Wrong on so many levels - Chinese copper extraction in Afghanistan

10 thoughts on “Wrong on so many levels – Chinese copper extraction in Afghanistan”

1. Government officials expect the copper mine to earn hundreds of millions of dollars in revenue and royalties as well as provide jobs – direct and indirect – for nearly 40,000 people.

   And in contrast to many Chinese investments on the African continent, where Chinese labor is typically brought in, most of the jobs from the Aynak copper mine project are designed to go to the Afghan people.

   Under the contract terms, initially some of the workers, including the mine technicians, will be Chinese, but over time training will be provided to the Afghan workers so they can take over more skilled jobs.

   (From the link in the story.  It sounds like the Afghan regime gets 50%.)

   And, while this does mean that lots of profits and a couple hundred skilled jobs will go to the Chinese, the money and jobs created will add to the stability of the current regime that reduces its reliance on opium money, which enriches the Taliban.

   In other words, a healthy Afghan economy means life is easier for our troops and they can come home sooner.  

   The fact that the Chinese got a deal in 2007 from an Afghan government, while the U.S. and European forces filled the country, also gives the Afghan regime credibility when it argues that it isn’t just a Western puppet.  Similar accuations have taken down regimes in Latin American and Iran.

   The division between Chinese mine owners and American and European troops also discourages the kinds of military favoritism towards foreign capital providers that have led to corruption when military occupiers guide big natural resource contracts to their own people.

   We also didn’t have to put up the highly risky $4 billion investment that went into building a copper mine in a war zone.

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   1. the more Afghans we can employ, the faster we can stabilize the country.  There have to be other opportunities like this.  

      The Chinese have put up 4 bil and I am sure they will make it back very quickly, similar to what they have done in Africa.  I don’t begrudge them, I begrudge us for not paying any attention to opportunities like this.

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   2. then it seems like the Afghans are getting a better deal that most foreign companies would offer. I thought the typical government concession on foreign-mined natural resources was something like 10%.

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      1. is 12.5%.  In the United States, a lot of those mineral rights are privately owned, but in most countries the mineral rights are publicly owned.

         But, it is also common for countries with sovereign mineral rights to require that development venture be majority domestically owned, and often the majority owner is a state owned enterprise.  So, a 50% share wouldn’t be that uncommon once all the details are worked out.

         I’ve never seen a deal for mineral rights in copper (this not being the metal of choice for mining ventures in Colorado), so I don’t know if the practice differs in that area.

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2. Here’s one of the more interesting ones:

   http://www.telegraph.co.uk/fin…

   A ‘Copper Standard’ for the world’s currency system?

   Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

   China’s State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

   Nobu Su, head of Taiwan’s TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

   “China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years.”

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   1. http://www.reuters.com/article…

      MANILA, Oct 15 (Reuters) – China’s Zijin Mining Group (2899.HK) (601899.SS) is eyeing up to $1 billion in investments in gold and copper projects in the Philippines within five years, the Philippine environment secretary said on Thursday.

      http://news.alibaba.com/articl…

      Oct. 16 MetalBiz–Bulgaria signed an important copper trading agreement with China on October 15. Xi Jinping, deputy chairman of China arrived in Bulgaria on October 15 and started the two-day official visit Bulgaria and also stated that they will further the trade and investment between China and Bulgaria.

      http://in.reuters.com/article/…

      MUMBAI, Oct 14 (Reuters) – India copper futures recovered partly on Wednesday helped by a weak dollar overseas, and a surprise rise in China’s copper imports in September, analysts said.

      Geez, Fidel. I didn’t know anything about all of this before you posted your diary.

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      1. Is China attempting to corner the market on the world’s copper ?  I wouldn’t be surprised one bit, and I’m really not surprised they don’t want any more dollars.

         That Palin trip to Hong Kong really did the trick : )

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         1. Interesting notion, though, that the Chinese are buying up everything they’ll need for their infrastructure for the next 50 years, and in order to shift their assets from US currency.

            Interesting link you provided:

            America fights, China profits?

            In making the case for converging U.S. and Chinese interests in Afghanistan, Robert Kaplan wrote last week in a New York Times opinion piece that, “The problem is that while America is sacrificing its blood and treasure, the Chinese will reap the benefits. The whole direction of America’s military and diplomatic effort is toward an exit strategy, whereas the Chinese hope to stay and profit.”

            In the op-ed, titled “Beijing’s Afghan Gamble,” Kaplan also noted, “China will find a way to benefit no matter what the United States does in Afghanistan. But it probably benefits more if we stay and add troops to the fight.”

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         2. Zacharay Karabell is the author:

            http://www.huffingtonpost.com/…

            The economic relationship between China and the United States is the defining issue of our day. While debates over health care are vital to American society, and while challenges ranging from Iran to Afghanistan to North Korea are real, nothing will determine the arc of the coming decades — or will shape domestic life and prosperity in the United States — more than the emergence of China as a global economic superpower unrivaled except by America…

            How that relationship came to be is the subject of my new book, Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends On It. While this economic fusion has taken more than two decades to evolve, with the crisis of the past year, it has become both a tighter embrace and one more fraught with tension. It’s to the credit of both governments — for now — that those tensions have not boiled over.

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            1. that is pretty apt to describe US-China relations.  There were a lot of books and discussion about Japan in this same vein about 20 years ago.  

               I don’t know if China will rise to surpass the USA in the next years or decades or not, but they still have to keep together a huge population of diverse ethnic groups under one regime, they have a lot of problems governing with rule of law, and they are an export driven economy.  Once demand slows down for their goods (and always eventually does) who knows what will happen.  

               They also have a huge disparity in wealth between urban and rural, coastal and inland, elites and subsistence farmers.  This type of disparity is never good for a country.

               They may indeed surpass the US someday in a pure economic sense, but there are a lot of other issues that count, maybe even more.

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