CPEC and Afghanistan’s mineral wealth

On July 23, 2023, The Washington Post carried a long story about the rich load of EV metal that could boost Taliban and its Chinese partners. EV metal referred to lithium, a vital component of electric vehicles of which China had become a major manufacturer. The authors of the story interviewed several locals, one of them Wali Sajid, who had spent years fighting American soldiers in the barren hills and fertile fields of the Pech River Valley. This was one of the deadliest theaters of the 20-year-long insurgency. But nothing confounded the Taliban commander like the new wave of foreigners who began showing up in late 2021. “At first, they didn’t tell us what they wanted. But then I saw the excitement in their eyes and their eagerness, and that’s when I understood the word, ‘lithium’.”

In a 2010 memorandum, the United States’ Pentagon Task Force on Business and Stability Operations dubbed the country the “Saudi Arabia of lithium”. A year later, the US Geological Survey said in a study that Afghanistan “could be considered as the world’s recognized future principal source of lithium”. By 2040, the demand for lithium could rise 40-fold as the world use of electric vehicles increased. Lithium is a vital element for batteries on which these cars run. With the United States and its allies in the West having imposed sanctions on Afghanistan after the 2021 takeover of the country by the Taliban, Chinese have stepped in and have cornered the Afghan market for the important minerals needed by its industries. Lithium’s price skyrocketed eightfold from 2021 to 2022 attracting dozens of Chinese companies to start mining operations in the areas that have rich deposits of the critical mineral in Afghanistan.

The new Taliban administration is still figuring out how to take advantage of the presence underground of the mineral. Once mined, and following some basic treatment, the mineral needs to be transported to feed the users in China. But the Taliban in Kabul are still in the process of coming up with a policy to making lithium available in the growing international market. In January 2021, the Taliban officials arrested a Chinese businessman for allegedly smuggling 1,000 tons of lithium ore from Kunar province through Pakistan to China. He didn’t have the government’s approval to transport the ore out of the country.

Taliban governing from Kabul are seeking to negotiate a concession with a foreign firm, with China the favoured country, to work in the area. However, experts warn that even after a contract is awarded, it may take years before the metal becomes available in the markets. The ore is in difficult to reach areas and needs costly investments to build the needed infrastructure. Travelers going through the area see dozens of small shafts that pierce the hillside. For centuries, the area’s farmers have augmented their incomes by extracting precious stones such as quartz, tourmaline and kunzite and selling them in the markets in Central Asia and neighbouring Pakistan. Ore bearing lithium was discarded until the Chinese arrived and sent brimming trucks carrying the ore through Pakistan to China.

According to Christopher Wnuk, an American geologist, “I have never seen anything like Afghanistan. It may very well have the most mineralized place on Earth. But the basic geological work has not been done.” This is now being carried out by experts from China who are also improving the communication network in the area where the metal is found in great abundance. “Afghanistan lacks an industrial base, but they have great mineral resources, and no Westerners can compete with the Chinese when it comes to building infrastructure and tolerating hardship,” said Zhou Bo, an international security expert at Tsinghua University. In a conversation with journalists working for The Washington Post, Shahabud Delawar, Afghanistan’s minister of mines and a senior Taliban leader, said that the representatives of a Chinese company had visited him in his office, presenting the details of a $10 billion bid that included pledges to build a lithium ore processing plant and battery factories in Afghanistan, upgrade long-neglected mountain roads and create tens of thousands of local jobs.

This leads to several important questions: How can Afghanistan tap its mineral wealth? Once tapped, how should mineral ores and products based on developing them be transported to the countries that need it for feeding their industries? Since a significant part of the mineral wealth lies close to Pakistan’s and China’s borders, how should the two neighbouring countries collaborate to bring the Afghan minerals — in raw form or processed — to global markets? Most answers to these questions underscore the important role China is likely to play in this area.

The first time I heard about the importance China attached to building a corridor that would link its underpopulated areas in the country’s west to the Arabian Sea was in 1993. That was in a conversation with senior leader Zhu Rongji who was on his way to becoming his country’s prime minister.

My final meeting with Zhu was in 1993. In that conversation, he asked for my help in drawing the attention of Pakistan’s senior leaders to China’s interest in building a land corridor that would connect China’s Xinjiang Autonomous Region with a port in Pakistan, preferably Gwadar on the Balochistan coast. Gwadar could become the site of a deep-water port. Nawaz Sharif then was prime minister and had not taken any interest in the Chinese initiative.

It took twenty years for the leadership in Islamabad to sign on to the development of what has come to be called the China-Pakistan Economic Corridor, or CPEC. In 2013, President Xi Jinping on a visit to Pakistan described China’s interest in developing what he called the Belt and Road Initiative, or BRI. China was working on developing a network of highways and ports that would improve its connection with the world. CPEC was an important component of the BRI.

What the CPEC initiative should embrace is a question that has no well-defined answer. This is just as well, as the development of the corridor would open new areas that need government attention. One of them is to extend the initiative to include Afghanistan. Both Beijing and Islamabad have recognised that by including the development of highway networks linking China with Pakistan and Afghanistan, there will be significant economic rewards. This is one way the Afghans will be able to provide their mineral wealth — in particular lithium — for the rapidly developing electric vehicle industry in China.

 

Published in The Express Tribune, August 7^th, 2023.

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