China Seals oil deal with Afghanistan

An insight to the news

by Subhechcha Ganguly

Recently, in the Afghan capital of Kabul, the Chinese Xinjiang Central Asia Petroleum and Gas Co (CAPEIC) and the Taliban-run Afghanistan signed a new oil agreement. The Amu Darya basin, which is located in northern Afghanistan, would be open to the Chinese enterprise for oil extraction.Zabihullah Mujahid, a representative for the Taliban-led government, tweeted that “The corporation (CAPEIC) will invest $150 million in one year and $540 million in the next three years. The Taliban government will be a partner in this agreement with a 20% stake that would eventually rise to 75%. In addition to aiding in the growth of the country, Mujahid believes that this contract will create jobs for at least 3000 Afghans and stabilise the nation’s ailing economy.

The country of Afghanistan is proud to own rare earth and other minerals worth between 1-3 trillion dollars. The nation also has lithium, gold, silver, zinc, mercury, and rare earth minerals like lanthanum, cerium, and neodymium. China’s goal will be to seize control of Afghanistan’s abundant mineral wealth now that it has access to the country’s oil. Although China now dominates the world’s rare earth element (REE) market, analysts predict that the aspirational country will take no chances to maintain its dominance. China had previously stated that it was prepared for “friendly cooperation with Afghanistan” and to “play a constructive role in Afghanistan’s peace and reconstruction” shortly after the Taliban had taken control of Kabul.

The demand for REE has increased dramatically because to the expansion of infrastructure and new technologies. Currently, China produces 60% of the world’s rare earths through mining, 85% of the rare earths processed, and 90% of the high-strength rare earth permanent magnets. Beijing will now further tighten its control over the Afghani belt in order to utilise its resources.

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