China’s Involvement in Afghanistan’s Extractive Industry

Patrick Yeager is an analyst with the U.S. Department of Defense. His publications are his own views and not those of the Department of Defense or the United States government.

During the 18-19 May China-Central Asia summit, President Xi Jinping pledged to “continue to help the Afghan people maintain security and stability and realize peace and reconstruction. We will work together to build a Central Asia that features no conflict.” While accepting the good tidings, the Islamic Emirate’s spokesman asked the summit participants to “take practical steps for stability and security in Afghanistan.”

The Taliban are likely to be disappointed. Beijing continues tentatively expanding its involvement in Afghanistan, but its strategy is unclear. Both sides in this nascent partnership seem unable or unwilling to provide the type of action needed to drive the relationship forward in a meaningful way.

Beijing fears regional instability, but its deliberative moves in Afghanistan will unlikely generate results quickly enough to bolster security. Afghanistan’s lack of infrastructure ensures that investments will take time to generate meaningful revenue.

China signed a 25-year oil deal with the Taliban government in January, Beijing’s first substantive economic move into Afghanistan since the Taliban took over. Details about the deal are limited, but there are some hints that oil production in Afghanistan has recently increased due to Chinese involvement.

Afghanistan’s Acting Minister of Mines and Petroleum, Shahabuddin Delawar, solicited Chinese support for new oil and natural gas tenders expected in the coming weeks. More than 20 Chinese companies are reportedly operating in Afghanistan, but their investment is not without complications.

Shortly after the oil deal was signed, the Taliban arrested two Chinese nationals for ­­smuggling “1,000 metric tons” of lithium ore out of northeastern Afghanistan. On 13 April, Delawar announced that a previously-unknown Chinese company named Gochin planned to invest $10 billion to mine lithium in the country.

However, Chinese Foreign Ministry Spokesman Wang Wenbin claimed no knowledge of the deal on 18 April. There was some speculation that Gochin, from the Taliban statement, was Chinese battery producer, Gotion.

However, Gotion denied these claims. On 1 May, the Afghans declared they were “in no hurry for the lithium contract,” and it was “yet to be known when the contract will be signed.” The confusion should not be surprising. China has a history of poor deals in Afghanistan, most notably the Mes Aynak Copper Mine.

After securing the deposits’ rights in 2007, Chinese mining company Metallurgical Group Corporation has done little at the site. File image of the Mes Aynak copper mine in the eastern province of Logar that is operated by a consortium of Chinese companies. The region is home to one of the world’s largest copper deposits.

Even before the previous Afghan government fell, the minister position was typically given to beneficiaries of social patronage networks. Delawar, a former judge and diplomat, lacks any previous technical experience, and many civil servants from the previous government have fled the country. Should it come, the ministry will likely struggle to harness international investment efficiently.

In addition to these problems, the Islamic State in Iraq and Syria – Khorasan (ISIS-K) intends to undermine the relationship between Kabul and Beijing by targeting Chinese activities in Afghanistan.

The group has increased its calls for attacks against China and expanded its efforts to recruit Uyghurs to its cause. ISIS-K’s willingness to single out China for attacks is extraordinary among extremist groups. The group attacked a hotel that regularly served the Chinese business community in Kabul last December and the Afghan Foreign Ministry during a scheduled visit from a Chinese delegation in January.

ISIS-K also threatened the Chinese Embassy in Kabul in February. Beijing continues to chide the Taliban about security for Chinese citizens, but it is unlikely the Taliban can make any real security improvements. Despite publicized operations against the Islamic State in February and March, Afghanistan is unlikely to see any of the needed practical steps from Beijing. China’s involvement in the oil sector is a relatively low-risk way to secure cooperation with the Taliban.

Afghanistan has an estimated 800 million barrels of oil, far short of Beijing’s strategic needs. However, the oil revenue is sorely needed by the Afghan government. Beijing’s work in the Amu Darya Oil Basin is far more important to the Taliban than China.

Both sides of this glacially improving partnership are likely bound for disappointment. The Taliban cannot deliver the security that Beijing desires to drive further investment. Beijing is unwilling to sponsor the investment that will help Afghanistan address its financial and humanitarian woes.

For China, the Amu Darya project is a low-risk investment. The fields are in a relatively secure portion of the country with quick access to Central Asia through developed road and rail connections. January’s oil deal seems a tentative opening move for Beijing to explore its options in the country.

However, securing reliable access to Afghanistan’s deposits of other minerals requires more extensive investment and expands the threat to Chinese workers, something Beijing will not countenance at this phase in the relationship. Both sides of this glacially improving partnership are likely bound for disappointment.

The Taliban cannot deliver the security that Beijing desires to drive further investment. Beijing is unwilling to sponsor the investment that will help Afghanistan address its financial and humanitarian woes.

The partners will make additional announcements of relatively small new projects in the future. In their analysis of the announcements, Western media will decry China’s economic exploitation of the U.S. withdrawal from Afghanistan.

However, only scrutiny of project details and construction progress will reveal the actual state of play in the relationship.