Ever since the Taliban regained control of Afghanistan in August, there have been apprehensions in the West and India that China would spread its economic tentacles in the country.
Afghanistan has vast untapped reserves of copper, iron, zinc, lithium and rare earths, valued at over $1 trillion. The country's lithium reserves are in various provinces including Ghazni, Herat and Nimroz.
On Tuesday, China's state-run Global Times reported five Chinese companies currently have representatives inside Afghanistan who are “conducting on-site inspections of potential lithium projects”.
Global Times reported the representatives arrived in Afghanistan early in November. The five companies are not alone in their interest in Afghanistan's lithium. Gao Susu, a staffer at the China Arab Economic and Trade Promotion Committee, told the Global Times “at least 20 Chinese state-owned and private companies have also made inquiries about lithium projects” in Afghanistan.
Global Times noted that concerns about safety and political stability persisted. Moreover, Chinese companies have had a tough time breaking into Afghanistan, unlike in other markets. A Chinese company had won a contract in 2008 to develop a copper mine in Mes Aynak, which is thought to have the world's second-largest reserve of the metal. However, progress on the project has been very slow.
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Interestingly, the latest Global Times report noted the Taliban regime had been friendly towards the Chinese investors. “During meetings and official statements, Taliban officials expressed a welcoming attitude toward Chinese companies, as they seek to rebuild the war-torn country. Chinese officials have also extended helping hands to the Afghan people by providing humanitarian aid and resuming certain trade channels,” Global Times reported.
Last week, a freight train with over 1,000 tonnes of humanitarian aid left from Xinjiang Uygur Autonomous Region for Afghanistan.
Control of lithium reserves
Lithium is a key component in building the lithium-ion batteries that power everything from mobile phones to electric vehicles to new generations of submarines. A Bloomberg New Energy Finance Limited report in 2020 noted China led the world's lithium-ion battery supply chain market, given its dominance of raw material mining and refining.
Control of Afghanistan's lithium and rare earths, which are used in multiple technology sectors, would give China a major advantage in its growing rivalry with the West.