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Copper in Afghanistan: Chinese Investment at Aynak
Will new investments by the Metallurgical Corporation of China (MCC) in the Aynak copper mine break Afghanistan out of its poverty trap? Will future revenues from the subsoil assets in Logar Province bring peace and stability to the ongoing conflict?
The U.S. Institute of Peace brought together expert panelists to discuss the pitfalls and possibilities related to the Aynak contract. Discussed were current uncertainties in investment plans, future risks related to mine operations, how the various stakeholders of the Aynak project can be more engaged in the process, as well as the planned reinvestment of economic benefits within the broader economy.
Alone, the Aynak Copper Mine’s multi-billion dollar reserves will not bring about security, but its success can be a gateway to future development. According to Lorenzo Delesgues, co-director of Integrity Watch Afghanistan, however, there is also a chance that this conflict-ridden region will find the mines a catalyst for more disputes. According to Delesgues, the potential negative impacts on the surrounding communities and the environment “can be exacerbating factors that might create even more insecurity than what you already have in that area.”Delesgues suggested that certain programmatic alterations needed to be considered by the MCC and the Afghan government to leverage local sustainable economic development beyond Aynak. For Delesgues, local communities need better information about mining’s environmental and employment impacts to improve their decision-making abilities, as many common social and environmental protections are lacking from the current MCC mining plans and activities. An environmental impact assessment, for example, has not yet been carried out, leading to concerns that on-going exploration activities may harm the local environment and downstream populations. To prevent future disputes, Integrity Watch Afghanistan recommends strengthening project monitoring processes and greater public communication and consultation with key stakeholders.
Gary McMahon, senior mining specialist at the World Bank, believes that Afghanistan is in a good position to benefit from the Aynak copper mines. Local employment generation and the MCC’s stated commitment to provide educational, health, and housing services to employees all offer promise for development. There are also contractual obligations for a power plant that will supplement a portion of Kabul’s current demand and the construction of a railway system through Afghanistan, which will extend from China to Tajikistan, and strengthen existing Afghan trade networks.
While the royalty rates established by the Afghan government in the Aynak contract on future mining revenue streams are unprecedented in the mining sector, McMahon fears that the revenue will solely follow international aid flows. “If all that happens is that fiscal revenues [from Aynak] replace foreign aid, the impacts are going to be way less,” says McMahon.
McMahon suggests that, moving forward, the Ministry of Mines and the National Environmental Agency’s capacities for monitoring and evaluation must be improved and strengthened. There also needs to be assurance that the local population gets a “fair share” of jobs and other opportunities, along with continuous consultation of the impact the mines are having on their social and environmental conditions.
In his concluding statements, Ishaq Nadiri, professor of economics at New York University and former senior economic advisor to Hamid Karzai, cautioned the audience about the weight that economics plays in the overall outcome of the Aynak Copper Mine. According to Nadiri, the objective in establishing the Aynak contract was to maximize national benefits. Nadiri offered hope that “the lack of security…[which] emanates from the highly chronic poverty of the country,” could find promising solutions in the wealth of Aynak.
Drafted by Michelle Neukirchen, edited by Julien Katchinoff.
Photo Credits: “River and Mountains of Logar,” courtesy of flickr user AfghanistanMatters and “Logar Province Shura,” courtesy of flickr user IsafMedia.-
http://www.blogger.com/profile/18337694112852162181 Geoff Dabelko
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http://www.blogger.com/profile/06774154839035673090 Hikmatullah
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Ibrahim Khan
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