President Biden’s hasty exit from Afghanistan and the Taliban’s rapid takeover left the U.S. in a tough spot for getting at the country’s rare earth minerals, while China positioned itself to cash in.
The diplomatic fumble with the mineral rights is particularly painful for Mr. Biden because his economic and climate agenda relies heavily on rare earth minerals to transform the power and transportation markets and rebuild the nation’s semiconductor industry.
The Taliban’s overthrow of the Afghanistan government gave the Islamist militants control of huge mineral deposits critical to batteries for electric cars, cellphones and other high-tech consumer goods.
“We are going to be fighting for scraps because we are sitting around debating and thinking about what to do,” said Chris J. Dolan, a politics and global studies professor at Lebanon Valley College. “The U.S. has all these conditions and caveats, but the Chinese don’t care if the Taliban is respecting human rights whereas the U.S. has.”
He said that ceding Afghanistan to the Chinese, even if it is on this one issue, would be a disaster.
“It’s going to hurt us because the next generation — especially in terms of advanced computers and technology — is going to have to be a lot more reliant on China. That would be the ultimate disaster,” Mr. Dolan said.
A 2010 Department of Defense report priced Afghanistan’s untapped mineral wealth — which includes copper, iron, gold and lithium — at roughly $1 trillion. In 2019, an Afghanistan government official estimated the value at as much as $3 trillion.
But while the U.S. raced to evacuate citizens and debate whether it wants to recognize the Taliban government, China opened up talks with the Taliban to gain access to the mineral mines.
China, which shares a border with Afghanistan, seized on the opportunity to invest in its neighbor’s mineral sector. Beijing is pitching itself to Kabul by promising two things the U.S. can’t: economic investment and political impartiality.
Meanwhile, the U.S. is fretting that the Taliban will reimpose its theocracy, turn back the clock on women’s rights and other freedoms.
Beijing’s bold overtures come as the U.S. struggles to wean itself off China’s supply of rare earth minerals. China exports more than 85% of the world’s rare earth minerals and is home to about two-thirds of the global supply, according to the Center for Strategic and International Studies.
At the same time, vying with China for mineral rights in Afghanistan isn’t an easy option. The Biden administration doesn’t want to reward the Taliban with U.S. investment given the militant group’s ties with terrorists, horrid human-rights record and history of subjugating women.
In response to the Taliban takeover, the U.S. froze Afghanistan assets and encouraged global financial institutions to halt aid to the beleaguered nation. It has also placed the group on the Treasury Department’s list of Special Designated Global Terrorists, although it has not designated the group a Foreign Terrorist Organization.
Up until the 1980s, the U.S. was the dominant supplier of rare metals, but pressure from environmental groups and cheaper production overseas shifted the landscape.
The Thacker Pass mine in Northwest Nevada is said to have one of the largest deposits of lithium in the world. Protests by environmentalists and native-rights activists halted mining plans.
China has shown it’s not afraid to use its dominance in the minerals sector as a cudgel to achieve foreign policy goals.
After Japan detained a Chinese fishing trawler captain last year, Beijing banned the export of minerals used to make hybrid cars and wind turbines to the country.
In February, China said it is considering limiting the export of 17 rare earth minerals used to manufacture American F-35 fighter jets.
“China is willing to use its mineral dominance as a tool of foreign policy,” said Scott Montgomery, a geopolitics scholar at the University of Washington. “The world right now is looking for new mineral deposits but at the same time, China is looking to maintain its dominance. That is only going to get more intense.”
Relying on China for rare earth metals is especially harrowing as energy experts have forecasted a shortage of rare minerals.
A May report by the International Energy Agency concluded that demand for rare minerals, including lithium and cobalt, could skyrocket by 2040 as the nations look to them to power green energy initiatives.
An electric car uses six times as many mineral resources as a gas vehicle and an offshore wind plant requires nine times as many mineral resources as a gas-powered plant, the report found.
Lithium, nickel and cobalt are crucial to rechargeable batteries used to power those devices.
Earlier this year, copper prices hit their highest level in a decade and, as of July, rose 21% compared to last year.
“We’ve seen economic spikes in copper. We’ve seen black markets for copper and we’ve seen people steal copper out of buildings because of shortages,” said Rod Schoonover, a scientist and security expert at the Center for Strategic Risks.
The total known deposits of copper in Afghanistan total about 57.5 million metric tons, which at current prices would be worth about $516 billion.
Lithium could be even more abundant. The 2010 Pentagon report dubbed Afghanistan the Saudi Arabia of Lithium.
The Chinese overtures to the Taliban will be increasingly enticing as the country’s economic crisis worsens. Prices of consumer goods like oil and flour are soaring, pharmacies have been depleted of medicines and ATMs are out of cash.
The Taliban are in desperate need of private capital, making a deal with China an increasing possibility.
However, any mining contract is going to require patience, technical skill and investment in infrastructure, according to analysts.
The extraction process takes an average of 16 years between the discovery of deposit and production.
Years of conflict have devastated Afghanistan’s roadways, power plants, and railways. Mountain roads can also flood easily, requiring significant capital to shore them up.
In 2007, China spent $3 billion on a copper mining project in Afghanistan, but the project went bust because of the challenges related to the lack of infrastructure.
This time could be different. In 2013, China launched what’s known as the Belt and Road Initiative, a global infrastructure development project. The initiative includes investment in more than 70 countries, including Afghanistan, to build roads and infrastructure to support Chinese investment.
It is the centerpiece of Beijing’s foreign policy.
Mr. Dolan said China already has the Belt and Road initiative, and its relationship with Pakistan are advantages China didn’t have in 2007 and the U.S. doesn’t have now.
He added that the U.S. needs to start considering these issues if it wants to become a bigger player in the mineral sector.
“I don’t see how we avoid paying more for our high-tech items that we’ve become reliant on,” he said. “It is going to happen regardless. It’s just who is going to dominate the market, and I prefer the United States.”