The Story Behind China's Long-Stalled Mine in Afghanistan
Nine years after Chinese companies took control of Mes Aynak, copper extraction has yet to start.
One-third of the Afghan population lives below the poverty line (earning less than $2 a day) and a further 50 percent are barely above this line. With a per capita GDP of only $595, Afghans hoped to see $1 billion in annual revenue and at least 8,500 direct jobs and more than 30,000 indirect jobs from the mining sector by 2017. The $1 billion in annual revenue was expected to come from the Mes Aynak copper mine ($350 million) and from the Hajigak iron ore ($550 million), with another $150 million from hydrocarbons and gemstones. This goal was set in the first and second National Priority Programs (NPP) of the infrastructure development cluster, namely the “National and Regional Resource Corridors Program” and the “National Extractive Industries Excellence Program.” The two NPPs were part of the 22 NPP packages that were designed and approved under the Kabul Process in 2010 and reconfirmed at the Tokyo Conference on Afghanistan in 2012. However, the $1 billion revenue target now looks unrealistic in 2017
and perhaps not even attainable by 2020. The problems in the Mes Aynak mine provide
an illustrative case study of the difficulties.
The year 2017 marked the ninth anniversary of the Mes Aynak concession, which was awarded in May 2008 to two Chinese state-owned companies, the China Metallurgical Group Corporation (MCC) and the Jiangxi Copper Company Limited. The consortium later called itself MCC-JCL Aynak Minerals (MJAM) to formally operate the project. Mes Aynak mine is said to be the second largest copper ore body in the world, with the deposit estimated to contain 5.5 million metric tons of high-grade copper ore. The contract awarded to MJAM is worth $2.9 billion.
It stipulates that copper production will commence in the fifth year of the 30-year lease, with the extracting, smelting, and processing of the raw copper to take place in Afghanistan. The contract also foresees the construction of a 400 MW coal-fired power plant and the building of a railway from Hairtan to Torkham dry ports. However, little has been done on the ground and MJAM has reportedly asked for substantial modifications to the contract.
Apparently,
the 400 MW coal-fired power plant option has been cancelled by MJAM, stating that their survey found that
insufficient coal resources were available in Ishpushta. MJAM also argued that
phosphate, which is an essential component for smelting and processing (neutralizing the sulfuric acid) copper, is not readily available inside Afghanistan. However, my ex-colleagues in the Ministry of Mines and Petroleum told me that some potential igneous phosphate resources at Khan Neshin in Helmand have been identified yet this requires further exploration by MJAM. The main argument by MJAM is that
if copper cannot be smelted and processed in Afghanistan, then the mine does not need the 400 MW coal-fired power plant.
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