Highlights

• Afghanistan's rare earth and lithium deposits are increasingly under Chinese control through Taliban security-for-minerals deals.
• Chinese firms are in charge of 78% of active extraction projects in Afghanistan.
• Despite the hype around Afghanistan's potential as a game-changer in the market, the country faces significant challenges.
• 42% of mining revenues are estimated to leak to corruption and armed actors.
• Rare earth smuggling generates $19 million annually for ISIS-K and other militant groups, contributing to an 'Islamic resource curse.
• Afghanistan is unlikely to break China's processing monopoly in the rare earth sector.
• Without domestic refining capabilities, any Afghan-sourced ore is expected to feed into China's existing ecosystem, which controls 90% of global rare earth processing capacity.

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Ashraf Dawar of the University of Peshawar, working with co-authors Muhammad Waqar Khan and Lindsey Tchatchouang, has published a timely open-access study (opens in a new tab) in the Journal of Trace Elements and Minerals examining how Afghanistan’s rare earth and lithium riches are being reshaped under Taliban rule and intensifying China–West rivalry.

The paper finds that while Afghanistan is often hyped as a “Saudi Arabia of rare earths and lithium,” the country’s resources are increasingly pulled into China’s orbit through “security-for-minerals” deals with the Taliban, even as smuggling and corruption siphon off huge value and help fund militant groups.

Crucially for investors and policymakers, the study concludes that Afghanistan is unlikely to weaken China’s near-monopoly on rare earth processing—in fact, under current conditions it risks reinforcing Beijing’s chokehold on the global supply chain.

How the Researchers Followed the Money and the Rock

To penetrate an opaque, dangerous environment, the team relied on tools that don’t need visas or Taliban permission:

• Satellite imagery to identify new and expanded mining pits, particularly in Helmand and Nuristan.
• Blockchain analysis to trace cryptocurrency wallets used for mineral-related payments and sanctions evasion.
• Semi-structured interviews with mining experts, former Afghan officials, NGO workers, and regional analysts.
• Document analysis and a geopolitical risk matrix combining conflict data, sanctions reports, and contract reviews.

This mixed-methods approach allowed the authors to cross-check claims: satellite change detection matched interview reports of new artisanal sites; blockchain flows into specific wallets aligned with known border crossings and smuggling hubs.

China Dominates Processing – and Now Afghanistan’s Projects Too

For lay readers, one key fact: China already controls about 80% of global rare earth production and roughly 90% of processing capacity. That processing step—turning ore into usable oxides and metals—is where real leverage sits.

Within that context, the study finds:

• Chinese firms control around 78% of active extraction projects in Afghanistan’s most promising rare earth and lithium areas.
• Deals typically bundle infrastructure (roads, power, security) in exchange for long-term mineral rights, with ore expected to move into China’s existing processing ecosystem.
• Afghanistan has no domestic rare earth processing capability, meaning any large-scale development today would almost certainly send raw or semi-processed ore to Chinese plants.

In practical terms, even if Afghan deposits come online, they are most likely to feed into China’s existing midstream monopoly, not diversify away from it. For REEx readers, that means Afghanistan is more of a strategic option value for China than a near-term hedge for the West.

An “Islamic Resource Curse”: Revenue, Corruption and Conflict

The researchers frame Afghanistan’s situation as a variant of the “resource curse” under a theocratic regime:

• The Taliban have set up a Ministry of Mines and a revenue-sharing model that nominally allocates ~15% of mining income to local communities.
• Yet the study estimates about 42% of revenues leak to corruption, middlemen, and armed actors, undermining any broad-based development.
• Artisanal sites often operate with poor safety standards, reports of child labor, and significant environmental damage, including risks to water and farmland.

Most troubling for regional stability, the authors estimate:

• Rare earth and related mineral smuggling generates around $19 million annually for ISIS-K and other militant groups, making REE flows a growing complement or alternative to narcotics as a conflict-finance stream.

This mix of localized patronage, religious legitimacy, and illicit flows leads the authors to propose an “Islamic resource curse” framework: natural wealth stabilizes some Taliban-controlled areas while simultaneously fueling broader insecurity and extremism.

What This Means for the West, Allies, and Investors

For Western governments and allied investors, the messages are blunt:

• Sanctions have unintended consequences. By pushing Western firms out of the Afghan mining space, current regimes have effectively cleared the field for Chinese entities and illicit actors, rather than halting extraction.
• Afghanistan’s physical and political constraints—mountainous geography, security risks, international non-recognition, and lack of infrastructure—mean large-scale, transparent development is years away at best.
• In the near term, Afghanistan’s rare earths are more geopolitically symbolic than commercially reliable, but they still matter: they strengthen China’s option set and offer militant groups a new funding base.

For supply-chain planners, the study reinforces a hard reality: without serious Western investment in domestic and allied processing capacity, any new raw-ore frontiers—Afghanistan included—are likely to deepen, not dilute, China’s structural advantage.

Limitations and Contested Ground

The authors are candid about the study’s limits:

• No direct fieldwork in high-risk sites; reliance on remote sensing, secondary reports, and intermediated interviews.
• Data gaps and opacity under Taliban rule; official figures are unverifiable and pre-2021 datasets are dated.
• Potential bias among interviewees—Western experts skeptical of the Taliban, Taliban-linked sources eager to project competence.
• A fast-moving political environment, where deals, factions, and security dynamics can shift in months.

Some framing choices are also likely to spark debate. The “Islamic resource curse” label, the normative critique of Western sanctions, and the detailed treatment of Chinese deals may be read differently in Beijing, Brussels, or Washington. But for Rare Earth Exchanges readers, the study’s core value lies in its integrated picture: Afghanistan is unlikely to rescue the world from China’s rare earth processing monopoly—if anything, it risks being pulled deeper into it under current rules of the game.

Citation

Dawar A, Khan MW, Tchatchouang L. The geopolitical implications of rare earth minerals extraction in Afghanistan. Journal of Trace Elements and Minerals. 2025;14:100267. doi:10.1016/j.jtemin.2025.100267

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