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Developments in Afghanistan could halt potential mineral exploration

August 19, 2021

Afghanistan is home to vast mineral deposits with reserves of many of the critical minerals that are in high demand including lithium and copper. However, those deposits might stay in place for many more years because of political instability and high danger levels to those companies that would mine there.

The United States began withdrawing troops from Afghanistan in August and the Taliban quickly regained control of the nation. Western nations that once looked to explore for minerals in Afghanistan will likely halt those plans.

“I wouldn’t and couldn’t invest in Afghanistan with the Taliban running the country. It’s lawless,” said Ben Cleary, the chief executive of Tribeca Investment Partners, which runs a global natural resources fund and finances mining projects recently told Reuters.

He said he couldn’t see any companies listed in Australia, Canada or the United States having a mandate to buy assets there, adding: “China would be the only potential buyer.”

However, the Chinese foreign ministry relayed caution as well, saying that lasting peace and stability were fundamental for potential investors from all nations.

While noting security concerns, state-owned tabloid Global Times said that China could contribute to post-war reconstruction in Afghanistan and resume stalled projects.

Citing an unnamed Metallurgical Corp of China (MCC) source, it also said the company would consider reopening Afghanistan’s largest copper project once the situation stabilized, and international recognition of the Taliban regime, including by the Chinese government, took place.

A consortium of MCC and Jiangxi Copper took out a 30-year lease for the project, the Mes Aynak Mine, in 2008 but it remains undeveloped.
One MCC source told Reuters that it could take five to six years to build infrastructure for mining there but the project could not go anywhere while safety concerns lingered.

Eight security force members were killed in a Taliban attack on a checkpoint at the mine last year.

There has been no official recognition of the Taliban, though China’s Foreign Minister Wang Yi hosted Mullah Baradar, chief of the group’s political office, in Tianjin last month.

The foreign ministry said it noted that the Taliban had expressed a commitment to creating a good environment for foreign investors.
“We hope that the situation in Afghanistan will transition smoothly, and an open and inclusive political structure will be established so that no terrorist organisation will be able to take advantage of it,” the ministry added in a statement to Reuters.

Concerns about potential human rights abuses under a Taliban regime will likely be another barrier to investment in resources that also include gold, natural gas, uranium, bauxite, coal, iron ore and rare earths – sectors in which China has few if any Afghan projects.

 

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