The Killid Group, February 8, 2015
Shadow on the economy
The details of the contract with MCC are shrouded in secrecy. Allegations of corruption fly thick and fast.
By Omed Zaheermal & Hamid Kohistani
Hopes pinned on Aynak in Logar, Hajigak in Bamyan and the Amo river as potential sources of huge tax revenue for Afghanistan are fading.
Ambitious plans to mine copper and iron ore in Aynak and Hajigak respectively are still on paper; oil drilling from the Amo river has started but it's nowhere close to the 300,000 barrels projected when the contract was awarded in 2012.
Royalty payments from the state-owned China National Petroleum Corporation and Metallurgical Corporation China (MCC) and the consortium led by the Steel Authority of India Ltd (SAIL) were expected to have more than compensated for the loss in government income after the 2014 withdrawal of foreign troops.
In 2007, when the MCC won the 30-year lease to mine for copper in Mes Aynak, 25 miles south of Kabul, it was estimated the government would earn up to 500 million USD annually when production, expected to start in 2013, hit its stride.
Rafea Sidiqi, spokesperson in the Ministry of Mines and Petroleum says mining for copper was delayed because of archaeological diggings on the site. "We have recently had talks with MCC," says Sidiqi. "The company is committed to all aspects of the contract," he insists. Rumours persist the Chinese corporation was bargaining hard to change the terms of the contract.
The details of the contract with MCC are shrouded in secrecy. Allegations of corruption fly thick and fast. Mohammad Ibrahim Adel, former minister for mining and petroleum, had to resign after being accused of taking a 30 million USD bribe to give China the gigantic project, an allegation he denied.
Mes Aynak mine in Logar province, Afghanistan. (Photo: Michal Przedlacki)
Integrity Watch's Mujahed Sangaryar who heads the Community-based Extractive Industries Monitoring (CBM-E) unit says the contract, signed in Dubai, "has been kept concealed. The mouth of the ministry is closed, it cannot say anything. If the MCC chooses it can go ahead with the work; if it wants it can postpone the work. All this points to corruption."
The AEITI (Afghanistan Extractive Industries Transparency Initiative) also finds the contract opaque. Mahmood Anwari, the director, says both MCC and the government seem to have agreed not to make public the full details of the contract. "This is according to neither international standards nor our principles," he says.
In defence, Abdul Aziz, project manager of Aynak copper mine in the Ministry of Mines and Petroleum says details will be revealed as soon as the third phase of negotiations are concluded. "The whole contract would be shared with people," he promises. The three phases, according to the authorities, are preliminary work including research on the mine site; the completion of documentation and removal of hundreds of Buddha statues from the site; and, extraction of copper.
Gul Pacha Majidi, member of Parliament from Paktia province, blames MCC for reneging on promises made. "Nothing has been done for people." According to reports, the Chinese were supposed to build a railroad, a 400 MW power plant to run the mine's machinery and for use by others, a smelter and a coal mine to fuel the power plant. Killid tried to interview MCC, but the corporation ignored the requests.
Bidding questioned
In 2011, the Ministry of Mines and Petroleum announced that mining for iron ore at Hajigak was awarded to an India-led consortium of six companies and Kilo, a Canadian mining company.
The ministry's spokesperson Sidiqi says negotiations for the second and third phases have not started. "According to presidential decree, until the sector ministers are not introduced we cannot move forward." Sidiqi insists the project will go ahead.
Last year on Oct 10, Pajhwok News Agency reported the process of bidding for Hajigak was not transparent, and was influenced by politics. While the law stipulates the winning company
should finalise the terms of the contract in coordination with the mines ministry within two months of bidding process, nothing has happened for the last three years.
The Hajigak mines in the Baba Mountains of Bamyan are thought to contain 2 billion tonnes of iron ore. The ministry has estimated it could earn 300 million USD and jobs for thousands of people.
Pajhwok has quoted former deputy mines minister Mohammad Akram Giassi saying on Feb 16 last year that the mines law has not been followed in the case. He has also questioned the ability of both the Indian and Canadian companies in a paper titled Robber of Mines.
Loss or profit
Drilling in three blocks Qashqari, Bazarkami and Zamrudsai on the Amo river is a joint venture of the Chinese petroleum corporation and the Watan group. Sidiqi, spokesman for the Ministry of Mines, says drilling has begun. Jalil Jebran, head of policy in the ministry had said in 2010 that refineries would be set up. But there has been no progress.
Gul Pacha Majidi, MP, blames both sides for the delays. "The contract stipulates that items that can be purified in Afghanistan should be purified here." The shadow of corruption hangs also over this project, according to other MPs from
Faryab, Sar-e Pol and Jowzjan. Mohammad Hasan Balkhabi, MP from Sarpol says, "We went twice to the area. The work is not going forward (as planned)."
URL for news «Shadow on the economy»
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