The Khaf-Herat Railway: possible iron ore-for-railway deal and new border crossing
By Sophia Nina B-A
In the course of my research into the Khaf-Herat railway I came across two notable developments: a new border crossing at Shamtig and a possible deal that involves the Taliban granting Iran iron ore mining rights in Western Afghanistan in return for railway development. Very little is written on these developments relating to the Khaf-Herat railway project. So I share my analysis below.
Summary:
The Taliban-led Afghan government has said it will finance the remaining section of the Khaf-Herat railway line that runs through Afghanistan. It is still unclear how the Afghan government will finance and implement such a project, especially given that Afghanistan is under international sanctions and economic recovery in the country remains precarious. According to a World Bank study published in 2025, Afghanistan’s trade deficit rose to 54%.
Under sanctions, financial transfers to Afghanistan’s banking system remains challenging, restricting private investors, which in turn means most infrastructure projects, including rail, must be state-supported.
While no further official details of the financing terms or the construction agreement are publicly available, there is some indication as to how the government plans on paying for the project.
Though not officially acknowledged, back in 2017 a few Iranian news sources talked about a proposed 'iron ore for infrastructure' deal between Afghanistan and Iran to speed up the construction of the Khaf-Herat railway project. It seems that in 2022 the Taliban government may have continued these negotiations behind closed doors. The creation of a Special Economic Mining Zone in 2025 and resumed construction of the Khaf-Herat railway project suggests that some sort of deal was reached.
Plus, a new railway border crossing between Iran/Afghanistan at Shamtig was opened back in December 2020. A significant, yet underreported event. This crossing is mainly used for freight. Located in Shamtig is a railway station, and in the past year, border control operations have been developed along with warehouses and storage facilities.
Here I unpack each of these developments: I explain why they are important and what this means for Afghanistan’s relations with Russia, China, India, and Pakistan.
I created a map to show the Shamtig border crossing’s location, where it connects, and all the other Iran/Afghan checkpoints for reference.
Photos of the Shamtig border crossing as of April 2025 from Google Maps and from Iranian state run news agency, IRNA.
Background:
The Khaf-Herat railway is a joint project between Afghanistan and Iran to construct a 225 km railroad linking Northeastern Iran to Western Afghanistan.
The railroad has been financed and mostly built by Iran. The remaining 90km on the Afghan side will be built by three private contractors: a Kazakh company, INKON KZ, Afghan company Cinderella International Group and a Russian company, Gamma Group. In terms of finance, the Taliban have claimed that they will provide the investment themselves, but no further details are known. (read more about the background here)
Questions over funding methods of the railway project: a possible “Iron ore for infrastructure” deal?
In 2017, a few local Iranian news sources revealed that Iran had proposed a plan to the former Afghan government whereby Iran would acquire certain mining rights to iron ore in Western Afghanistan, in exchange for infrastructure development. This would have supposedly been in the form of railways and roads.
It seems that the current Taliban government may have continued these negotiations behind closed doors, as it is not clear what type of finance or source of funds the Taliban government has used to fund the railroad construction.
The continuation and further development of the Khaf-Herat railway project in 2022 and Iran's Islamic government’s announcement in May 2025 to invest a hefty $5 billion in the development of iron ore mines in Afghanistan suggests that some sort of deal was reached.
For example, the Iranian government seemed to have processed all needed approvals to accelerate the iron ore mining, exploration and transport in Afghanistan, including agreeing to invest $27 million to create a Special Economic Mining Zone (SEMZ) at the Iranian/Afghan railway crossing in Shamtig; approval of the rights of the land in Shamtig to be developed as a SEZ; as well as carrying out joint training and cooperation between Afghan and Iranian officials on mining exploration.
A new border crossing was opened in December 2020 in the Iranian town of Shamtig in the city of Khaf, the capital of Khaf county in Razavi Khorasan province, which is by the border with Afghanistan. This crossing was specifically created and approved by the Iranian government for the purposes of the Khaf-Herat railway project. It would primarily run freight containers with iron ore from the Sangan Iron ore mine in Herat, Afghanistan. The Iranian government also reported that it would ease the congestion on the Dogharun/Islam Qala border crossing.
On 2 August 2025, Dr. Amir Tavakoli Rudy, an Iranian government official, representative of counties Khaf and Rashtkhar and a member of the Industries and Mining Commission of the Islamic Consultative Assembly, spoke to Amu TV, an Iranian news outlet. He stated that by the end of the month, passenger services will run on the Khaf-Herat railway line connecting with the Iranian city of Mashaad (Mashad-Khaf-Herat).
