A project to mine copper in Aynak that was awarded in 2008 to a Chinese state-owned company has not taken off in eight years.
The mine was a potential source of huge revenue for Afghanistan and employment for job-hungry Afghans. Extraction should have started in 2013.
A project to mine copper in Aynak that was awarded in 2008 to a Chinese state-owned company has not taken off in eight years.
The mine was a potential source of huge revenue for Afghanistan and employment for job-hungry Afghans. Extraction should have started in 2013.
Under the terms of the contract, MCC was committed to expand the rail from dry ports in the north to Turnham, construct a 400 MW power plant and copper smelting factory in addition to paying between 250 and 500 million USD royalty per year once the production started.
But the Chinese corporation has procrastinated year after year over claims that the site was not secure and historical relics had to be removed, which was challenged by the provincial government in 2014. Then governor of Logar told Killid, “The ancient relics have been removed from the mine site (relics from Bronze Age and Buddhist era sites), the area cleared of landmines, yet the MCC says there is no security, and it is bothered by the locals. I reject all these excuses.”
MCC has consistently refused to talk to Killid.
Integrity Watch Afghanistan, a non-governmental organisation that works to improve “transparency (social), integrity and accountability”, thinks MCC is no longer interested in mining copper with world prices having nearly halved in the past few years.
Sayed Ekram Afzali, Integrity head, says the government should cancel the contract. At the time of awarding the contract, one tonne of copper was selling for 8,800-9,000 USD; the price was down to 4,764 USD on June 23 this year.
The Ministry of Mines thinks there is still another reason. Spokesperson Mohayudin Noori, told Killid, the previous government had rushed into signing the contract without studying the complexities of such a large project. While technically mining could start, he adds, “There are works that the former management should have done but they failed to. We are completing them.” The project planners did not consider details like how much time would be required to prepare the groundwork before the extraction begins.
The Ministry of Culture and Information is “working in eight points to protect our historical relics. This work would be finished this year,” according to Noori. The relics in the project area are from the Bronze Age and Buddhist era.
Landmines have been cleared, but the problem of shortage of phosphate at the project site has to be resolved.
Noori says the ministry has been able to build a security ring around Aynak. More has been done in the past one and a half years under the Ghani government than in the previous six years, the spokesperson claims.
But there is no clarity on when mining will start. Neither is there a change in the position of the Ministry of Mines. In 2014, then spokesperson Rafea Sidiqi told Killid that the third phase of dialogue would start soon; concerns over shifting of historical relics has been dealt with, and mines cleared from the area.
In 2011, then deputy minister of mines Nasir Ahmad Durani (currently the minister of rural rehabilitation and development) had in an interview with Killid said the project was one year behind schedule, and would start the next year.
Killid tried to talk to both Wahidullah Shahrani, the former minister of mines, and Durani, former deputy minister, but they were not willing.
Nothing to show
People in Logar say MCC has not begun any project-related work including the rail line, smelting plant and power plant.
Integrity Watch chief Afzali thinks the mining agreement with MCC has not been in Afghanistan’s interests. “Some authorities signed this contract for their own interests, corruption has taken place and the contract is in favor of the company.” MCC is bound by the agreement to fulfill the infrastructural requirements of the project only when there is security in the project area. Afzali feels this was deliberately inserted in the contract as an escape clause for MCC.
Moreover, a parliamentary commission for environment protection that reviewed the project found “defects”. Obaidullah Amin, commission chief, there are technical defects. Also, there are problems with financial consequences. A payment of some 800 million USD, which should have been a privilege payment has been entered as an advance. MCC is bound by the contract to pay 50 million USD for every year it delays mining. But the company has not paid the fine even once.
Afzali says Integrity Watch believes the government is in talks with MCC regarding the contract. There have been eight meetings in the last six months. “We are talking with MCC, (and) if there is need for amending the contract, it should be set in a manner according to current conditions in the country,” says Ministry of Mines spokesperson Noori. In his words, the Chinese corporation has given 180 million USD to the Ministry of Mines, which includes a 130 million USD “goodwill” payment.
Major investment
The Aynak copper mine project was won by MCC, which offered one billion USD more than others bidding for the project. It is committed to invest 2.8 billion USD. The lease is for 30 years.
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