Afghanistan by itself is a true spoil of war. Ever since Soviet geologists mapped Afghanistan’s crags and valleys for minerals and raw materials, which according to estimates are worth trillions of dollars, local warlords and foreign powers have plundered these deposits to their benefits.
Terrorist groups, including the Taliban along with other armed militants in Afghanistan have battled each other as well as the central government for control of the mines, which are used to partly fund their insurgency. Way back in 2017, former U.S. President Donald Trump had latched onto the prospects of Afghanistan’s mineral wealth, which includes rare minerals, lithium, uranium, gold and others, to keep US troops in the Afghanistan.
While the vast majority of these mineral resources have remained largely untouched because of the presence of the Taliban, the value of many of these minerals have skyrocketed, following the global transition to a green economy.
Case in point: Lithium, which is widely used in batteries for electric vehicles, smartphones and laptops, is facing unprecedented demand, with annual growth of 20% compared to just 5-6% a few years ago. In a memo, the Pentagon memo termed Afghanistan as the Saudi Arabia of lithium saying the country’s lithium deposits could equal that of Bolivia’s — one of the world’s biggest.
Kabul’s former President Ashraf Ghani had dangled the prospect of awarding mining contracts to American companies as a reason for them to stay in the country. During his discussion with Trump, Ghani had promoted mining as an economic opportunity and had suggested to a deeply skeptical on increasing troop levels in Afghanistan, that this could be one justification for Washington to continue to remain engaged in the country.
Ghani delivered on his promise. In late 2019, a Virginia-based company with links to the U.S. military and intelligence apparatus, SOS International (SOSi), gained exclusive access to various mines across Afghanistan. As part of the deal, Ghani’s family got kickbacks from both sides.
Ghani granted Southern Development, a subsidiary of SOSi, which is known as SODEVCO, exclusive rights to purchase artisanally mined ore. An investigation by OCCRP has concluded that Ghani’s brother, Hashmat Ghani, owns a significant stake in Southern Development, which operated a mineral processing plant on the outskirts of Kabul.
According to Jessica Tillipman, assistant dean of the Government Procurement Law Program at George Washington University, “Entering into this relationship in Afghanistan, a country with a widespread reputation for corruption, and obtaining unique benefits from it, is suspect”. “If there was a color redder than red, that’s what color this red flag would be.”
Illegally mining chromite
Southern Development’s roots in mining can be traced back to an initiative backed by U.S. Special Operations Forces in Afghanistan’s Kunar province.
More than a decade back, in 2011, US Special Forces operators introduced Noor Mohammed, a paramilitary commander from Afghanistan’s eastern province of Kunar, who is also known as Farhad, to a Task Force for Stability and Business Operations, a business development office for the Pentagon.
Stability and Business Operations was created with the aim of nurturing jobs for locals in key industries including mining as part of a broader counterinsurgency strategy. In short, its goal was to create jobs for Afghans so that they stop becoming militants.
“Their mission, to create small-scale, sustainable mining operations for the Afghans, was a solid fit to our FID [Foreign Internal Defense] mission,” said Heinz Dinter, a former Special Forces officer.
Commandos from the US Special Forces asked the Task Force to help the two local warlords, who were illegally dealing in chromite, which incidentally is a very valuable anti-corrosion additive that is typically used in stainless steel and in the paint industry, especially for the painting of airplanes.
Afghan chromite is prized for its exceptional purity. With the Pentagon providing a crusher, the two Afghan warlords, Mohammed and Farhad, began to process their ore at Combat Outpost Penich, a small NATO base in eastern Kunar.
It is beyond any reasonable doubt that the entire operation was totally illegal in the country since Afghan public officials and leaders of government-aligned militias, such as Mohammed and Farhad, are forbidden by law to hold mineral right. Afghan law also prohibited by law from buying ore from unlicensed mines, which typically uses child labor.
The large majority of these unlicensed mines are controlled by the very militants Washington and its allies have been fighting for decades.
“There’s no conceivable way extraction or export could be done without the collusion of insurgent groups,” said Jim Wasserstrom, an anti-corruption expert who has worked for several U.S. agencies in Afghanistan.
The Kunar scheme came into public limelight after many years of operations following an expose by Integrity Watch Afghanistan, an anti-corruption NGO. In 2013, the crushing operation was shut down by the then-President Hamid Karzai.
