Afghanistan's Vast Natural Resources Awaiting Exploitation

"With the Taliban running the city right now, all the government offices are closed. The situation is very tense and scary here."

"I was in the Ministry of Foreign Affairs building at the time [the Taliban] entered the city. There was chaos and traffic jams and everybody was running to his or her home, and the situation got very tense."

"I can say that right now, probably because of the relationship with the Taliban, [the Russians] might be interested in this [metals mining] sector. Bear in mind that the Russians were the first who did surveys of all these mines in the 1970s when they invaded the country."

"During the past 20 years, the Taliban and some warlords have been exploiting these resources illegally, and they have been working on small mines."

"But major ones like rare earth elements and lithium will be very difficult for them to exploit.The question is how the Taliban will run the government [and] how they will contribute to the economy. How can they exploit these resources? That’s impossible for the Taliban."

"Right now, the major interested power is China, given the Chinese relationship with Pakistan, and then Pakistan’s influence on the Taliban. China will be very interested in exploiting these resources."

Ahmad Shah Katawazai, Ministry of Foreign Affairs bureaucrat, Kabul, Afghanistan

A general view of Mes Aynak valley, some 40 kilometers southwest of Kabul, Afghanistan. (AP)

"Many of the mineral deposits are of world-class size and tenor."

"[Afghanistan has] abundant mineral resources, but modern technical data and information are necessary if they are to be developed successfully." 

"Afghanistan might be far removed from being able to sustainably develop its mining sector, however, owing to several factors, such as deterioration of the security situation, political uncertainty, and insufficient infrastructure."

U.S. Geological Survey

"...Such a program was always considered in the context of having a government in Kabul that respected basic principles of representative governance, human rights, rule of law. That is not the case with the return of the Taliban to power."

"Given China's stranglehold on the [rare-earth elements] market ... and the West's commitment in blood and treasure to Afghanistan -- allowing China to stroll in and harvest Afghanistan's rare-earth riches seems both unwise and unfair. But the West's options are limited."

Alan Dowd, senior fellow, Fraser Institute

A local laborer in 2013 helping to excavate part of the mountaintop copper works above the ancient city at Mes Aynak in Afghanistan, which sits on the old Silk Road trading route connecting China and India with the Mediterranean. Matthew C. Rains/MCT/Newscom

 

Foreign Affairs Ministry bureaucrats in Kabul indulged in high-level discussions focusing on the Afghan government's near future following the U.S. withdrawal; ministry officials forecasting a six-month period before an interim government would be formed. And then, the Taliban marched into the capital city, and President Ashraf Ghani's government along with its 300,000-strong army vanished into the woodwork.

 

Ahmad Shah Katawaza feels himself still "technically" an employee of the country's Ministry of Foreign Affairs, involved in those high-level discussions, at a time when the anticipated vacuum following the U.S. withdrawal was suddenly filled thanks to the Taliban. The immediate aftereffect of the chaos and disruption of normal life saw Taliban soldiers on the streets and everywhere fears of violence.

In the past 20 years under Western tutelage in good governance and democracy, Afghanistan's culture of corruption went on undisturbed at every level of government and civil life under the veneer of Western-style democracy. But with it came a level of freedom never known before in a fundamentalist culture of rigid Islamist sharia law, brought to a fine art of repression and mismanagement and inequality under the Taliban. And they have returned with a familiar script.

This is a country with vast natural resources that have never been exploited, and those resources now attract the attention of countries that are amenable to Taliban rule; Iran, Turkey, Russia and China. And a cash-strapped Islamic Emirate of Afghanistan may look to its friends in China and Russia to help fund its Islamist regime through the development of its lithium, rare earths and other metals, resources which it has in abundance while scarce in many other parts of the world.

This is a legendarily impoverished and war-torn country whose rich stores of valuable natural resources have never been exploited. Its abundance of coal, natural gas, copper, lithium, gold, iron ore, bauxite and rare-earth mineral reserves speak of great, untapped wealth. Rare earth minerals in particular are a strategic resource, hugely attractive to China planning to corral and control the rare and valuable resources. 

China itself produces some 85 percent of these minerals used in rechargeable batteries for electric and hybrid vehicles, advanced ceramics, computers, cellphones and other vital electronics. A U.S. study highlights Afghanistan's resources, valued at about $1 to $3 trillion, according to the Afghan Ministry of Mines and Petroleum. But not so fast; the country lacks stability and infrastructure which makes is problematical to see foreign investors willing to risk venturing into the country as a profitable enterprise.

Afghanistan's rugged and remote terrain represents yet another roadblock to development which, added to the security situation, lack of infrastructure required to haul minerals to global markets alongside rampant corruption and what seems hugely attractive at first glance, merits a second and a third assessment. Yet the reality is that those mineral resources could contribute significantly to economic growth in the country if it was possible to develop their extraction efficiently.

