Taliban return cloud plans for Afghan resource projects

August 19 (Reuters) – China could try to steal a march against cautious Western nations in developing resource projects in a Taliban-led Afghanistan, state media and industry sources say, but the necessary infrastructure will take years to build -se and security issues could intervene.

Afghanistan’s great mineral wealth, including large reserves of lithium, a key component of electric vehicles, has been trumpeted as a path to economic independence. But instability has repeatedly hampered past projects and wiped out the interest of foreign investors.

Factbox: What are the minerals and untapped resources of Afghanistan?

“I could not and could not invest in Afghanistan with the Taliban running the country. It is illegal,” said Ben Cleary, chief executive of Tribeca Investment Partners, which runs a global natural resources fund and finances projects. miners.

He said he could not see any company listed in Australia, Canada or the United States having a mandate to buy assets there and added, “China would be the only potential buyer.”

Asked about the investment prospects under the Taliban, the Chinese foreign ministry said lasting peace and stability were key for potential investors from all nations.

Despite pointing out security concerns, state tabloid Global Times said Tuesday that China could contribute to post-war reconstruction in Afghanistan and resume stalled projects.

Citing an unnamed source from Metallurgical Corp of China (MCC) (601618.SS), he also said the company would consider reopening Afghanistan’s largest copper project once the situation stabilizes and international recognition is made. of the Taliban regime, including by the Chinese government. .

A consortium of MCC and Jiangxi Copper (600362.SS) contracted a 30-year lease for the project, the Mes Aynak mine, in 2008, but it remains undeveloped.

An MCC source told Reuters this week that it could take five to six years to build infrastructure for mining, but the project could not go anywhere as long as security issues persist.

Eight members of the security forces were killed in a Taliban attack on a mine control last year.

“It is impossible to get the project going without a safe environment,” the source said.

MCC and Jiangxi Copper did not immediately respond to requests for comment.

CHINA, TALIBAN MEETING

There has been no official recognition from the Taliban, although China’s Foreign Minister Wang Yi welcomed Mullah Baradar, head of the group’s political office, to Tianjin last month. Read more

The Foreign Ministry noted that the Taliban had expressed its commitment to create a good environment for foreign investors.

“We hope that the situation in Afghanistan will go smoothly and that an open and inclusive political structure will be established so that no terrorist organization can take advantage of it,” the ministry said in a statement to Reuters.

Concerns about possible human rights abuses under a Taliban regime are likely to be another barrier to investment in resources that also include gold, natural gas, uranium, bauxite, coal, iron ore and rare earths, sectors in which China has few or no Afghan projects.

“I think most of the global financial system is applying some pretty strict ESG (environmental, social and governance) lenses now on investments in this (resource) sector,” said Daniel Hynes, the company’s commodity chief strategist. ANZ, in Sydney.

“It would be a pretty difficult project to start considering all the obstacles.”

CNPC SURT

At least one Chinese project in Afghanistan will not go ahead.

China-owned China National Petroleum Corp (CNPC) is in the process of pulling out of its oil project in the northern Amu Darya Basin, a company official told Reuters this week.

“It’s not a big investment. CNPC sees the investment as a failure,” the official said, without detailing it.

The state’s major power company began producing oil there in 2012 with a 25-year contract, but it stopped working the following year as plans to refine oil in Turkmenistan hit.

The project had also been attacked by local militants.

CNPC declined to comment.

An Indian consortium led by Steel Authority of India (SAIL.NS) (SAIL) is also withdrawing.

In 2011, rights were granted to build a steel plant and develop iron ore mines in Afghanistan with a total investment of $ 11 billion.

“SAIL’s incursions into Afghanistan were purely a political compromise and they were promised a steel mill,” a SAIL official with direct knowledge of the matter told Reuters on Thursday.

The project had been abandoned due to poor iron ore quality, lack of security and a threat to employee safety, the official said, who refused to be appointed.

SAIL and the Indian government did not immediately respond to requests for comment.

The Afghan Ministry of Mines and Petroleum did not immediately respond to a request for comment.

Reports by Tom Daly, Shivani Singh in Beijing, Aizhu Chen in Singapore, Melanie Burton in Sydney and Neha Arora in New Delhi; Additional reports from Beijing Newsroom, Min Zhang and Muyu Xu in Beijing; Edited by Christian Schmollinger

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