However, the Task Force’s natural resources group, which got the project off the ground when it gave Mohammed and Farhad a $3.8 million contract in the mineral-crushing operation was a big deal and underscored the potential of Afghanistan’s massive mineral wealth.
Although the Pentagon went on to publish several geological surveys and provided assistance to the Afghan Ministry of Mines, no other independent mining projects come so close to full fruition.
In fact, in a 2013 Naval Postgraduate School thesis Ryan Hartwig, a Special Forces major, touted the benefits of the project and called it a “major success” and a model for future Special Forces-facilitated business development.
According to the results of several interviews by Hartwig on Task Force officials concluded that the intervention by Special Forces in Afghanistan’s mining sector played a significant role in saving the country’s economy. Naturally, it downplayed the complex safety, health and political ramifications of the project as well as the non-compliance to Afghanistan’s prohibition of unlicensed mining, saying these issues got in their way.
Task Force officials remained bullish on strategic mining long after the project was closed down with some even seeing it as a possible form of rehabilitation for Taliban terrorists.
Incidentally, Hartwig’s thesis cited Tarek Ghani, whose father was soon to become the president of Afghanistan. Tarek Ghani, then a graduate student at the University of California at Berkeley, on receiving a pre-publication review copy had endorsed the critique of Afghan mineral law suggesting that involving private companies in artisanal mining would force the government to accept the practice.
“The only way to realistically economically reintegrate the Taliban back into Afghanistan’s economy is with mining,” said Emily Scott King, the former director of the Task Force’s natural resource group in a special operations policy forum in 2019
“It can work within the hierarchy that the Taliban is used to, with commanders running small processing facilities or becoming the brokers for small miners,” said Scott King.
Given the high value of Afghanistan’s minerals, including chromite, Scott King and her colleagues never gave up on Afghan chromite. The Task Force’s Kunar project which was closed down was once again reopened under a new, private management – Southern Development, a subsidiary of Virginia’s SOSi in which President Ghani’s brother had invested.
“Intelligence and Special Forces do what it takes to achieve their mission. Their military mission may have ended, but these guys may have thought they could make a ton of money and advance our national security at the same time” said Wasserstrom.
Privatizing the Pentagon’s chromite project
Scott King, as a geology major, has emerged as a key player in privatizing the Pentagon’s chromite project. She joined the Task Force as a mobile banking project consultant in Iraq after completing her undergraduate degree at Bowdoin College in Maine. In 2010, when the Task Force’s mission expanded into Afghanistan Scott King was put in charge of setting up and running its natural resources group.
According a former official from the Task Force, the natural resources group was unusually secretive.
“They were putting the majority of their work into cooperative ventures they had with the Special Forces world,” said the official on the condition of anonymity citing safety reasons.
In 2011, with the bulk of the Task Force’s senior leadership quitting the US Congress transferred the authority for its operations in Iraq to United States Agency for International Development, Scott King role in the project got diminished following repeatedly clashes over safety and the organization’s mission.
In 2013, following repeated internal feuds, she left the government project. But by then she had made the exploitation of conflict minerals her niche.
Proclaiming herself as a “mining futurist,” she co-founded Global Venture Consulting, a Florida-based private company, with her husband, Army Special Forces reservist Mark King.
Global Venture offers mineral exploration and mining services aimed at “emerging and frontier markets” that requires a Special Forces-style framework. Advertising itself in executing special operations missions, Global Venture’s website showcases its founders working in harsh environments.
In 2019, during a Special Forces conference Scott King had said, “Those [Task Force] chromite projects grew into a $4 million investment from an American company to build a chromite processing facility outside of Kabul.”
“None of that would be the case if it weren’t for the support and the vision of the SoF [Special Forces] community.”
High Level Contacts
Southern Development’s parent company SOSi was the perfect fit to revive the Task Force project. Founded in New York by Sosi Setian, a mother who emigrated from Bulgaria as a teenager and trained as a linguist, initially the company provided translation and interpreting services.
In 2004, SOSi moved its headquarters to Reston, Virginia, close to its clients at the Drug Enforcement Administration, the Central Intelligence Agency (CIA) and the Pentagon.
During this time, Setian passed control of the company to Julian, her son, who prioritized connections with the military and intelligence agencies. Over the next 15 years, SOSi added new lines of military support services as its relationship with the government’s War on Terror.
