Posted on 18 Aug 2021
The world’s largest rare earth producer, China, may extend its market dominance if it gets access to Afghanistan’s huge resources now in the hands of the Taliban. This is expected to increase global geopolitical tension and challenges to the energy transition.
The Asian giant produced 140,000 tonnes of rare earths in 2020, which corresponds to 52.3% of the global production, according to the bp Statistical Review of World Energy 2021. With a 15.5% stake, Australia is the second largest producer, followed by the US with a 14.2% share. China also controls over 80% of the global rare earth processing capacity.
Beijing is ready for “friendly cooperation with Afghanistan” after the country was overtaken by Taliban fighters, Chinese foreign ministry spokeswoman Hua Chunying told a press conference on Monday. The Taliban took over the capital Kabul and the presidential palace without much resistance on 15 August, as Afghan President Ashraf Ghani fled the country.
“We are ready to continue to develop good-neighbourliness and friendly cooperation with Afghanistan and play a constructive role in Afghanistan’s peace and reconstruction,” she said.
Afghanistan has large deposits of copper, lithium (spodumene) and rare earth minerals, among other metals. It has been once described by American officials as the “Saudi Arabia of lithium” and, if further developed, its mining industry could contribute to its economic growth and the global supply of critical materials to decarbonisation, Kallanish understands.
The International Monetary Fund said in a report in 2018 that “Afghanistan might be far away from being able to develop its mining sector sustainably owing to deterioration of the security situation, political uncertainty, the deficiency of its infrastructure, and stalled projects.” It forecast then that illegal mining and insurgent control over mining sites would likely continue to be critical challenges to the development of the mineral sector in the “near future.”
With support from China, Russia and Iran, the Taliban could become a supplier of raw materials for the EV industry and generating trillions of dollars in revenues. Afghan resources are reportedly worth between $1 and $3 trillion.
“So there should be pressure on China if they are going to do alliances with the Taliban in order to generate economic aid for them — that they do it on international terms,” defends Shamailan Khan, head of Emerging Markets Debt at Alliance Bernstein.
“It should be an international initiative to make sure that if any country is agreeing to exploit its minerals on behalf of the Taliban, to only do it under strict humanitarian conditions where human rights, and rights for women are preserved in the situation,” she said in a televised interview on Tuesday.
Both the Afghanistan and the US geological surveys have estimated large reserves of rare earth elements in the war-torn country, yet an exact figure remains a state secret. In 2011, the US Geological Survey said the Khanashin carbonatites, in southern Helmand province, have an estimated 1 million tonnes of rare earth metals at a “potentially useful concentration.”
Source:Kallanish
