Afghanistan: China's Winning Bid For Copper Rights
Includes Power Plant, Railroad
Radio Free Europe / Radio
November 24, 2007 (RFE/RL) -- Afghanistan has
awarded a state-owned company in China with the right
to develop a large copper field to the south of Kabul,
following two years of bidding.
China Metallurgical Group agreed to invest billions
of dollars in the project and related infrastructure
development -- including the construction of a
coal-fired electrical power plant and what would be
Afghanistan's first freight railway.
By the estimates of some geologists, deposits at
Afghanistan's Aynak copper field in Logar Province
make it the world's largest undeveloped copper field.
The deal gives China Metallurgical Group the right
to extract high-quality copper from the area south of
But the Aynak copper field has neither the
electrical power nor access to the transportation
links needed to fully develop the area as a copper
Afghan Mining Minister Ibrahim Adel says the
Chinese company has agreed to invest nearly $3 billion
in order to set up mining operations and overcome the
lack of basic infrastructure.
"With this mining project at the Aynak copper
field, we will have about $2.8 billion of direct
investment," Adel said."About $500 million will be
invested in building an electrical power plant. And a
large amount of money also will be invested in
building a railroad. This is one of the biggest
foreign investment projects in the history of
Khozman Ulumi, a spokesman for the Afghan Mining
Ministry, told RFE/RL's Radio Free Afghanistan that
preliminary plans call for a railroad link from
Tajikistan to the copper field and on to Pakistan.
Ulumi said the coal-fired power plant to be built
near the copper field would produce more than enough
electricity to run the mine. He says excess
electricity would be routed to Kabul, where most
residents now have electricity for only a few hours
per day -- if at all.
"They are working to generate up to 400 megawatts
of electricty from coal. When this project is
completed, God willing, some 5,000 people will be
working at the power plant adjacent to the copper
mine," Ulumi said.
Another 5,000 people -- mostly Afghan workers led
by a few Chinese experts -- are expected to be
employed in the mining operations and as construction
workers on the railroad.
Ulumi said the Chinese firm expects to start full
mining operations in about six years, after work on
the power plant and railroad are completed.
The Chinese offer beat out bids by four other firms
that were considered finalists. They include
Strikeforce -- part of Russia's Basic Element Group,
the London-based Kazakhmys Consortium, Hunter
Dickinson of Canada, and the U.S. copper-mining firm
China Metallurgical Group's bid surprised many
analysts in Kabul who expected the tender to be
awarded for less than $2 billion.
But Adel said the latest estimates suggest there
are at least 13 million tons of copper waiting to be
mined from the Aynak field. He said that with further
exploration, those estimates could rise to 20 million
tons before full-scale mining operations begin. And at
current prices, he said the value of copper at Aynak
would be about $30 billion.
But industry experts say the venture could be risky
for the Chinese company. They say the same obstacles
that prevented Anyak from being developed during the
last 30 years also could prevent China Metallurgical
Group from meeting its production goals there.
Years of war in Afghanistan have ensured that the
deposit has remained largely untouched since Soviet
geologists surveyed the field in 1979.
And although the mine is in a relatively secure
part of Afghanistan, the railroad and electric power
lines would be difficult to defend around the clock
from guerrilla attacks by Taliban militants.
That makes the Aynak deal a litmus test for other
possible foreign investors -- not just of about how
Afghanistan deals with international investors, but
also about the security that the Afghan central
government can provide for high-profile foreign
Chinese metal producer vows to protect
environment in copper mining in Afghanistan
NANCHANG, Nov 26, 2007 (Xinhua) -- Jiangxi Copper
Corporation, which is to develop copper mine in
Afghanistan together with China Metallurgical Group
Corporation (MCC), has pledged to protect local
environment in the mining.
"We will abide by international standard and
develop the copper mine with high-tech measures, so as
to ensure environmental protection during the
process," said Zha Kebing, assistant chief engineer of
Jiangxi Copper Co. Monday.
Jiangxi Copper Co. has invested about 800 million
yuan (106.7 million U.S. dollars) in recent years to
reduce energy consumption, realize resource recycling
and improve environment, said Zha.
Founded in 1979, the Jiangxi company boasts the
largest copper production base in China. It is also a
large producer of gold and silver and has been listed
in Hong Kong, Shanghai and London.
Last year the company achieved a revenue of 31
billion yuan (4.13 billion U.S. dollars), in which
nearly 3 billion yuan (400 million U.S. dollars) was
gained in the form of recycling economy.
"By reclaiming rare metal and sulfur dioxide and
generate electricity with the afterheat, we have
improved the value of one ton of copper ore from 160
yuan to 600 yuan (21.3 to 80 U.S. dollars)," said the
MCC beat bids by Strikeforce, part of Russia's
Basic Element Group; the London-based Kazakhmys
Consortium; Hunter Dickinson of Canada; and U.S.
copper mining firm Phelps Dodge by offering 808
million U.S. dollars to obtain a 30-year lease for
developing the the Aynak mine 30 km east of Kabul.
Discovered in the early 1970s, the mine is
estimated to contain 11.3 million tons of copper and
recognized as one of the world's largest.