In Afghanistan, SOSi offers a variety of services, including provision of cultural advisers, intelligence analysis, and producing communications for Resolute Support, the U.S.-led NATO mission.
SOSi’s connect with the US military contracting powerhouse came through its connections to the office of retired Army General David Petraeus, a former CIA director who was also a major backer of the Task Force for Stability and Business Operations while serving as the top U.S. commander in Afghanistan and Iraq.
Sadi Othman, Petraeus’s translator and close confidante, was a SOSi employee, while his top deputy in Iraq, Lieutenant General Frank Helmick, was later hired to run SOSi’s logistics portfolio.
Incidentally, Petraeus wasn’t the only senior government official which had ties to SOSi. Former Deputy Secretary of Defense Paul Wolfowitz under the Bush administration, who was an architect of the Iraq invasion, along with other U.S. defense officials were part of SOSi’s board.
“It’s an open secret that SOSi is essentially a front for the DoD,” said a high-ranking Afghan official who has recently dealt with the company on the condition of anonymity citing fear of retribution. He went on to add, when it came to disseminating its message in Afghanistan, SOSi offered ideal cover for Washington.
“The U.S. government cannot directly do business with Afghan companies, so it goes through SOSi, a private entity, to secure deals with all the major Afghan media networks to broadcast Resolute Support and NATO communication material,” he said.
Although its dealings in Afghanistan have so far been under the radar, but with SOSi’s operations in Iraq now under investigation by the U.S. Justice Department, it is only a matter of time before its dealings come under scrutiny. Already reports have emerged that the company allegedly paid an Iraqi firm connected to Iraq’s former prime minister, Nouri al-Maliki, in return for exclusive military base support service contracts which are worth hundreds of millions of dollars.
SOSi’s connection with friends at high places was not limited to just the US military. The company was well positioned for growth because it was not afraid to get its hands dirty. In his thesis, Hartwig recommended offering the-then Afghan government “some type of benefit” to win support from “key leaders” for future mineral projects. And SOSi did exactly that through its subsidiary: it apparently cut a deal with the-then president’s brother.
Southern Development is a complex mishmash of organizations that stretch from the United Arab Emirates to Afghanistan. At its core it is essentially a joint venture between SOSi and Hashmat Ghani.
Archival documents, including a 2005 Kabul business directory shows that Hashmat Ghani was the original owner of Southern Development. A document from Southern Development in the secretive United Arab Emirates’ Ras al-Khaimah Offshore Free Zone, confirms that on June 17, 2014, SOSi’s ownership of the company was at 80% while Hashmat Ghani had the remainder 20% stake.
A phone number listed in Southern Development’s most recent Afghan corporate filings also matches the number registered to Hashmat Ghani’s primary business entity, the Millennium Integrity Logistics Company. However Ghani’s name was removed from Afghan corporate documents so to avoid embarrassing Ashraf Ghani during his presidential campaign, said a former SOSi employee on the condition of anonymity since the person continues to work in the field.
Although it remains unclear how SOSi first networked with the Afghan President’s family, Sultan Ghani, Hashmat Ghani’s son, has listed a short SOSi internship in 2013 on his resume.
Incidentally, Sultan Ghani now runs The Ghani Group, – the family’s privately owned conglomerate with interests that include mining and military contracting. Going by a photo he uploaded on LinkedIn in 2019 which shows him meeting with SOSi Vice President Helmick, he keeps in touch with his old friends at SOSi. The account also shows praise for his interpersonal skills posted by a SOSi executive.
Although purchasing chromite from unlicensed local mines continues to be illegal in Afghanistan, Ashraf Ghani’s election win opened previously untapped revenue streams.
While before 2019, Afghanistan’s Minister of Mines had to review proposals dealing with mineral processing and licenses, after the election win, these documents were directly approved either by the president, his cabinet or the High Economic Council, which was also headed by him.
“The ministry just has a figurative role,” said a longtime civil servant with extensive experience of the process on the condition of anonymity citing safety reasons. “Nothing goes through without the president’s green light.”
According to a leaked document, on December 26, 2019, the High Economic Council, which was overseen by the president, authorized Southern Development to take on a project that was much bigger than the original task force project in Kunar. The company received a mineral processing permit and permission to purchase artisanal chromite in six Afghan provinces – Ghazni, Kunar, Khost, Paktika, Paktia, and Maidan Wardak.
