Baby powder helping fund Islamic State in Afghanistan: report

FILE PHOTO: Afghan National Army troops prepare for an operation against insurgents in Khogyani district of Nangarhar province, Afghanistan November 28, 2017. REUTERS/Parwiz/File Photo

KABUL (Reuters) – Islamic State fighters in Afghanistan are making hundreds of thousands of dollars a year from illegal mining of talc, much of which ends up in the United States and Europe, advocacy group Global Witness reported on Tuesday.

About 500,000 tonnes of talc, used in products ranging from paint to baby powder, were exported from Afghanistan in the year to March, according to Afghan mining ministry figures cited in the group’s report.

Almost all went to Pakistan, where much of it is re-exported. Pakistan provides more than a third of U.S. imports of talc and much also ends up in the European Union, it said.

“Unwitting American and European consumers are inadvertently helping fund extremist groups in Afghanistan,” Nick Donovan, Campaign Director at Global Witness, said in a statement, calling for stronger checks on imports.

Illegal mining of gemstones and minerals such as lapis lazuli is a major source of revenue for Taliban insurgents and the report said Islamic State was fighting for control of mines in Nangarhar, the province where it has its stronghold.

Nangarhar, on the border with Pakistan, has large deposits of talc as well as minerals such as chromite and marble, and sits on major smuggling routes used for drugs and other contraband.

The report quoted a senior Islamic State militant commander as saying that wresting control of mining assets from other armed groups in Nangarhar was a priority: “The mines are in the hands of the mafia … At any price we will take the mines.”

Security officials in Afghanistan have long been concerned about the uncontrolled traffic in Nangarhar of commodities like talc and chromite, which the Global Witness report said “may be the least glamorous of conflict minerals”.

It said that while it was difficult to estimate the value of the trade to Islamic State, revenue from mining in Nangarhar could amount “anywhere from the high tens of thousands to the low millions of dollars a year”. Somewhere in the hundreds of thousands was a plausible mid-range estimate, it added.

The sum did not appear very high, it said, but the U.S. military estimated the strength of Islamic State in Nangarhar at somewhere between 750 to 2,000 fighters, meaning the funds would be a significant source of revenue to the movement.

An Afghan mining ministry spokesman said a special committee had already been established to coordinate approaches to the issue with security and intelligence services. The ministry planned a news conference this week to address some of the specific issues raised in the report.

(Reporting by James Mackenzie; Editing by Mark Heinrich)

Utilities, mining boost U.S. industrial production

Robotic arms spot welds on the chassis of a Ford Transit Van under assembly at the Ford Claycomo Assembly Plant in Claycomo, Missouri April 30, 2014.

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. industrial production increased more than expected in December as unseasonably cold weather at the end of the month boosted demand for heating, but manufacturing output barely rose, pointing to moderate growth in the industrial sector.

Strong demand for utilities bolsters expectations of an acceleration in consumer spending in the fourth quarter, which could prompt analysts to raise their economic growth estimates for the October-December period.

The Federal Reserve said on Wednesday industrial output surged 0.9 percent last month also buoyed by robust gains in mining production after slipping 0.1 percent in November.

Economists polled by Reuters had forecast industrial production advancing 0.4 percent in December. Industrial production rose at an annual rate of 8.2 percent in the fourth quarter, the biggest gain since the second quarter of 2010.

For all of 2017, industrial output rose 1.8 percent, the first and largest increase since 2014.

The industrial sector is being supported by a strengthening global economy and a weakening dollar, which is helping to make U.S. exports more competitive relative to those of the nation’s main trading partners. A survey early this month showed an acceleration in factory activity in December, with a measure of new orders recording its best reading since January 2004.

The dollar maintained gains versus a basket of currencies after the data, while prices for U.S. Treasuries were little changed.

Mining production increased 1.6 percent in December amid a rebound in oil and gas well drilling. Utilities production accelerated 5.6 percent last month after declining 3.1 percent in November.

Bitter cold gripped a large part of the country at the end of December. The surge in utilities demand added to strong December retail sales in supporting expectations of an acceleration in consumer spending in the fourth quarter.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.2 percent annualized rate in the third quarter.

But manufacturing output gained only 0.1 percent in December, putting a wrinkle on the report, after rising 0.3 percent in the prior month. Manufacturing production jumped 1.5 percent in October.

Manufacturing output was last month held back by a 1.5 percent drop in the production of primary metals. Motor vehicle and parts production increased 2.0 percent. Manufacturing production rose at a 7.0 percent rate in the fourth quarter.

With output accelerating last month, capacity utilization, a measure of how fully industries are deploying their resources, increased to 77.9 percent, the highest since February 2015, from 77.2 percent in November.

Capacity utilization is 2 percentage points below its long-run average. Officials at the Fed tend to look at capacity use as a signal of how much “slack” remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)