Few Western investors would take the leap with the Taliban in power and from that source there would be "zero interest". China and Russia can be guaranteed to have fewer scruples and fewer fears of losing a promising investment in a country ruled by diehard Islamist functionaries with whom they would have no trouble getting along. China has demonstrated amply its penchant and purpose in investing heavily in countries with natural resources begging to be exploited. 

The global electric-vehicle boom that China is eager in cornering the market on, with production of batteries dependent on lithium, will readily see the Taliban recognizing an opportunity and allowing China permission to get on with its investment, building the required infrastructure, and maintaining efficient extraction of the minerals the modern world is being built upon. A situation where the country with 47 percent poverty levels can hope to raise its standard of economic self-sufficiency.

The pledge of $13 billion from international donors in grants to Afghanistan's development and reforms of last November is unlikely to be carried through at this juncture, to benefit the Taliban. The International Monetary Fund, preparing to transfer close to $150 million of a $370 million credit facility will be set aside, frozen in reflection of Taliban rule which most countries will not recognize as secure and legitimate.

Afghanistan's central bank with 22 tonnes of gold stored at the Federal Reserve Bank in New York, has been frozen. Its international reserves of $9.8 billion in cash, gold and other instruments will be closed to the Taliban wishing to withdraw any of it for immediate use. According to Mr. Katawazai, the Afghan government and Metallurgical Corp. of China Ltd. were negotiating terms for a lease to develop Afghanistan's largest copper mine, with reserves of an estimated 6 million tonnes. 

Goodbye United States of America, NATO countries, hello China and Russia, Afghanistan's Islamic Emirate is open and ready for business.

An Afghan man holds a small piece of gold, prospected from the site of a proposed Qara Zaghan mine.

"Why can't the civil service of distressed nations be adequately funded? After all, many countries which receive aid have extensive natural resources. The answer is that these valuable commodities tend to be contracted out to extractive industries, often foreign."

"Contracts for the extraction of resources such as petroleum or minerals are not disclosed to the public, so the industry and their procedures remain highly opaque ... massive diversions of funds means that usable domestic revenues on the books is a fraction of its potential."

Afghan President Ashraf Ghani; Fixing Failed States: A Framework for Rebuilding a Fractured World

Taliban co-founder Mullah Abdul Ghani Baradar, left, and Chinese Foreign Minister Wang Yi in China on July 28, 2021.

Canada: Use It or Lose It

"This study should be a wake-up call for the federal government."

"It has been made abundantly clear that the overarching issue within this industry is the fact that the federal government has created a business environment where Canada will be unable to meet the growing global demand for critical minerals and, therefore, be reliant on other countries to meet our needs."

"[The current review process] imposes barriers and represents a serious financial risk for reputable mining companies to move forward with new projects."

House of Commons Natural Resources Committee Report

"We're talking about the here and now. People have to get with the times and get with critical minerals or they're going to lose."

The question is, will we be riding on the crest of that wave, or will we feel the impacts of federal government bearing down on us as opposed to walking in lockstep."

Greg Rickford, Minister of Northern Development, Mines, Natural Resources and Forestry, Ontario

Ontario Minister Rickford points out that new regulatory hurdles imposed by the federal government declared recently all new projects in the northern "Ring of Fire" region are to be subject to federal environmental assessments. This is the Ontario region known to be rich in chromite, nickel, copper, platinum and other minerals, set to play a vital role in building Canada's supply chains, most particularly if federal funding is provided for the development of provincial resources.

This is in recognition of China tightening its grip on worldwide supplies of rare earths and other crucial materials. Minerals such as magnesium, lithium and cobalt, used in the production of electric car batteries, mobile phone components, solar panels and guided missiles relate to their shortage, constraining production levels. Those same consumer-demanded items will of necessity be sourced elsewhere, as fungible products, if Canada fails to protect its vital natural resources for its own security.

The federal government's failure to secure supply for these strategic materials represents a shortcoming with potential major consequences, in view of next-generation technologies consuming a growing share of the global economy. Canada's immense mineral wealth according to the report, as a result of a weighty regulatory burden, has hampered Canada from tapping into its own critical natural resources. 

The critical need to secure supply chains for strategic products has become urgent recently in view of sustained efforts on the part of the Communist Party of China to 'corner the market' for supplies of strategic metals, alongside its coveting of the 17 rare earth elements on its way to manipulating prices and supplies. In 2010 China cut the Japanese supply of rare earths, responding to a dispute over the Diaoyu Islands. That measure restricted Japan's capacity to manufacture hybrid cars and other like products.

Canada is being urged by experts to outline a working framework geared to developing and protecting critical minerals; incentives for investment, to national security protection to guard against foreign takeovers of Canadian assets. For decades, China has invested in acquiring strategic mineral assets in Africa and elsewhere. The end result being that it now has possession of fully 80 percent of global processing capacity for rare earths. Around 80 percent of battery chemicals globally are refined in China.

