While many nations have balked at Afghanistan’s new Taliban government, China has notably taken the initiative to engage with them. This is seemingly confusing as Afghanistan’s nature as a predominantly Muslim state with a Uyghur population has caused China to fear “The possibility for Uyghur-led terrorist groups to conduct attacks or foment violence in Xinjiang, which shares a narrow border with Afghanistan.” Nevertheless, China met with Taliban leaders in Beijing even before they overthrew the Afghanistan government. What can explain this Chinese engagement with such an unlikely ally? Lithium batteries. Or more specifically the natural resources that Afghanistan possesses yet is unable to utilize which would further enhance China’s global monopoly on the production of lithium-ion batteries.
Afghanistan’s Natural Resources at a Glance
Afghanistan possesses a vast amount of rare earth minerals which are valued at $1 trillion or more. Among these minerals are copper, gold, oil, natural gas, uranium, bauxite, coal, iron ore, rare earths, lithium, chromium, lead, zinc, gemstones, talc, sulfur, travertine, gypsum and marble. While many of these minerals are potentially valuable, the most important for Afghanistan’s economy is its lithium reserves which could potentially be the largest in the world. Lithium, along with cobalt, is used in lithium-ion batteries which are used in everything from smartphones and computers to electric car batteries. As the global society becomes increasingly dependent on such technology, the usage of lithium-ion batteries increases. The market for lithium batteries used for electric cars alone is expected to grow to nearly a trillion dollars by 2030. Consequently, lithium batteries represent the future of energy storage and the nations who can monopolize their manufacturing will ensure economic prosperity for themselves and supply chain advantages that will allow them a degree of control over foreign economies similarly to middle eastern nations who were able to control the flow oil and natural gas to modern economies. To put this mineral wealth in perspective, Afghanistan’s GDP in 2020 was roughly $19 billion. Meaning, that Afghanistan potentially possesses mineral wealth almost fifty thousand times its current GDP. Consequently, as reported by Reuters, “An internal U.S. Department of Defense memo in 2010 reportedly described Afghanistan as ‘the Saudi Arabia of lithium,’ meaning it could be as crucial for the global supply of the battery metal as the Middle Eastern country is for crude oil.” However, Afghanistan has been historically unable to extract these minerals due to a lack of infrastructure, security, proper legal framework, organizational capacity, and high corruption.
These roadblocks to Afghanistan’s mineral extraction provide the perfect opportunity for China who is adept at building the necessary infrastructure to extract minerals in return for rights to those minerals. A prime example of this is China’s involvement in the Democratic Republic of the Congo’s (DRC) cobalt mining. As noted by CNN, “Three countries — China, the Democratic Republic of Congo and Australia — currently account for 75% of the global output of lithium, cobalt and rare earths.” However, China only accounts for 11% of the world’s cobalt mining while around 60% of the world’s cobalt originates in the DRC where China’s investors control 70% of the mining sector, allowing China greater access to an ingredient in lithium-ion batteries. China acquired this commanding stake in the DRC’s mining market by promising to build vital infrastructure in return for mining contracts and mineral rights. Thus, it’s very likely that China will employ a similar strategy in Afghanistan and seek to add them to their Belt and Road Initiative to further enhance their ability to produce lithium batteries, which is a key interest for China.
Looking Forward to the Future of Chinese Lithium Batteries
Lithium batteries are China’s path to future global economic dominance. Currently, China already leads the world in lithium battery output, producing 80% of the world’s raw materials for advanced batteries in 2019 and produced 77% of all lithium batteries in 2020. Additionally, China is seeking to expand its control with 101 of the 136 battery plants being constructed within the next eight years being based in China and China cementing controlling interests in some of the largest lithium reserves in Australia and Chile. However, if China were able to develop a significant trade relationship with Afghanistan, China would exercise an immense degree of control over an increasingly vital supply chain as developing nations continue to pivot to electric vehicles and renewable energies which largely rely on lithium-ion batteries. Controlling the production of these batteries will allow China to return to its historic stance as the middle-kingdom which controlled the provision of valuable trade goods to the West. However, this time, China will not be providing luxuries; it will be providing, and thus to some degree controlling, a necessary good.