Aynak: Renegotiation or pawn
of the next generations
By Javed Noorani
Tolo News reported on 22 August 2013:“Wahidullah Shahrani, the Afghan Minister of Mines, said that China
Metallurgical Group Corporation (CMGCC) requested a review of its contract with
the Afghan government for the Aynak Copper Mine project in Logar province”[i]. In
the light of the statements made by Minister Shahrani during the multi-stakeholders
meeting for EITI on April 17th this year, the ministry’s stand seems
to be misleading.
The Aynak Copper Contract signed with the CMGCC obligates the company to
pay US$ 808 million dollars in three installments as bonus n advance to the Afghan
government as cost recoverable in the run up to the commercial production of
copper at Ayank According to the contract, the company also commits to building
a railway line linking the northern border of Afghanistan to the eastern
border. Moreover, the company is obligated to 400 MW electricity generation,
production of pure copper and paying 19.5% royalty when the price of copper is
very high internationally.
In the presence of more than 13 members of multi-stakeholders group MSG which
works for the implementation of Extractive Industry Transparency Initiative, the
Minister of Mines on 17th April 2013 shared the terms of the
contract for review. The CMGCC had requested for re-negotiation in five areas:
reduction of royalty to 10%, no more bonus payment (US$ 808 million) to the government
as previously promised, no production of copper in Afghanistan, therefore negating
the need for producing 400 MW. Moreover, the company seems to think that the
construction of a railway is not feasible and requested five more years before
it starts producing. There venue from the project during its production stage
was estimated to be US$ 300 million. The company was to start producing in 2013
and within the parlance of rational thinking the government may have already allocated
the money; this could already constrain the national budget.
Despite being stopped to access Aynak Copper site by design of some
officials in the Ministry of Mines, Integrity Watch Afghanistan managed to
follow the activities of the company on the ground. Integrity Watch researcher observed
that the Aynak Copper Project was neither progressing well nor effectively, and
it was a deliberate decision to do so. The progress in the implementation of
Aynak Copper Project was not shared with civil society in a timely manner and
what was shared was often embellished. The commitment to transparency followed
an ebb and flow trajectory, perhaps indicating that some individuals were
calling the shots rather than a mechanism for transparency being
institutionalized.
Yes, we want money post-2014 when donor money dries up. But what is the
cost we have to incur to finance our budget? Afghan citizens would want the CMGCC
to implement the contract as it was signed.
Minister Shahrani’s planned visit in China to renegotiate the contract
puzzles us and defies rationality. We may need money and they need copper, but
we have other potential buyers interested in copper and they would be ready to
pay a lot of money. Minister Shahrani thinks he can convince Afghans with the
conditionality clause for railway and royalty already included in the contract
to pave the ground for renegotiation in favor of the company and not of
Afghanistan. We underline that the request for re-negotiation is unfair. No one
should forget that the contract signed for copper extraction with the MCC has
been read word by word and the government bears responsibility to implement it.
Otherwise the Afghan government owes it to its people to tell them why it is
going for renegotiation rather than retendering it. It was a strategic contract
and the decision to send the Minister of Mines to China is already a gesture of
appeasement which may seal our fate for the next generations. We would really
look forward to a sensible decision on Aynak to protect Afghanistan’s interests.
[i]Tolo News, 2013 , Chinese Company Seeks
Amendment to Ainak Copper Mining Contract, August 22nd 2013
(accessed on August 22nd, 2013 http://tolonews.com/en/business/11650-chinese-company-seeks-amendments-to-ainak-copper-mine-contract)
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