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Afghanistan could potentially become the lead supplier of lithium

in Afghan Business

Afghanistan could potentially become the lead supplier of lithium

lithiumBy Ahmadshah Ghanizada: Afghanistan’s natural resources are considered to be a silver lining for the economy of Afghanistan, as the NATO-led international coalition security forces are preparing to leave the country.

The withdrawal of the NATO troops and reduction of international community’s aid to Afghanistan has created fears of economic crisis among the Afghans; however, there are optimisms that the natural resources of Afghanistan could play a vital role in economic development of the country.

U.S. agencies estimate Afghanistan’s mineral deposits to be worth more than $1 trillion. Afghanistan’s copper, cobalt, iron, barite, sulfur, lead, silver, zinc, niobium, and 1.4 million metric tons of Rare Earth Elements (REEs) — may be a silver lining.

A classified Pentagon memo called Afghanistan the “Saudi Arabia of lithium.” (Although lithium is technically not a rare earth element, it serves some of the same purposes.)

Jim Bullion, who heads a Pentagon task force on postwar development, said the maps reveal that Afghanistan could “become a world leader in the minerals sector.” (The American)

There are optimisms that Afghanistan’s mineral wealth may be able to help knit the country back together after decades of war, having Rare Earth Elements (REEs), which are high in demand.

 The REEs are essential for manufacturing of a host of modern technologies, including cell phones, televisions, hybrid engines, computer components, lasers, batteries, fiber optics, and superconductors.

According to the American, congressional findings have called rare earth elements “critical to national security.” REEs are key to the production of tank navigation systems, missile guidance systems, fighter jet engines, missile defense components, satellites, and military grade communications gear.

Currently, China is considered to be one of the major suppliers of REEs, and produce 97 percent of the world’s REEs. However, the global market has reportedly been manipulated by China.

The overall exports of REEs were reduced to 72 percent in the second half of 2010 following a maritime dispute with Japan, and China stopped supplying REEs to Japanese customers.

There are optimisms that Afghanistan can be part of the long term solution to the REE supply problem in the long term. However, concerns regarding the corruption and security remain a challenge.

The rule of law, human capital, and infrastructure which are critical to attract foreign investment is yet another challenge, which prevents building of a rare earth mining system from scratch in the short term.

In the meantime, China is considered to be a vital player and can play an important and constructive role in Afghanistan, as the country is eager to develop Afghanistan’s mineral wealth.

China is one of the major foreign investments in the mining sector of Afghanistan. The country has been granted exploration rights for copper, coal, oil, and lithium deposits across Afghanistan.

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