GT Exclusive: Chinese firms explore lithium projects in Afghanistan, but risks remain
Representatives conduct on-site inspections, but major risks remain: sources
Published: Nov 23, 2021 09:08 PM
A man works at a talc stone processing factory in Sorkh Road district of Nangarhar province, Afghanistan, on May 9, 2021. Afghanistan has resumed the export of talc stone from a key mine in the country's eastern province of Nangarhar, the Ministry of Industry and Commerce said on Sunday.(Photo: Xinhua)

A man works at a talc stone processing factory in Sorkh Road district of Nangarhar province, Afghanistan, on May 9, 2021. Photo: Xinhua

Representatives of several Chinese companies have arrived in Afghanistan on special visas and are conducting on-site inspections of potential lithium projects, while others have made contacts about such projects, several Chinese businessmen in Afghanistan told the Global Times on Tuesday, marking a concrete initial step in potential cooperation in developing one of Afghanistan's biggest mineral deposits. 

However, despite growing interest from companies, major hurdles and risks remain for Chinese firms to actually implement such projects, given the major uncertainties in the country in terms of policy, security, the economy and infrastructure, some mining industry insiders who have been involved in overseas projects, including in Afghanistan, told the Global Times. 

After coordination between the China Arab Economic and Trade Promotion Committee in Kabul and Afghanistan's mining ministry, representatives of five Chinese companies obtained special visas and arrived in Afghanistan early in November to conduct on-site inspections, Yu Minghui, director the committee, which has been helping Chinese companies explore business opportunities in Afghanistan, told the Global Times on Tuesday. 

"[They] have arrived in the Chinatown and are conducting inspections in Afghanistan as planned," Yu said, adding that he believes these company representatives received the first batch of special visas issued to Chinese investors. With the power transition in Afghanistan, such arrangements are hard to make, and they required coordination among various companies and authorities, he said.

Yu said that he had spoken with the representatives of the Chinese companies, and they were most concerned about basic guarantees of security and social order in Afghanistan, while some praised the Afghan Taliban's friendliness toward Chinese investors. "Some believe friendly relations between China and Afghanistan… are conducive to Chinese companies' operations," Yu said. 

During meetings and official statements, Taliban officials expressed a welcoming attitude toward Chinese companies, as they seek to rebuild the war-torn country. Chinese officials have also extended helping hands to the Afghan people by providing humanitarian aid and resuming certain trade channels, including for pine nuts. 

Just on Saturday, a freight train loaded with more than 1,000 tons of humanitarian aid departed from Northwest China's Xinjiang Uygur Autonomous Region, bound for Afghanistan.

Amid the friendly ties, interest in Afghanistan's mining sector is also growing among Chinese firms, including projects involving copper and lithium, given the massive deposits estimated to be worth as much as $1 trillion. In terms of lithium, a critical but scarce resource for batteries and other technologies, Afghanistan could rival Bolivia, which currently has the world's biggest known reserves, according to a CNN report. 

Apart from the five Chinese companies whose representatives are currently in Afghanistan, at least 20 Chinese state-owned and private companies have also made inquiries about lithium projects, Gao Susu, a staffer at the China Arab Economic and Trade Promotion Committee, told the Global Times on Tuesday. 

However, despite the growing interest and on-site inspections, major hurdles and risks remain for any potential project and many companies will likely adopt a wait-and-see attitude until conditions improve, industry insiders noted.

Zhou Shijian, a former vice president of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers and Exporters, said that he supports Chinese companies to explore potential projects in Afghanistan, but "first and foremost" is that the Taliban government must ensure the safety of personnel and projects.

"The problem is to ensure safety. If safety is not guaranteed, the gain will not be worth the loss," Zhou told the Global Times on Tuesday. "What I mean is that we need to further observe the situation in the country before deciding whether the company will go in."

Such concerns also stem from the earlier experience of Chinese companies' mining projects in Afghanistan. Some Chinese companies are involved in several major projects in Afghanistan, including the Aynak Copper Mine project, which is the second-largest copper mine in the world. But many have been stalled or seen slow progress due to instability in the country.

With regard to the Aynak Copper Mine project, "the difficulty level of mining is relatively low but the problem is there is so much uncertainty about the security issue," a source at China Metallurgical Group Corp, which is involved in the project, told the Global Times in an earlier interview. "When the conditions are ripe, we are happy to mine."

Zhang Xiaorong, director of the Beijing-based Cutting-Edge Technology Research Institute, said that potential projects would also require bilateral diplomacy. 

"Whether or not to cooperate in the development of minerals may also involve diplomatic decision-making," Zhang told the Global Times on Tuesday.