Back in January 2025, Dr. Amir Tavakoli Rudy also gave an interview to Iranian state news agency ISNA. He stated that officials from the Sangan Steel Mining Industries Company(SIMC), an Iranian iron ore mine operating in the city of Khaf in Razavi Khorasan province, have carried out trips and meetings with Afghan officials to discuss the transit and transport of iron ore from Ghorianand Pashtun Zarghun provinces of Afghanistan to the Iranian border at Shamtig. He also noted that despite previous resistance from the Afghan government on the sale and exploration of iron ore, trips to Iran and negotiations had “adjusted” their positions.
Funding methods of this kind, specifically a minerals-for-infrastructure deal, is not new to the region. The Taliban-led government may have learnt this from their neighbours who have agreed to similar deals in order to develop expensive infrastructure. For example in 2018, Tajikistan reportedly granted a Chinese company the rights to the Upper Kumarg gold mine in the Sughd region in northern Tajikistan in exchange for building a power plant free of charge in Dushanbe. Also in 2021, the Kyzgryz government had been considering selling its Jetim-Too iron-ore mine to China to pay off its large debts.
Why does this matter?
For Afghanistan:
Firstly, Afghanistan's Islamist Taliban rulers want alternative transport routes. By investing in the Khaf-Herat railway project, they seek to connect onwards to Iran’s Chabahar port. Currently the Chabahar- Zahedan railway project is being built (628-750 km) which plans to connect with Khaf-Herat railway line. So far 155km of railroad has been laid. The Chabahar-Zahedan railway project aims to be completed by late 2025 or March 2026 according to news reports.
Secondly, by investing in the Khaf-Herat railway project the Taliban leadership want to show that they are capable of being self-sufficient. They want to be considered as legitimate rulers and competent leaders. However, the flagrant disregard for human rights poses a tremendous operational and moral challenge for donors, development banks and private sector investors. So infrastructure projects must be state-funded.
Developing Afghanistan’s critical minerals would open up new lines of revenue for the Taliban government. Which is something they desperately need. Particularly in Western Afghanistan. In June 2024, Tolo News, an Afghan news outlet spoke with Homayoun Afghan, spokesperson for the Afghanistan Ministry of Mines and Petroleum said that the concession rights to 4 blocks in the Ghorian iron ore mine in Herat has been granted to Iran, UK and Türkiye for 30 years, with investments totalling over $5.5 billion.
For Iran:
Iron ore is used in steel making. Iran has a rising demand for iron ore and currently there is a supply shortage due to a major expansion in domestic steel manufacturing and US sanctions.
In 2019, U.S. President Donald Trump imposed new sanctions on Iran, targeting the Islamic Republic's export revenues from its industrial metals sector.
Therefore the Khaf-Herat railway is linked to Iran’s ambitions to import and mine iron ore from Afghanistan - the railroad will help transport the iron ore into Iran.
Iran needs to diversify its supply sources to cover for the shortages as steel production further increases.
For China:
This would also test China’s outreach to Afghanistan, which has been tense recently. For example, in June 2025, the Taliban cancelled a 2-year oil contract with the Chinese company, Xinjiang Central Asia Petroleum and Gas Company for alleged contractual violations. On the other hand, the Chinese company accused the Taliban of “robbery.”
For India and Russia:
The Khaf-Herat railway line plans also to connect Afghanistan with the Chabahar seaport in Iran. The biggest investors in Chabahar port are Iran and India. It is a rival to the China-backed Gwadar seaport in Pakistan. In late February 2025, the Taliban government announced a $35 million investment in Chabahar port.
Prior to that, in July 2023, it was reported that a private unnamed Afghan company signed an agreement in cooperation with an unnamed local Iranian logistics firm to create a joint venture and invest $50 million at Iran’s Caspian Port in the Anzali Free Zone for three wharves,a series of docks at which boats are stationed. According to Taadol Newspaper, a local Iranian language news outlet ‘the Afghan investor has taken steps to establish a goods transit corridor between Russia and Afghanistan through the Anzali Free Zone.’ There hasn’t been a reported update on the construction of these wharves in the public domain.
Currently Afghan goods are mainly exported out from Pakistan’s Karachi sea port. This is Afghanistan’s closest access point to the sea. However frequent border skirmishes, rising tax prices and transit fees on Afghan goods imposed by Pakistan has prompted the Taliban leadership to seriously seek alternative options.
On the whole, closer Afghan-Iran relations challenges Pakistan and Chinese outreach. Another set of winners that could benefit from these ties is India and Russia. A fully operational Khaf-Herat railway and access to Iran’s Chabahar port would reduce Afghanistan’s dependence on the Karachi port in Pakistan. This would also align with India’s ‘Connect Central Asia Policy’ as it would grant them access to Central Asia bypassing Pakistan. Also, with Russia’s North-South corridor which runs largely through Iran and utilises Chabahar port and connects with the Trans-Afghan railway line also.