In fact, as the Pentagon itself quotes us as saying, Afghanistan’s mineral reserves are worth bupkiss.
Which makes this Washington Post report more than a little suspect.
Rich lode of EV metals could boost Taliban and its new Chinese partners
The Pentagon dubbed Afghanistan ‘the Saudi Arabia of lithium.’ Now, it is American rivals that are angling to exploit those coveted reserves.
No. Really, just no.
But now, in a great twist of modern Afghan history, it is the Taliban — which overthrew the U.S.-backed government two years ago — that is finally looking to exploit those vast lithium reserves,
Again, no. There are no lithium reserves in Afghanistan. Therefore the value of lithium reserves in Afghanistan is zero.
A mineral reserve is a specific thing, a phrase that has a meaning in the technical jargon. It means that we - some member of the species, perhaps some group of such, homo sapiens sapiens - has drilled, measured and weighed the deposit, shown that it can be extracted using current technology, shown that doing so will make a profit at current prices and also has the licences to be legally allowed to do so. As no licences have been issued - let alone any of the other work - there are no lithium reserves in Afghanistan. Therefore the value of lithium reserves in Afghanistan is zero.
This is all a repeat of a grand mistake that has been made for a long time now. This one:
A decade earlier, the U.S. Defense Department, guided by the surveys of American government geologists, concluded that the vast wealth of lithium and other minerals buried in Afghanistan might be worth $1 trillion, more than enough to prop up the country’s fragile government. In a 2010 memo, the Pentagon’s Task Force for Business and Stability Operations, which examined Afghanistan’s development potential, dubbed the country the “Saudi Arabia of lithium.” A year later, the U.S. Geological Survey published a map showing the location of major deposits and highlighted the magnitude of the underground wealth, saying Afghanistan “could be considered as the world’s recognized future principal source of lithium.”
Really, just no. We explained this here in 2010, at The Register. We explained it again in 2017 at Forbes.
There are lithium deposits in Afghanistan, no one has any doubt about that. But there are lithium deposits near everywhere. It’s a common element. The value of spodumene (the lithium-containing mineral being talked about) at the end of a two goat track is about that zero even when extracted. The artisanal miners are talking of having been able to sell it at 50 cents a kg a year or more back when lithium prices were at their peak. Which is about right, $600 a tonne today (much lower than that 18 months back) for direct shipping ore - delivered.
But don’t just take our word for it. Or rather, take our word but filtered through the intelligence services of the Pentagon. For there is this, from SIGAR (“Special Inspector General for Afghanistan Reconstruction"):
More recently, and more colloquially, the British economic writer Tim Worstall commented on the U.S. government’s view of Afghanistan’s large deposits of iron, copper, and lithium: “The problem with all of this is that those minerals are worth nothing. Just bupkis.” The reason for his assertion: “The value of a mineral deposit is not the value of the metal once it has been extracted. It’s the value of the metal extracted minus the costs of doing the extraction. And as a good-enough rough guess the costs of extracting those minerals in Afghanistan will be higher than the value of the metals once extracted. That is, the deposits have no economic value”—“As we can tell,” he adds, “from the fact that no one is lining up to pay for them”
Afghanistan has lots and lots of lovely rocks. Of mineral reserves it has not a shred nor a scrap. It is indeed entirely possible that some of those rocks will one day become mineral reserves. But the net present value of those rocks is, as minerals, something around zero. The idea that they’re worth $1 trillion is truly away with the faieries - the result of not understanding even the first bedrock* principles of the subject under discussion.
Even the Pentagon now understands this. And if it’s possible to get military intelligence to understand an idea then the rest of us should be able grasp it too.
*Ahaha. Sorry, couldn't resist.