Afghanistan continues to refine its extraction strategy

While the Taliban has cracked down on non-governmental organizations and women’s rights, the government is gradually increasing revenue streams from resource extraction in an effort to minimize the impact of Western sanctions and pressure. The Afghan government announced in November that it had signed three major deals worth more than $1.2 billion with companies from different countries. Separately, the interim government signed 167 contracts for smaller mining projects from September 2023 to September 2024.

Business is increasing. The year before the regime signed 108 extraction contracts because it revitalizes the Ministry of Mines and Petroleum. Following a leadership change this summer, the Ministry of Mines and Petroleum appears determined to boost production in existing concessions, improve the competitiveness of Afghan minerals in international markets and build business ties with Afghanistan’s neighbors.

Hidden in a July 2024 series leadership moves, the Taliban removed Shahabuddin Delawar as acting Minister of Mines and Petroleum and installed Hedayatullah Badri in his place. The ministerial position plays a crucial role for the Taliban government in its efforts to achieve economic autonomy, reduce the impact of Western sanctions and establish commercial ties with its neighbors. Delaware was accused of nepotismincluding securing a role for one of his sons as ambassador to Uzbekistan, a key partner in the Afghan mining industry. Badri, a former head of the Taliban Finance Commission and governor of the Afghan Central Bankis on international sanctions lists for its facilitation of the Taliban insurgency and its involvement in drug trafficking. Perhaps in an oblique reference to the accusations again Delawar, Badri promised transparency and accountability during his tenure in the ministry.

Badri’s long ties to the drug trade have not slowed his ability to convince foreign officials. The recent announcement of a large lead and zinc tender in Bamyan province suggests that the Taliban have focused more on bigger deals with foreign companies. The minister has had a meeting Turkish, Turkmen, Chineseand other foreign officials pursuing these deals. His engagements were productive. In October, the ministry recorded a $1 billion natural gas extraction project with the Ariel Group from Uzbekistan. Progress may also be made on the Ghorian Iron Mine project, as announced by the ministry international group had agreed to invest in a remote and undeveloped place.

The Afghan government also continues to use smaller mines to create jobs and generate local revenue. Since taking over the country in 2021, the Taliban have firmly taken control of Afghanistan’s mining interests. Even in Panjshir province, one of the last areas to succumb to the Taliban, the government has issued mining permits and organized weekly auctions. According to the regime, that is so 10,000 miners work in 550 emerald mines in the province alone. The government has done that too technical teams sent to Panjshir to explore deposits and issue permits for ruby ​​mines. End of December 2024, Nuristan Province started its own gemstone auction processThis suggests that other mineral-rich provinces will soon follow Panjshir’s example. That is important for the Taliban 10 percent of the proceeds from sales go to the government.

The Ministry of Mines and Petroleum is working with both local and international companies to improve the capacity of existing projects. Since the first time we signed a deal to extract oil from the Amu Darya field in January 2023remains the Xinjiang Central Asia Petroleum and Gas Company expand production at the concession by installing additional equipment and digging new wells. Although the amount of oil involved remains small, the Taliban continues to strive for self-reliance. A group of local investors have announced their intention to close a deal a new oil refinery in Balkh provincepossible with Iranian aid.

The regime also announced this at the end of November Coal revenues rose slightly through its state-owned enterprises. The increase in sales is likely due to one reduction in customs duties on coal last summer. The Afghan government has sought to increase its market share by supplying coal to energy-poor neighbor Pakistan, which currently sources about half of the coal for its power plants. from South Africa and Indonesia.

The Ministry of Mines and Petroleum continues to work on two pioneering long-term projects: the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline and the Mes Aynak copper mine. Both may be wishful thinking, but the pipeline seems the most unlikely project. While Turkmenistan and Afghanistan remain committed on this subject, and even goes so far as to say that it does begin practical work on the Afghan side of the borderNew Delhi is skeptical. Without India’s support it is not economically sustainable for Pakistan to join the effort. Moreover, Kabul does not have the infrastructure and finances to support its own pipeline with Turkmenistan.

The Mes Aynak copper mine, which has been dormant for more than 16 years, has finally come to fruition showed signs of progress. Acting Minister of Mines and Petroleum Badri met with Chinese Ambassador to Afghanistan Zhao Xing very shortly afterwards he took over the portfolio. A few days later, both sides stood their ground a ribbon cutting ceremony for a connecting road for the project. The Taliban have done that too worked to clean up artifacts from an archaeological site near the mine and progress has been made on the necessary environmental impact study.

However, much is still unclear about the project. The first contact asked for one A 400 megawatt power plant and a smelter to refine the mine’s copper ore. Neither appears on the radar at the moment and it is unclear how viable the mine is without a smelter available. Transporting raw ore over the limited roads in the area does not seem feasible, especially with the appalling trading situation between Afghanistan and Pakistan, where the nearest smelter is located.

It is not known how much mining revenue ends up in the interim government’s coffers. The Ministry of Mines and Petroleum reported sales of $100 million the past year. However, since Badri took control of the ministry, reporting has waned. The Taliban regime has indeed done that stopped sharing budget information absolutely.

The government is undoubtedly benefiting from progress in the mining sector, but may be approaching the upper limits of what is achievable without a massive influx of investment in transport and electricity infrastructure. Gemstones and petroleum have simple transportation requirements compared to hundreds of tons of copper or iron ore. While the Improving the Afghan railway network is under discussionIt will take at least several years before access to the country’s mines is promoted.

Despite the challenges, the Taliban are making progress in their efforts to strengthen revenues, employment and diplomatic ties. While Delawar’s skills as a former diplomat made several deals possible, the ministry will move forward with Badri at the helm. Badri’s skills in taxation and tax collection and his international ties since his time as head of the Taliban’s finance committee during the insurgency appear to be paying off.

Self-sufficiency remains far away for Afghanistan. However, the current amount of mining revenue will allow the Taliban’s senior leaders to enrich themselves and fund enough governments to maintain the current level of stability.