According to the document, this chromite that “was mined by local villagers over many years using rudimentary tools,” was to be processed in Kabul’s District 12 neighborhood, where the Southern Development plant is located. The Ministry of Mines was instructed to oversee the entire process, and Afghan security forces and highway police were ordered to “cooperate” in securing “the transfer of the chromite ore.”
Southern Development was also permitted to obtain 20,730 tons of locally mined chromite already under the control of the Afghan government, shows the leaked correspondence between the company and the Ministry of Mines.
It turns out Southern Development, had long been preparing for a significant increase in mineral processing capacity. In the first quarter of 2018, more than a year ahead of Afghanistan’s High Economic Council giving Southern Development’s Kabul office the rights to mine and process chromite, the company had imported new crushing equipment from South Africa for its Afghan operation.
According to Scott King, Global Venture and its consultants, had been “advising private sector investors” with mining interests in Afghanistan on how to “quietly” restart initiatives like the Kunar chromite project way back from 2013.
In spite of making significant gains in areas across Afghanistan, Southern Development was also trying to gain concessions in areas it had not been granted.
Ring of Corruption
According to Jodi Vittori, a non-resident fellow at the Carnegie Endowment and former anti-corruption adviser to NATO in Afghanistan, the former Afghan President used the control of lucrative mineral processing contracts to stay in power by “managing the political settlement that helps balance the various forces there.”
Multiple sources, including current and former employees of the Ministry of Mines, as well as former civil servants, and anti-corruption officials have confirmed this and elaborated saying there was a ring of corruption that was controlled by a select cast of elites at the Presidential Palace and the High Economic Council.
“If you pay the right amount to the right person, they’ll accept anything,” said a longtime civil servant. “Many people choose to pay, because success is guaranteed thanks to a tacit system by which if one member wants something to happen, the whole chain will agree.”
According to Javed Noorani, an expert on Afghan mining, corruption and cronyism are rampant in the state sector.
“There are networks in Arg [Afghanistan’s Presidential Palace] that not only keep information from the president but also mislead him,” said Noorani. “These networks are involved in wholesale corruption both in appointing their cronies to key positions in state institutions, as well as giving contracts to their clients in return for money.”
Since mining has a longer profit curve – it takes longer to generate profits, it is yet unclear as to how much money SOSi made on its sunken investment. Given that the price of chromite ore hovers around $200 per ton and since it has a global market for stainless steel, Southern Development may have been highly profitable.
Southern Development is not the only American military contractor to be under federal investigation, DGCI, another American military contractor, is also under the scanner for its work in Afghanistan and in Iraq. In 2019 DGCI had hired another former Task Force staffer in what turned out to be an unsuccessful attempt to mine lithium in Afghanistan’s Ghazni province. Since then DGCI has had a relationship with the Ghani family, and has held public charity events with Sultan Ghani.
“DGCI seeks to give back to the communities where we work and allocates a portion of its profits to charity every year,” said the company in a statement about its relationship with Ghani. “We are proud to currently work with numerous organizations in Afghanistan and its diaspora through our charitable foundation.”
In 2018, Scott King established a new company, De Zwan Ghar, which in Pashto means “the young mountain.”
In 2019 she presented Afghanistan’s Ministry of Mines with a plan to buy and process oxide copper. Although that project, which again contravened mining regulations, was declined, “but the moment she manages to persuade someone close to the cabinet, the project might see the light,” said a longtime civil servant.
Afghanistan’s mineral reserves could fuel China’s global ambition
A survey by the United States Geological Survey (USGS) concluded that Afghanistan may hold 1.4 million tons of rare earth elements (REEs) such as lanthanum, cerium, neodymium, and veins of aluminium, gold, silver, zinc, mercury, and lithium. According to an initial analysis by Pentagon officials of the availability of mineral resources in Afghanistan’s Ghazni province, the potential for lithium deposits are as large as those of Bolivia – which is currently known to have the world’s largest lithium reserves. Estimates by USGS show that deposits in Afghanistan’s Helmand province holds 1.1. to 1.4 million metric tons of REEs; other reports point to Afghanistan’s REEs being among the largest in the world.
In today’s modern world, rare earths are essential to modern technology. They have wide usage across a wide spectrum of industries including in the military, defense components, missile guidance systems, consumer electronics, automobile industry, lasers, paint industry, communication, and hybrid engines to name a few. U.S. Congressional findings have called REEs critical to national security.
