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Chinese investors want review of US$3b Afghan copper deal
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A CONSORTIUM of Chinese investors has demanded a review of a landmark US$3 billion deal to produce copper in Afghanistan, the Ministry of Mines said yesterday, putting at risk one of Kabul’s greatest hopes for economic independence.
It said China Metallurgical Group and Jiangxi Copper want new terms that would cut their royalties to the government, release them from building a power plant and copper smelter, and postpone the laying of a railway.
“The Afghan government is trying its best ... to negotiate with the company but contract conditions are clear and previously both sides have agreed about it,” a spokesman for the ministry said.
An independent anti-corruption monitor, Integrity Watch Afghanistan, said the Chinese venture also wanted to delay the start of production by five years to 2019.
A spokesman in China for the consortium declined to comment immediately.
The copper deposit is among the world’s largest but is situated in a dangerous province and the site has often come under attack by insurgents, who have succeeded in halting work on the mine by forcing workers to flee.
Donors hope the largest foreign investment project in Afghan history will help wean it off international aid, which is expected to fall short of the amount needed to pay for its security forces and sustain economic growth.
The Afghan president is expected to travel to China with the minister of mines to discuss salvaging the project. The government was split between accommodating Chinese demands and cancelling the contract.
“Others for strategic reasons want it to happen ... so China remains committed to helping Afghanistan when the money dries up in this country,” said Javed Noorani of IWA.
Once production starts, the mine will generate a quarter of a billion dollars a year and create around 75,000 jobs, according to a “low-impact” scenario by the World Bank.
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