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Updated: 02:26 23/10/21

Could war-torn Afghanistan be a new major gold & lithium producer?

By Liam Sheasby, News Editor

08 Sep 2021

As the 'War on Terror' in Afghanistan ends in ignominy, another conflict potentially looms: the war for resources. According to Forbes, Afghanistan reportedly sits atop what could potentially be one of world's largest reserves of precious metals, minerals, and rare earth elements.

Surveys performed by the US Department of Defence suggest that Afghanistan could be holding anywhere between $1-3 trillion in resources below the surface, with deposits chiefly lithium, but likely to contain large amounts of gold, silver, platinum, aluminium, copper, iron, and even uranium.

Rare earth elements (REEs) are, as the name says, rare. These metals and minerals are used in advanced technologies, such as electric cars, fibre optic cables, and smartphones, as well as by the military for fighter jets and the healthcare industry for things like X-Ray machines. Lithium is by far the most valuable resource here. A core part of battery production, lithium will be a huge necessity for the transition to cleaner energy – whether through renewable energy devices or electric vehicles.

This scarcity makes REEs both a necessity and expensive, which is why China has made such a concerted effort to be the main player in this market; guaranteeing they are part of global trade in nearly all aspects. There are concerns – primarily from America – that now the US and UK forces have pulled out of Afghanistan and the Taliban are back in control, China may try to move in to the country as it has in several East African nations to pursue mining operations in tandem with the new Taliban authority. China's foreign ministry spokesperson has already expressed the country's willingness to help in “reconstruction and development” within the country, so perhaps we could see a bidding war in the coming months for access to mine these rare resources.

Afghanistan could take a similar route to the likes of Ghana though, where domestic gold production is bought up by the state to go into the national reserves. Given the nation's animosity to the US, this wouldn't be that surprising a decision. Foreign mining firms from China and maybe Russia (unlikely given their history) or someone like Australia could come in and operate in Afghanistan; training labourers to then train more workers as operations expand for domestic purposes, as well as international exporting. PAMP Suisse are a great example, with operations in India alongside the MMTC (Metals and Minerals Trading Corporation of India) to help develop the bullion refining industry in the country.

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