Emeralds for sale: The Taliban looks underground to revive the economy

In a cold hall in Afghanistan, piles of freshly mined green emeralds glowed under bright table lamps as bearded gem dealers inspected them for clarity and quality.

The auctioneer requested a bid on the first lot, which weighs 256 carats. Thus, the Taliban’s weekly gemstone auction began.

The sales, which take place in the emerald-rich province of Panjshir in eastern Afghanistan, are part of an effort by the Taliban government to tap into the country’s vast potential in minerals and gemstones.

Since seizing power in August 2021, the Taliban say they have signed deals with dozens of investors to extract gems, gold, copper, iron and other precious metals, such as chromite. These buried treasures provide a lucrative lifeline to a weakening economy.

China has led the way in investments under the Belt and Road Initiative, an aggressive effort to spread Chinese influence around the world. Russian and Iranian investors also signed mining licenses, filling the void left by the chaotic US withdrawal in 2021.

The US government estimates that at least $1 trillion in mineral deposits lie beneath Afghanistan’s rugged landscape. The country is rich in copper, gold, zinc, chromite, cobalt, lithium and industrial minerals, as well as in precious and semi-precious stones such as emerald, ruby, ruby, garnet and lapis lazuli.

Afghanistan also has a treasure trove of rare earth elements, according to the Office of the Inspector General for Afghanistan Reconstruction, a US agency. Which will close this year. These elements are used in a range of modern technologies, such as mobile phones, laptops and electric vehicles.

The Taliban is trying to do what the United States could not do during its 20-year occupation. The US government has spent nearly $1 billion to develop mining projects in Afghanistan, but “tangible progress has been minimal and unsustainable,” the inspector general concluded in a report. a report Published January 2023.

Many of the obstacles that arose at the time are still applicable: lack of security, poor infrastructure, corruption, inconsistent government policies and regulations, and frequent movement of government officials.

However, the Taliban are giving it a chance, desperate for revenue after Afghanistan’s huge loss of aid with the US withdrawal.

During the war, the United States provided approx $143 billion In the field of development and humanitarian aid to Afghanistan, and support for the government allied with the United States. Since 2021, the United States has given $2.6 billion In such aid, it is delivered by a private contractor in wrapped cash packages on flights to Kabul, according to the special inspector general.

The Afghan economy has shrunk by 26 percent over the past two years, the World Bank reported in April. The bank said the sharp decline in international aid left Afghanistan “without any internal drivers of growth.”

And on top of that, the Taliban Prohibition of opium production It has cost farmers $1.3 billion The income, or 8 percent of Afghanistan’s gross domestic product, the World Bank said. the ban It resulted in a loss 450,000 job opportunities The United Nations Office on Drugs and Crime reported that land under poppy cultivation had decreased by 95 percent.

Mining could help replace poppies as a stable source of income. Türkiye and Qatar, along with China and Iran, have invested in iron, copper, gold and cement mines. Uzbek companies have signed deals to extract it oil In northern Afghanistan, according to the Ministry of Mines and Petroleum.

The Taliban already collects taxes from emerald sales.

Under the previous government, the emerald trade was a corrupt free-for-all. Politically connected warlords and merchants controlled trade, and tax collection was haphazard at best.

But since the Taliban government established weekly emerald auctions, it controlled and taxed all sales. Dealers who buy emeralds at auctions do not receive the gems until they pay a 10 percent tax.

The Taliban imposes taxes on other gemstones as well, including rubies and sapphires.

Rahmatullah Sharifi, a gem dealer who bought two sets of emeralds at the auction, said he did not mind paying the tax.

He added: “The government needs money to develop the country.” The question is: Will they spend it on helping the Afghan people?

In Panjshir province, where most of Afghanistan’s emeralds are mined, the government has issued 560 emerald licenses to foreign and Afghan investors, said Humayun Afghan, spokesman for the Ministry of Mines and Petroleum.

The ministry has also granted licenses for ruby ​​mining in Panjshir and Kabul provinces, and plans are underway to obtain licenses for emeralds and gemstones in three other provinces, Mr. Afghan said.

But many of the new licenses are for mines that have not yet been opened. Many existing mines suffer from poor infrastructure and a scarcity of experienced engineers and technical experts.

Mr. Afghan admitted that the country needs more engineers and technicians. He added that foreign investors seek the help of experienced experts, and they are obligated under licenses to employ Afghans and teach them technical and engineering skills.

Traders said that most of the emeralds purchased at weekly auctions are resold to foreign buyers. Among the dealers buying emeralds one November day is Haj Ghazi, who sells the gemstones from a small hive-like room inside a darkened area of ​​shops in downtown Kabul.

Two days after the auction, Mr. Ghazi closed the door to his shop, closed the curtains, and opened an old cupboard. He pulled out several caches of emeralds and rubies, each wrapped in plain white paper.

Ghazi’s largest collection of emeralds is probably worth $250,000, he said. A much smaller quantity of brilliant rubies was estimated to be worth $20,000.

In one corner, Mr. Ghazi has gathered heavy pieces of rock bearing thick blue veins of lapis lazuli, a semi-precious stone. Much of the world’s supply of lapis lazuli is mined in northern Afghanistan.

Mr. Ghazi sells most of his gemstones to buyers from the UAE, India, Iran and Thailand. He said he missed the days before the Taliban took power, when the occupation brought eager buyers from the United States, Britain, France, Germany and Australia.

In a nearby shop, Azizullah Niazi turned on a desk lamp to illuminate a collection of lapis, rubies, rubies and emeralds spread out on a small table. He was still waiting for his first client of the morning.

Mr Niazi said sales were not as strong as they were during the 13 years he was allowed to sell gemstones one day a week from a small shop on a US coalition military base. He added that his profits rose as soldiers and civilian contractors lined up to buy gemstones every Friday, and they rarely bargained over prices, unlike Afghan or Arab buyers. He said he paid 7 percent tax on his profits.

These days, Mr. Niazi has to travel to increase sales: he said he opened a store in China, where he makes regular visits. In Kabul, he sells his products to buyers from Dubai, the United Arab Emirates, as well as from Pakistan, Iran and a number of other countries.

He has a few Afghan clients.

“Not many Afghans can afford to pay $1,000 or $2,000 for a stone to make a ring,” he said with a shrug.

Safiullah BadshahYaqub Akbari and Najm Rahim contributed to the report.