China Metallurgical Begins Work at Afghanistan's Aynak Copper Deposit

Researched by Industrial Info Resources (Sugar Land, Texas)--China Metallurgical Group Corporation (MCC) (Beijing) has begun developing mining infrastructure for the 28-square-kilometer Aynak copper deposit in Afghanistan. Workers are paving a $3 billion access track to the Aynak fields under the watchful eyes of U.S. troops positioned en route. The Aynak deposits are located about 25 kilometers away from Kabul in the Logar province, which continues to remain a stronghold of the Taliban. The U.S. troops, deployed to prevent Taliban infiltration into Kabul and its neighborhood, are also shielding the workers and their gated community quarters from attacks.

In November 2007, the U.S. Agency for International Development (Washington, D.C.), which is monitoring the privatization programs in Afghanistan, with the approval of the Afghan government, awarded the development contract for the Aynak copper deposit to MCC. According to online reports of GeoJournal, an international academic journal on geography, the Aynak field has about 11 million tons of copper ore. However, unofficial reports peg the reserves at 240 million tons. These reserves will now be recovered by the Chinese using surface-mining techniques.

The package deal includes the development of a 400-megawatt power station to operate the copper mine, an associated smelter unit, a coal mine to fuel the power station and a fertilizer plant. The $500 million coal-fired power plant is expected to pump surplus power to the national grid. A freight railway line linking western China to the Gwadar port in Pakistan through Tajikistan and Aynak is also planned. The Gwadar port, located in a tax-free development region close to the oil shipping routes on the Persian Gulf, will serve as a shipping point for the mined copper. In 2008, the management of the Gwadar port was entrusted to PSA International Private Limited (Singapore) for a period of 25 years.

The Aynak mine is expected to be productive for another 30 years, yielding up to 200,000 tons per year of copper. It has an earnings potential of about $42 billion, with royalties to the government amounting to $400 million. In addition, the project is expected to generate 10,000 jobs for locals over five years. Chinese language classes have begun in Kabul, and local students have been promised education in Chinese universities.

Seven companies, including leading firms from the U.S., U.K., Russia and Canada, had participated in the auction. However, the deal was finalized in favor of MCC at $3.5 billion, although Hunter Dickinson Incorporated (Vancouver, British Columbia) had made a lower bid of $2 billion for the project. By means of what seems to be an arbitrary decision, the U.S. and other nations of the North Atlantic Treaty Organization have passed on the burden of infrastructure development to China while still retaining access to surplus capacities generated by the venture for subsequent projects. China, on the other hand, appears to be more than willing to take on the uphill task despite the political turbulence in the region, in order to maintain economic and social stability back home. The deal will enhance Chinese presence along the northern borders of India and provide access to Afghanistan's unlimited mineral wealth.

Since 2002, China has been involved in various projects in Afghanistan, including the 350-bed Jamhuriat hospital in Kabul, and the repair of transportation and irrigation networks in the country. In addition, another road route along the Wakhan Corridor, the former silk corridor along Sino-Afghan frontiers, is also being envisaged.

To date, two geological surveys have been undertaken in the region. The first one by Russia in the 1970s triggered a spate of industrial mining, although it eventually stalled because of political unrest in the region. The Russians, however, managed to install a natural gas pipeline, improving the economies of both countries. According to a U.S. Geological Survey study carried out in 2002, the region has more than 1,000 potential mineral and hydrocarbon deposits, including those of rare metals such as tantalum, lithium, niobium and cesium. Gold, copper, iron, mercury and lead are also found in abundance. A publication by Afghanistan's Ministry of Mines confirms the presence of a 1.8 billion-ton iron ore deposit in Hajigak, Bamiyan, with 62% of iron content. The iron ore deposit is in proximity to coalfields.

Tenders are afloat for a few other mines in Afghanistan, including the Ghorian iron ore deposit in Heart, the Namakab coal deposit in Takhar, the Feranjal barite deposit in Parwan, and the Da Eman coal deposit in Bamiyan.

Afghanistan, the cradle of early Asian settlements, is still home to many groups of the ethnic Hazara community. It is also a mine of wealth, rich in various minerals and gemstones, which have been mined only for artisanal purposes until now. With the mines in the region being auctioned to foreign companies, it remains to be seen whether the fragile ecosystem of the land will survive the industrial operations being initiated to bring in economic development.

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