World of electric vehicles can have strong Afghanistan connection. But for war
War-scattered Afghanistan might be low in terms of industrial richness but the country has the potential to encash its huge reserve of essential minerals. Afghanistan's mineral reserve is valued at up to $3 trillion and a huge chunk of this is attributed to lithium, the most essential mineral required for EV batteries.
According to a US Department of Defense memorandum report published in 2010, Afghanistan is sitting on high-value mineral deposits estimated to be worth between $1-$3 trillion. It has a rich reserve of various minerals including lithium, tungsten, lead, copper, iron, mercury etc. Experts estimate that the country may have the world's largest lithium reserves. In fact, if the lithium reserve in Afghanistan can be extracted, it is estimated it could beat Chile and Australia as well.
Clearly, the country has the potential to fuel the global drive for electric vehicles. The lithium reserve in Afghanistan is capable of reducing the price and scarcity of EV batteries significantly around the world.
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The question is, what is barring Afghanistan from becoming the largest lithium source in the world?
Afghanistan has once again been taken over by the Taliban and the political situation in the country is both fragile and extremely risky. With the pullout of US troops, the security situation has worsened and is worsening by the day.
Any investment in the country is highly unlikely in at least the near future. And even if peace does somehow prevail, the country's record in the past doesn't evoke much confidence for foreign companies to come and invest.
Lack of infrastructure
Despite having a vast reserve for lithium and other rare earth, Afghanistan lacks the infrastructure required to extract those minerals. The demand for lithium, cobalt and neodymium has been increasing worldwide. But, extracting these minerals require huge investment and infrastructure.
Several US, European and Asian companies have shown their interest in setting up mining infrastructure in Afghanistan to extract these minerals. However, the unstable political scenario in the country has barred them from doing so.
In the current geopolitical scenario, China can strengthen its hold in the EV battery market and global lithium reserve as well. The country has already shown its interest in investing in infrastructures in Afghanistan. It has also shown interest in extending its Belt and Road Initiative in Afghanistan as well.
The US Geological Survey study has revealed that a vast amount of high-value mineral deposits are located along the border with Pakistan. Coincidentally this is the area where conflict rages on. Besides China, Pakistan too might try its hand on the mineral reserves in Afghanistan.
This could propel the growth in the Afghan mineral industry, especially in the lithium and other rare earth required for the EV industry. China already owns the lion's share in the global lithium deposit and mines through various companies in Chile and Australia. It is also known for its aggressive push for electric mobility. The global EV battery market too is dominated by Chinese companies.
With the vast Afghan lithium deposit in China's hands, the country will be able to further strengthen its position in the global EV ecosystem.