single day." He added that in the days after the US withdrawal from Afghanistan, China implemented a plan that it had designed for Afghanistan's one trillion dollar mines more than a decade ago. The author then by referring to the 20 years of war in the United States and the 2 trillion dollars spent there, wrote that now we cannot present the result to others.
According to this report, the Chinese are going to build a power plant and a railroad for Afghanistan in exchange for the exploitation of Afghanistan's resources, as part of the contract. China has very favorable relationships with both the Taliban and its allies in Pakistan. It also does not hold the Taliban accountable for human rights violations and drug trade. However, this Chinese plan has some problems which United States can make use of them. First, the Chinese contract does not help the development of Afghanistan's economy, and the China only do construction for them.
Second, although the processing of minerals usually is done in the mines themselves, China take the raw materials out of Afghanistan and deprive this country of the benefits of other value chain links. The writer said that the Taliban's Minister of Mines prefers American miners to Chinese ones, citing a webinar he held with a few American companies in which the Taliban minister requested investment from the Americans.
Finally, Auchincloss concluded the United States and Western partners should accept the Taliban minister’s offer as soon as possible and sign a firm contract with the Taliban for the development of Afghanistan's mines.
China's successful experience in investing in Afghanistan's mines
Security problems and lack of infrastructures, have prevented the appropriate harvesting of resources in Afghanistan. The uncertain future of Afghanistan and the lack of legal and security frameworks in it since the Taliban came to power, may prevent many foreign companies from investing in the country. Nevertheless, now that NATO is no longer present in Afghanistan, some countries are seeking to control Afghanistan's resources. China plays a key role here, as it is the largest foreign investor in Afghanistan. In 2008, China began its operations in the Mes Aynak copper mine which is located 35 km away from Kabul.
Before the Taliban came to power, Beijing had probably talked to the group for access to Afghanistan's mines. China is looking for controlling virgin resources such as Lithium and rare-earth elements; a move that brings a great advantage for it in the competition with the United States and Europe. According to the International Energy Agency (IEA), China currently produces 40 percent of Copper, almost 60 percent of Lithium and more than 80 percent of rare-earth elements of the world.
In order to increase its economic presence in Afghanistan, Beijing welcomed the Taliban’s coming to power. After the Taliban took control of Kabul, the spokesperson of China Ministry of Foreign Affairs declared that Beijing is ready to develop friendly relationships and cooperation with Afghanistan, and play a constructive role in it. Kabul and Beijing has had close relations since the establishment of the Islamic Emirate in 1996 until the fall of the Taliban after the US invasion in 2001, and then during the new era of Taliban rule in 2021. Mullah Abdul Ghani Baradar, Taliban deputy prime minister for economic affairs, has said that he expected China to play an important role in the reconstruction and economic development of Afghanistan in the future.
Regarding this, Wang Yu the Chinese ambassador to Kabul, , in a recent meeting with Shahabuddin Delawar, Acting Minister of Mines and Petroleum of the Taliban interim government, said that the development and extraction of Mes Aynak in Logar will begin soon.
Mes Aynak mine is the largest copper mine in Afghanistan and the second largest one in the world. This mine is located in Logar province. The exploitation contract of Mes Aynak, which was signed in 2008 during the presidency of Hamid Karzai between the Ministry of Mines and Petroleum of Afghanistan and the China’s MCC Company, has not been implemented so far. The Taliban government also hands over the oil extraction of Amu Darya to China.
Previously, the Ministry of Mines and Petroleum of the Taliban government had announced that in the near future, a Chinese company would open its office in Kabul and would take measures to extract Mes Aynak copper mine. Chinese media had also written that businessmen of this country have come to Afghanistan to conduct on-site investigations on lithium mines.
Afghanistan's mines, a treasure for national power, development and future economic growth
It was estimated in 2020 that 90 percent of Afghans lived below the poverty line. In a recent World Bank report, Afghanistan's economy has been described as "fragile and dependent on aid". However, this country's natural resources can boost its economy and as a result, improve its social situation. In fact, the natural resources reserves in Afghanistan - especially the start of investments in mining sector, in order to achieve national development and create wealth - is now a great hope for the people of this war torn country.
The development of mines can be a basis for future economic growth in Afghanistan, which can lead to employment and income generation, business prosperity, development of transportation and infrastructures, and unleash the potentials of different parts of the country. This will cause the overall economic development, and not only generate domestic income, but also will bring the benefits of commercialization. Simply put, if Afghanistan's natural resources are properly managed, just the mining sector in Afghanistan has the potential to lead to poverty reduction and sustainable economic growth, and in less than a decade, Afghanistan can turn into one of the wealthiest countries in the region.
Seyed Mohamad Hadi Lankarani, is a South Asia expert