How lithium is powering China, Afghanistan bonhomie

The rising interest in various autonomous machines in recent years, particularly electric vehicles, has spurred a growing focus on lithium as the essential material for the energy storage units these machines require.

Consequently, lithium, often dubbed the oil and natural gas of the future, is progressively becoming a strategic commodity on the international stage.

Nations are advancing their initiatives concerning lithium, the foremost raw material of the future, predominantly highlighting sustainability and the circular economy.

Nevertheless, China stands as the pivotal nation in the processing of lithium as a raw material. Indeed, China is acquiring lithium companies in South America, which possesses half of the world's reserves, while simultaneously solidifying its market position by forming the Mining Companies Association with firms in lithium-rich countries.

Within this framework, an analysis of China's relationships with Middle Eastern and Central Asian countries reveals the significant role of the lithium trade.

Among these countries is Afghanistan, endowed with abundant lithium deposits.

Often referred to as the "second Saudi Arabia of lithium" amid the global powers' lithium competition, Afghanistan is gaining increasing prominence.

Competition over lithium

According to published reports, approximately 100,000 tonnes of lithium carbonate are traded globally today. Chile, Argentina, Belgium, Germany, China, and the US export 98.3 percent of this total.

The importing countries, which account for 86.3 percent of this trade, include South Korea, Japan, the US, China, Belgium, Germany, Spain, Türkiye, Russia, Thailand, France, India, and Italy.

This has led to significant competition over lithium among various countries. According to estimates, the added value of this sector will exceed $400 billion by 2030.

In this context, Australia, Chile, and Argentina are the three primary actors at the initial stages of the mineral processing chain, whereas China is the dominant actor from the middle to the final stages of the value chain.

As leading electronics producers, Japan, South Korea, and the US participate in this value chain's final stage. Among these actors, China controls 60 percent of global lithium production and refining, dominating the electric vehicle markets.

Furthermore, China holds a dominant position in the electric battery market, with a capacity ranging from 80 to 90 percent worldwide. Notably, six of the world's top 10 electric vehicle battery manufacturers are based in China.

China's leadership role in the vital minerals chain is not accidental but rather the result of deliberate and strategic planning.

Lessons learned from China's position in the global steel chain are shaping its industrial strategies in the transition to clean energy, particularly regarding electric vehicles and lithium batteries.

In the steel industry, most of the profits go to mining companies such as Rio Tinto and FMG and downstream sectors like automotive. In contrast, despite producing over 50 percent of the world's steel, China retains only a small share of the profits relative to the energy and labour it enagages.

This experience has driven China's efforts to secure access to lithium mines worldwide, reflecting its strategic goal of controlling the entire lithium chain to avoid a similar predicament as in the steel industry.

Considering China's prowess in this domain, the US and the European Union are engaging in rigorous negotiations to enhance collaboration with suppliers in lithium-abundant nations. Concurrently, they persist in exerting pressure against China's dominance in this sector.

China's interest in Afghan lithium

Blessed with rich lithium resources, it is estimated that Afghan lithium resources will soon be able to compete with those in Bolivia.

A study conducted by the US National Aeronautics and Space Administration (NASA) estimated the value of unexploited lithium mines in Afghanistan at approximately one trillion dollars.

The lithium mines in Afghanistan are reported to stretch from Herat province to Nuristan province, covering a length of 850 to 900 kilometres and a width of 150 to 200 kilometres. It is estimated that the lifespan of these lithium mines is approximately seventy years.

Lithium resources in Afghanistan were first discovered in the 1980s by Soviet mining experts. However, they kept this information well-hidden until 2004.

However, it came to light when a team of American geologists stumbled upon old maps and data in the Afghanistan Geological Survey Library in Kabul.

Utilising old Russian maps, the United States Geological Survey commenced aerial surveys of Afghanistan's mineral resources using P-3 Orion surveillance aircraft equipped with advanced gravity measuring instruments and magnetic equipment.

In 2007, they employed a well-equipped British bomber, which provided a three-dimensional profile of the underground mineral reserves. Afghanistan's rich lithium deposits have, more than anything else in recent years, spurred China's growing interest in Afghanistan's lithium and concrete steps in this direction.

Following the Taliban's return to power in August 2021, the Chinese government officially emphasised that the agreements with the previous Afghan governments would continue.

Indeed, more than 20 Chinese companies are currently active in Afghanistan, and over 100 Chinese companies have registered with the Afghan Ministry of Mines to operate mines in the country.

After the Taliban's return to power, approximately 500 Chinese business people travelled to Afghanistan to closely examine the nation's natural resources.

The majority of Chinese companies and their investments are focused on mining and mineral development, with lithium mines appearing to hold particular significance in this context.

According to reports in the Afghan press, this interest stems from the rich lithium deposits in Afghanistan's Ghazni province and the ease of transportation to China through the Wakhan border.

In fact, according to a report published in the Afghan press in April 2023, China's Gochin company announced its intention to invest $10 billion in Afghanistan's lithium mines in the initial phase.

Afghanistan's abundant lithium resources have also been a focal point for US officials. In 2010, US media, citing Pentagon officials, claimed that Afghanistan would become the "Saudi Arabia of lithium" due to the size of its lithium reserves.

In general, when examining China-Afghanistan relations, mutual economic interests appear to be predominant. After the Taliban regained control of Afghanistan, China became one of the few countries to maintain relations with the Taliban government.

Mutual political and economic interests are bringing the two sides closer, with China attempting to leverage the opportunity presented by the US withdrawal to expand its influence in Afghanistan.

For China, the security provided by the Taliban presents a favourable opportunity to implement commercial and economic projects in Afghanistan, through which Beijing aims to achieve its strategic interests.

Conversely, the Taliban have shown significant interest in Chinese projects, viewing them as a viable opportunity to alleviate their economic crisis. Upon scrutinising China's economic projects and investments in Afghanistan, it becomes evident that Afghanistan's abundant lithium resources are one of the significant factors fostering this interest-driven rapprochement between the two nations.

In essence, lithium, gradually evolving into a strategic commodity on the international stage, is assuming a strategic position in China-Afghanistan relations.