With the US withdrawal from Afghanistan the access to these REEs are no more within its reach. With the Taliban gaining control over the country’s infrastructure and natural resources they are likely to be at the disposal of US enemies including China & Russia; With an eye on Afghanistan’s untapped mineral reserves, China is eyeing to boost its regional ambitions vide lucrative development projects.
Earlier last month, Chinese Ministry of Foreign Affairs spokeswoman Hua Chunying stated Beijing will pursue a constructive role in establishing “peace and reconstruction” in Afghanistan.
“On the basis of fully respecting the sovereignty of Afghanistan and the will of all factions in the country, China has maintained contact and communication with the Afghan Taliban and played a constructive role in promoting the political settlement of the Afghan issue,” said Hua Chunying at a press conference.
He went on to add, “on multiple occasions” the Taliban “looks forward to China’s participation in Afghanistan’s reconstruction and development.”
“We are ready to continue to develop good-neighborliness and friendly cooperation with Afghanistan and play a constructive role in Afghanistan’s peace and reconstruction,” Hua said.
By doing so, Beijing has signaled its willingness to accept the Taliban as a legitimate governmental entity. In fact in late July, the Chinese Ministry of Foreign Affairs even hosted senior Taliban political leader Mullah Abdul Ghani Baradar underscoring Beijing’s commitment to fill the void left behind by Washington.
The Taliban has so far welcome China and has invited it to play a role in economic development.
China dominates the world’s rare earths market, with 35% of global reserves pf REEs being located in China.
China is a mining machine: in 2018 it produced 120,000 metric tons equivalent to 70% of the global rare earths, in comparison the US mined only 15,000 metric tons of rare earths in the same year.
In terms of rare earth reserves, US reserves pale in comparison to China. US reserves stand at 1.4 million metric tons compared to 44 million metric tons of reserves in China.
In 2019, during the Trump Administration’s trade war with Beijing, China used rare earths as a threat saying it could cut off supplies to the U.S. In the same year, China exported 80% of U.S. rare earths requirements, according to the U.S. Geological Survey.
Gaining access to these mineral reserves are unlikely to be a bed of roses for Beijing, which shares a 90km border with Afghanistan. China is worried that the East Turkestan Islamic Movement, which it has blamed for violent acts in Xinjiang, can shift to Afghanistan and threaten its internal security.
The earlier US presence in Afghanistan had helped China’s counterterrorism efforts, but following the US withdrawal these will now come under stress.
“China will have to worry about extremism emanating from Afghanistan and influencing its own Xinjiang region,” opined Harsh Pant, a strategic studies program chief at the New Delhi-based Observer Research Foundation think tank. He went on to add, “even though China had maintained good ties with the Taliban, mainly to safeguard its belt and road projects and to prevent a surge of violent jihadism in Xinjiang, the Taliban’s likely return to power might threaten those interests and even regional stability”.
Beijing “certainly would like to have greater influence in Afghanistan” but this was unlikely given Kabul’s fractured nature and the existence of multiple stakeholders. China has so far been very cautious when it comes to Afghanistan,” said Pant.
“The difference that China brings to Afghanistan is that it is the strongest country in Asia with the deepest pockets and this reality provides opportunities for Beijing to outspend competitors, buy loyalty, even if this loyalty is transactional, and protect its core interests,” said Nishank Motwani, an independent analyst based out of Kabul.
According to Mark N. Katz, the Taliban is likely to be “emotionally inclined to help fellow Islamists elsewhere, including those in Xinjiang”; even if the Taliban were to restrain themselves, their very act of seizing power in Afghanistan only goes to serve to inspire similar groups in neighbouring areas, including in China’s Xinjiang region where it houses Muslim Uyghurs in forced labor camps similar to Nazi concentration camps.
A lot will depend on Afghanistan’s domestic situation: in the worst-case scenario in case there is civil war, it could potentially spill over to Xinjiang.
While earlier “The US presence in Afghanistan served to counter the Islamist threat to China from there, but with the US presence gone, China and neighboring countries may have to deal with this issue themselves,” said Katz.
And therein lies the risks to Afghanistan’s mineral resources. An enriched Taliban could fight more effectively to liberate its Muslim brothers from China’s concentration camps in Xinjiang. The battle for Afghanistan is far from over.