Who’s interested in Afghanistan’s lithium?

In the last few years, one bright spot in the Indian economy has been the soaring growth of the mobile phone manufacturing industry. India is now the world’s second largest manufacturer of mobile phones; it is also the second largest user of mobile phones.

The mushrooming of this industry is one of the success stories of Prime Minister Narendra Modi’s Make in India campaign. An estimated 120 factories to make mobile phones have been set up in the country since Modi came to power in 2014, and between 2014 and 2017, made-in-India mobile phones rose from 58 million to 225 million.

India is now competing with the world’s largest manufacturer of mobile phones—China. The slowing Chinese economy gives cheer to India’s case.

How is all this connected to Afghanistan? Through a metal called lithium. Where is lithium critically used? In lithium-ion batteries and in mobile phones.  And who owns most of the supplies of this metal? Why, the biggest manufacturer of mobile phones which hopes also to be the biggest manufacturer of electronic vehicles one day—China. It has bought interests in many a mine in regions such as Australia and South America which have vast lithium deposits. It is estimated that China, which is looking at becoming the largest maker and supplier of electric battery-operated vehicles in the future, controls 60% of the supplies of the mineral now.

Amid all this action, India is scrambling to catch up. In 2016, the Indian government put three state-owned companies on the job. National Aluminium Company (Nalco), Hindustan Copper (HCL) and Mineral Exploration Corp. Ltd (MECL) are partners in trying to source and finalise future access of metals like lithium for the country. India cannot hope to go up and value chain of mobile phone manufacturing and really compete with China unless it can secure access to vital—and might one add relatively inexpensive—necessary minerals.

As it turns out, one of the future major sources of this metal, along with other important ones like cobalt, is Afghanistan. This has been exciting various U.S. governments for a while. Some assessments have even pegged the value of Afghan mineral deposits at $1 trillion.

If only.

The truth is minerals have no value as long as they are under the ground and then, even when they are taken out, their value depends on the swings of the spot and future commodity markets.

The excavation and transportation of minerals is not easy—especially, for instance, when one of them is lithium, highly inflammable when it touches water.

The Afghan government—or should one say, these days, the government in Kabul—had been trying to lure America to stay on in Afghanistan and keep the Taliban at bay using these mineral mines as a lure. Some of the biggest deposits are anticipated to be in areas controlled by the Taliban.

But this doesn’t seem to have worked. Even if the minerals could be mined out, transporting them from landlocked Afghanistan would not be easy—to say the least.

This is where China and India come in. There are some land routes to China over treacherous mountains, and some to India—which are blocked by Pakistan.

The presence of these minerals complicates an already messy situation in Afghanistan even as America prepares to leave and India faces the despairing prospect of having to deal with a Pakistan-controlled Taliban regime.

India has spent $3 billion in aid in Afghanistan and has massive goodwill in Afghan society—interestingly social media posts by Afghans supporting India in the latest India-Pakistan conflict viral. It has also moved the needle of its aid from civilian to military aid, providing two tranches of military helicopters—a total of eight to be concluded this year.

All of this is now in play in Afghanistan even as the U.S. negotiates to get some kind of an honourable exit, and India warily watches a situation where its investments might turn terribly sour.

If this seems hopeless, at least for India, consider this. The latest reports suggest that Hamza bin Laden, the son of Osama bin Laden, is probably hiding somewhere in the Afghanistan-Pakistan border. The U.S. recently announced a $1 million bounty for the head of the new leader of Al Qaeda.

The game is afoot.