The report urges Canada to deepen ties with Europe, the United States and Japan, in a group effort to strengthen non-Chinese supply chains. The managing director of Benchmark Mineral Intelligence, Simon Moores, informed the committee that China is set to possess 67 percent of global capacity to build lithium-ion batteries by 2030, in large part as a result of significant investments China has made, including a number of "mega factories". Leaving the rest of the world to contemplate the possession of a mere 12 percent.

A lithium mine in Quebec. One expert told the committee that China is likely to possess 67 per cent of global capacity to build lithium-ion batteries by 2030, and North America just 12 per cent. Photo by RB Energy Inc./File

Canada’s critical minerals list:

Aluminum, Antimony, Bismuth, Cesium, Chromium, Cobalt, Copper, Fluorspar, Gallium, Germanium, Graphite, Helium, Indium, Lithium, Magnesium, Manganese, Molybdenum, Nickel, Niobium, Platinum group metals, Potash, Rare earth elements, Scandium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Uranium, Vanadium, Zinc.

'Rare Earth' Minerals the new Indispensible -- Greenland's Treasure Trove

Greenland holds a number of world records. It is the world's largest island, the least densely populated territory on Earth, and home to the only permanent ice sheet outside Antarctica. Most of its 56,000 residents are Inuit, descendants of those who migrated there from what is now Canada in the 13th century.

"Whether it's an Apple, Mac or an F35 fighter jet, you can't make any smart technology without using rare earth minerals."

Dwayne Menezes, managing director, Polar Research and Policy Initiative, London

 

"The mine will destroy everything."

"We are afraid dust from the mine will hurt our fishing grounds and drinking water."

Jens Davidsen, Greenland fisherman

 

"[Greenland wanted to be a] free and open market for everybody who wants to participate."

"[If Europe and the United States were worried], they need to start putting money into exploration."

Jens-Erik Kirkegaard, former minerals minister, Denmark

Giant icebergs float in the fjord in the southern Greenland town of Narsaq, the site of a controversial Australian-led uranium and rare-earth mining project. The open-pit mine has divided opinion on the island, which goes to the polls on Tuesday. NORDFOTO/AP

A vote is pending in Greenland, its population of 56,000 with a voter base fewer than that of some town councils is to settle the issue of the Kvanefield mine project; whether to proceed or to shut down the enterprise. The project overlooks the tiny fishing village of Narsaq where catching whales and seals provide the basic living conditions of the locals perturbed by the inevitable exploitation of one of the world's largest deposits of 'rare earth' minerals in a geology they consider home and inviolable.

The decision they reach has wide implications that will affect materials viewed as critical to the enterprising technology of the 21st century as was oil to the century preceding it. These materials with their supermagnetic, superconductive properties are integral to everything from iPhones and solar panels, to hybrid cars and weapons systems. Key to a high-tech, low-carbon world, extracting them promises to be a balance between caution and an environmentally hazardous process in the making.

Some of the residents of Greenland, skeptical of promises from the Australian company behind the project -- Greenland Minerals -- place little faith in strict measures to be enforced. The ruling Siumut party called snap polls to settle growing unrest over the project. Rowdy public meetings and police being called in to investigate death threats speak to the controversial nature of the disagreements over whether to allow mining to proceed.

Another concern is the fact that Greenland Minerals is partially owned by Shenghe Holdings, a Chinese firm closely tied to the Chinese Communist Party ruling Beijing. The left-wing, pro-green Inuit
Ataqatiglit party has the capacity to toss the mine project out, despite rival parties warning that Greenland's isolated economy has to begin looking elsewhere than its fishing monopoly.  And then there is pressure from Western diplomats fearing Beijing is seeking sole authority over Greenland's rare earth deposits.

Beijing dominates the rare earth market, a resource fast becoming the world's most valuable natural deposits. Over half of such supplies are mined in China which itself supplies the EU with 98 percent of its associated needs and the U.S. with 80 percent. Greenland's resources are considered the last great untapped rare earth reserves with estimates running up to 25 percent of total resources, placing it in the target position of a new superpower "scramble" for access.

Dwayne Menezes, director of the think-tank Polar Research and Policy Initiative, calls for a minerals alliance between Britain and its traditional allies, including the U.S., Canada, Australia and New
Zealand a group that styles itself the "Five Eyes" intelligence network. A report issued by the think tank states: "Greenland offers the U.S. and its allies the opportunity to reduce their dependence on China for resources essential to their defence and security." 

 

Beijing plays a tough game to follow. It has proffered to Greenland an offer ultimately benefiting China 

with its "Polar Silk Road", infrastructure geared around shipping routes, new opportunities opening in tandem with the melting of the Arctic ice cap. It is coming home to Greenlanders that they sit on a treasure trove of the world's newest 'must-have' commodities in rare earth minerals, and with that natural resources comes a drawing into a geopolitical tug-of-war.

One that promises to greatly benefit 56,000 Greenlanders sharing the profits of their natural resources, transforming their living standards and bringing in aid to achieving financial independence from Denmark which subsidizes a third of the government budget of Greenland's capital, Nuuk.

The Kvanefjeld mine could hold the largest deposit of rare-earth metals outside China