Copper deposits worth over $50 billion in Afghanistan’s Aynak valley could either present an opportunity for economic sustainability and political stability or become the focus of violent competition and grand corruption. Panelists discussed the steps necessary to ensure that the copper industry benefits local communities and promotes peace in Afghanistan; how the Afghan business sector could prepare to be fully integrated in the copper value chain and the role for external parties, like the United States, to help the Afghan government and community-based organizations to build capacity that would improve coordination and effectiveness.

Copper deposits worth over $50 billion in Afghanistan’s Aynak valley, some 30 miles south of Kabul in Logar province, could either present an opportunity for economic sustainability and political stability or become the focus of violent competition and grand corruption.

The Metallurgical Corporation of China (MCC) secured mining rights in November 2007 after outbidding a world class field (including Canada-based Hunter Dickinson, U.S.-based Phelps Dodge and UK-based Kazakhmys Consortium.  As part of the deal, the MCC will build a 400 megawatt power plant, construct vital infrastructure (like the railway linking Afghanistan to Tajikistan and Pakistan) and provide social amenities like schools, clinics and mosques. Annual royalties are expected to average over $300 million after operations start around 2012-13 and could play a role in shifting the focus of Afghanistan’s economy away from the opium trade.

The project is expected to employ as many as 5,000 directly and 30,000 indirectly. This is the largest investment in Afghanistan’s recent history; roughly equivalent to one-third of all foreign aid spent in the country between 2002 and 2007.  Translating this investment into meaningful and lasting improvements in the quality of life for all Afghan citizens would require community-focused interventions, sustained capacity-building, effective environmental management and an enhanced security climate.  Panelists addressed the following questions:

  • What steps should be taken to ensure that a viable copper industry benefits local communities and promotes peace in Afghanistan?
  • How should the Afghan business sector prepare to be fully integrated in the copper value chain?
  • How should external parties, like the United States, help the Afghan government and community-based organizations to build capacity  that would improve coordination and effectiveness?
  • What lessons from other mining-based economies would be most useful in Afghanistan?

Speakers

  • Lorenzo Delesgues
    Director, Integrity Watch Afghanistan
  • Gary McMahon
    Senior Mining Specialist, The World Bank
  • Ishaq Nadiri
    Jay Gould Professor of Economics, New York University
  • Raymond GilpinModerator
    Director, Center for Sustainable Economies, U.S. Institute of Peace

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