Pacific Money

Lithium and an Unexpected Battle for Energy Transition in Afghanistan

Recent Features

Pacific Money | Environment | South Asia

Lithium and an Unexpected Battle for Energy Transition in Afghanistan

Most researchers agree that lithium demand will only increase. Afghanistan’s estimated reserves put it among global leaders — if the metal can be extracted.

Lithium and an Unexpected Battle for Energy Transition in Afghanistan
Credit: Depositphotos

With the Taliban capturing Kabul on the August 15, Afghanistan is predicted to soon lose most of its Western investors. Indeed, it is highly likely that foreign companies sharing Western values will shy away from involvement with a militant group that openly opposes democracy and violates human rights. Nevertheless, as Aristotle and Rabelais’ famous postulate goes, “natura abhorret vacuum” — nature abhors a vacuum. Other nations, less concerned with social issues in Afghanistan, may soon be engaged in making deals with the new radical rulers of the country.

Unfortunately for the West, this may mean not only a loss in the battle for human rights, but also in a lesser known struggle for technology dominance in the energy transition.

Afghanistan – the ‘Saudi Arabia of Lithium’?

While being one of the world’s poorest countries that has been at constant war for almost half a century, Afghanistan, at the same time, is a nation that is extremely rich in mineral resources. With over 1,400 mineral fields, it has vast deposits of hydrocarbons (including oil, gas, and coal), lead, limestone, gemstones, copper, iron, and gold, to mention just a few. At the moment, it is generally estimated that the Taliban are sitting on $1-3 trillion worth of minerals. Although the extraction of some of these resources could potentially be ignored just as it used to be under the previous Taliban regime, this time the militant group might enter the world’s mineral market with a timely special offer – lithium.

Representing a key component of batteries and other electronics that are getting increasingly popular these days, lithium is mostly produced in the so-called “lithium triangle” in South America (Bolivia, Argentina, Chile), followed by other three nations: the U.S., Australia, and China. Among these six countries, long considered to be the ones possessing the world’s largest proved lithium deposits, Afghanistan may unexpectedly appear as a dark horse. In fact, according to a 2010 internal Pentagon memo, the nation could become the “Saudi Arabia of lithium,” as its estimated reserves of the metal could potentially rival or even exceed those of Bolivia (around 21 million tonnes).

Normally produced  either via solar evaporation of large brine pools or from hard-rock extraction of the ore spodumene, lithium was first discovered in Afghanistan by the Soviets after their 1979 invasion. Some three decades later, American geologists conducted surveys of dry salt lakes in western Afghanistan only to prove that the Soviet estimates of the country’s rich lithium reserves were right. Nevertheless, due to ongoing conflict, the high capital investment necessary, and insufficiently strong global demand, the industrial production of Afghan lithium did not start when it was discovered. Nowadays, however, the timing might be better, at least from the perspective of global demand. 

Lithium – ‘The New Oil’?

While the world is solidifying its environmental agenda, global economies are moving toward decarbonizing their energy systems through increasing the share of renewables, among other efforts. However, due to their variable nature owing to seasonality and changing weather conditions, such intermittent renewable energy sources as solar and wind are hard to integrate into electrical grids. In fact, since, in an energy system, generation and consumption need to be balanced at all times, energy storage plays a crucial role in preserving surplus power so that it could later be used at peak demand. In such circumstances, batteries are broadly viewed as one of the key solutions to effectively incorporate high shares of solar and wind renewables into power systems worldwide.

After the commercialization of lithium-ion batteries in 1991 and their relatively slow start in electrical appliances, this type of electrochemical energy storage gained new impetus with the spread of mobile phones, electric vehicles, and renewable energy sources. At the moment, despite the eventual presence of other battery options, lithium-ion solutions represent by far the most prolific type of batteries for both small- and large-scale energy storage. This is so due to the unique advantages missing in their closest rivals (nickel-cadmium and nickel-metal hydride batteries): lighter weight, higher energy density, shorter charging time, and absence of a memory effect causing batteries to lose storage capacities with continued usage.

These features of lithium-ion batteries caused the demand for lithium – their crucial ingredient – to dramatically change over the past few decades. For instance, in 1995, the annual global production of lithium was only around 6,500 tonnes; by 2015 it had already increased to around 32,500 tonnes per year. Over the past five years, however, the yearly production of lithium increased tenfold and constituted around 345,000 tonnes in 2020. Given that lithium is the lightest of all metals, these figures are really impressive. They, however, do not indicate the limit. To meet the growing demand of high-tech and energy industries, lithium production is further expected to grow up to around 2 million tonnes just in the upcoming decade. Due to the global obsession with this metal, some experts even call lithium “the new oil.”

Lithium Production in Afghanistan: What Next?

Although lithium might not directly replace oil, most researchers agree that the only way is up for lithium demand. While this resource is not rare per se, it does not naturally occur in elemental form due to its high reactivity and thus is found in many rocks and some brines, most often in very low concentrations and hence having low commercial value. Nevertheless, previously used primarily in metallurgy, glass production, and nuclear industry, lithium was in steady but relatively low demand, which allowed for gradual exploitation of its commercially viable deposits. In the new rapidly changing conditions, however, it is often feared that the existing mines might simply not meet the swelling lithium demand of the future. This is where Afghanistan’s lithium deposits could turn into an extremely valuable asset.

In these circumstances, the future of lithium-ion batteries might be greatly dependent on who takes control over the Afghan reserves, as it is extremely unlikely that the Taliban alone will be able to successfully launch large-scale commercial lithium mining. As for now, countries like China, Russia, and Iran have already revealed their intentions to develop “friendly relations” with the Taliban. At the same time, out of all these “new friends,” China seems to leave not much space for competition to other countries as it is the world’s second largest economy, the absolute leader in mining rare earth metals, and the largest producer of lithium cells in the word. 

In the past, China intensively invested in mining industries all over the world with the developing nations of Africa, Asia, and Latin America representing particular focus. There, Chinese investors were extremely successful, among others, in nations like Madagascar, Mozambique, Sudan, and the Democratic Republic of the Congo. As the list of these countries demonstrates, challenging political climate and hardships of post-war reconstruction do not seem to ward off China’s natural resource companies. That is why the first political steps to extend a hand to the Taliban regime might mean that China is seriously considering playing the first fiddle in a new Great Game of the future. The stakes, this time, might be technology dominance in the global energy transition.