On Tuesday, October 24, the Taliban announced that it had auctioned 3342.95 carats of emerald stones. The gems were sold at a total price of $827,200 after being retrieved from the mountains of the Panjshir Valley, where the Taliban brutally subdued a nascent resistance two years ago. The auction was held in a “completely transparent manner”, the Taliban’s Ministry of Mines and Petroleum said in a statement on the X platform. The statement added that the auction was the latest of four that began last month, generating a total revenue of nearly $1.5 million for the Taliban.
It is not clear how the revenue generated from such schemes benefits the broader population on the brink of starvation. Two miners in Panjshir told KabulNow on condition of anonymity that the Taliban “directly exploit illegal emerald mining” in the province, and their benefits go into the hands of a few powerful Taliban leaders. “At one point, at least $100,000 from emerald selling was received by Taliban’s former governor of Panjshir, Mawlawi Qudratullah,” one of the miners said. The Taliban authorities, however, deny such allegations, saying the revenue produced from selling the gemstone contributes to the central treasury. The order to auction gems, the Taliban say, comes after a direct decree from the group’s supreme leader Hibatullah Akhundzada, who is based in the group’s spiritual stronghold in Kandahar.
Panjshir, about 110 km northeast of Kabul, holds one of the finest emerald deposits in the world, largely located in mountainous terrain on the eastern side of the Panjshir River, according to a study by the Multidisciplinary Digital Publishing Institute. There are five emerald mining areas in the Panjshir Valley including Darkhenj, Mikeni, Yaknow, Buzmal, and Darun.
However, income from the glistening green emeralds, which are used in adorn jewelry, is only a tiny part of the Taliban’s source of revenue generation from mining. Since returning to power in August 2021, the Taliban have regained control of Afghanistan’s untapped mineral wealth and resources, estimated to be worth 1-3 trillion dollars, which according to U.S. officials is “enough to fundamentally alter the Afghan economy.” The mining sector largely remained untouched under the former Western-backed republican governments in the past two decades, which struggled to attract foreign investment because of a lack of infrastructure, reliable energy, and water supplies, but more importantly because of security threats that the Taliban insurgency posed.
Battered by sanctions and cut off from international aid that once propped up the country’s economy, the cash-strapped Taliban have escalated efforts to leverage the natural resources to fund its government, which no foreign country has yet recognized. Afghanistan’s resources include gold, copper, lithium, uranium, bauxite, coal, iron ore, oil, natural gas, and various rare earth minerals and gemstones. The group understands that cashing in mining is crucial to its survival without concerning itself with the economic growth of the country that has plunged into an economic crisis since it overtook power. Meanwhile, the global transition to green energy, post-COVID global economic recovery, and recent global political turmoil, such as the war in Ukraine, have significantly increased the value of these minerals, which favors the Taliban.
While the Taliban remains isolated from many in the West, countries like China, Russia, Pakistan, and Iran have shown interest in working with the group and expanding commercial and diplomatic ties in a bid to fill the vacuum left in the wake of the catastrophic U.S. and NATO withdrawal. In August alone, the Taliban Ministry of Mines and Petroleum signed seven major mining contracts worth over $6.5 billion with foreign and domestic companies. The office of the Taliban Deputy Prime Minister for Economic Affairs stated that the contracts include the extraction and processing of gold, copper, lead, and iron mines in different parts of the country. The signing of these contracts is the latest in a series of mining deals since the Taliban returned to power.
China, which is already Afghanistan’s largest foreign investor, is leading the race. In January 2023, the Taliban signed a deal worth $540 million with the Chinese company Xinjiang Central Asia Petroleum and Gas Co (CAPEIC) to extract oil from northern Afghanistan’s Amu Darya basin. Moreover, the Metallurgical Corporation of China (MCC), a mining giant in the region, already has a 30-year lease for $30 billion, signed in 2008 with the then-Kabul government, to mine copper at Mes Aynak in the country’s barren Logar province, about 32 kilometers southeast of Kabul. The mining operations were largely hindered by the Taliban militants who planted IEDs on roads leading to the mining site and targeted to kill security and mining personnel as well as NATO forces. The Taliban has renewed the deal with MCC and is eager for the operations to begin.
For China, however, Afghanistan’s rich lithium reserves could be of particular interest. The withdrawal of the U.S. has offered Beijing a crucial investment opportunity to try to access the country’s lithium, which is facing unprecedented demand on the global market. Dubbed “white gold”, lithium is a key component used not only in cell phones, computers, tablets, and other technological devices but also in large-capacity batteries that power electric vehicles. In April this year, the Chinese company Gochin expressed willingness to invest $10 billion in the country’s lithium deposits which could create 120,000 direct and a million indirect jobs amid a surge in the unemployment rate and widespread poverty. However, some analysts are skeptical of China’s near-term mining investment in Afghanistan’s lithium sector due to large-scale investment requirements for geological surveys, infrastructure, and addressing potential security challenges.
For the Taliban, however, China’s economic investment interest and strategic relations offer an impetus to strengthen their diplomatic goals. The Taliban’s prime minister Hassan Akhund gave a lavish welcome to the new Chinese Ambassador Zhao Xing in Kabul last month, which marked the first time a country has appointed a new diplomatic representative to Afghanistan since the Taliban takeover. Taliban’s Foreign Minister Amir Khan Muttaqi said the appointment was a “significant step with a significant message,” and Taliban spokesperson Zabihullah Mujahid called on other countries to follow suit. While Beijing stops short of recognizing the Taliban regime, it has called on the international community to unfreeze Afghanistan’s assets and maintain dialogue with the group.
Although these lucrative mining projects look viable on paper, most are not in practice, at least in the short term. The feasibility and sustainability of these projects are substantially complicated by a host of reasons, including basic infrastructure; security risks from anti-Taliban groups or intra-Taliban rivalry over resources; and the uncertain environment created by the Taliban. Experts have also warned that these mining projects raise serious questions about the country’s “sovereignty, natural resource integrity, environment, and cultural heritage preservation.” Meanwhile, the existing mining projects have failed to generate employment opportunities for citizens or serve public services despite the Taliban’s promises.
Nevertheless, it is the Taliban’s power base that benefits the most without any equitable distribution of profits among citizens. The group’s revenue has increased exponentially in the past year. Between March 2022 and March 2023, the group generated $2.2 billion in revenue albeit with a $500 million deficit, according to a recent World Bank report. The World Bank data attributed most of the revenue to the group’s high exports and aggressive tax collection, mainly in Afghanistan’s border areas—despite the shrinking national economy and absence of foreign development aid. According to the World Bank, Pakistan remains Afghanistan’s largest export market—accounting for 63% of total exports—followed by India (26%).
Most of these exports come from coal. Out of Afghanistan’s 80 coal mines, 17 are operational, with most situated in central and northern regions. Since August 2021, coal exports have hiked and so have coal prices, allowing the Taliban to boost its revenue. The group increased coal exports to 1.8 million tons last year, with an estimated 12,000 to 14,000 tons exported per day to Pakistan. The Taliban authorities also lifted prices for coal from $90 per ton to $200, with 30% being collected as tax. According to the World Bank report, coal exports to Pakistan amounted to $140.7 million in January-April this year–13% higher than the coal exports in the comparable period last year.
