Friday, January 28, 2011

Did you know-The Taliban: World's Next Minerals Superpower

The Taliban: World's Next Minerals Superpower
Gordon G. Chang
Afghanistan's resources raise the stakes in Central Asia.

This week the US Defense Department revealed that Afghanistan possesses at least $908.9 billion in untapped mineral resources. Iron accounts for $420.9 billion of the total, and copper $274.0 billion. There is cobalt, gold and molybdenum. The country could become, according to a Pentagon memo, the Saudi Arabia of lithium.” Just as interesting, there is niobium, used to make superconducting steel.

Most significantly, Afghanistan has substantial deposits of rare earth minerals, estimated to be worth $7.4 billion. And why is this so important? At present, China has a near monopoly over them. It posseses about 36% of world reserves, by far the biggest share for any nation, and accounts for around 97% of global production. Five years ago Beijing substantially tightened export controls on these minerals. At this moment, officials are building a strategic reserve of them.

Last August China's Ministry of Industry and Information technology announced it would prohibit exports of some heavy rare earth minerals and restrict exports of other rare earths to levels far below current global needs. The complete prohibition may go into effect by 2015.

Beijing, unfortunately, is not content to control just its own rare earth resources. The Chinese are buying deposits around the world, including those in the U.S. and Canada.

And that brings us back to Afghanistan. Beijing, not surprisingly, has already shown great interest in the resources of its troubled neighbor to the west. In 2007 a Chinese company won the concession to the Aynak copper mine in Afghanistan's Logar province-- after paying, according to American officials, a bribe of $30 million to the now-former minister of mines.

As the New York Times reports, the Chinese want to buy up even more of Afghanistan's resources. They will surely succeed in exploiting most of the trillion dollars of minerals if the Taliban fighters take back control of the country, as they will if President Obama adheres to his plan to begin withdrawing troops next July. The Taliban, in short, could become a minerals superpower in a few years time.

That will surely mean an even larger portion of the world's rare earth deposits will be under Chinese control. Beijing has traditionally maintained strong ties to the Taliban, continuing relations even after Sept. 11. Since that horrible event, for instance, China went through with the sale of a telephone system for Kabul and, after the group's ouster, has supplied it with weapons used against NATO forces.

The Pentagon, in September, is scheduled to complete its report identifying “national security risks due to rare earth material dependencies.” Yet we don't have to wait until then to know what it will say.

The U.S. is not mining any rare earth minerals at the moment, and there is only one American company with commercially significant deposits of heavy rare earths. It is not entirely clear what defense planners will do when China's export ban on these minerals goes into effect.

Rare earth minerals are used in every major weapons system the U.S. fields today, from M1A2 Abrams tanks to Arleigh Burke-class destroyers. There is not a plane in the American inventory that will fly tomorrow without some mineral that is now mined in China. Lasers, radar and missile-guidance systems? Yes, they all require rare earth minerals, as do the military's hard drives.

So the stakes just went up in Afghanistan with the release of the information this week. The U.S. has a critical reliance on what is in the ground in that war-torn land. Kabul can undercut Beijing's virtual monopoly on rare earths--or it can help the Chinese tighten their grip over global markets.

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