As US is fighting wars China is striking deals

Behind an electrified fence, blast-resistant sandbags and 53 National Police outposts, the Afghan surge is well under way.

But the foot soldiers in this bowl-shaped valley about 20 miles southeast of Kabul are not fighting the Taliban, or even carrying guns. They are preparing to extract copper from one of the richest untapped deposits on earth. And they are Chinese, undertaking by far the largest foreign investment project in war-torn Afghanistan.
Two years ago, the China Metallurgical Group Corp, a Chinese state-owned conglomerate, bid $3.4 billion - $1 billion more than any of its competitors from Canada, Europe, Russia, the United States and Kazakhstan -- for the rights to mine deposits near the village of Aynak. Over the next 25 years, it plans to extract about 11 million tons of copper - an amount equal to one-third of all the known copper reserves in China.

While America spends hundreds of billions of dollars fighting the Taliban and al-Qaida here, China is securing raw material for its voracious economy. The world’s superpower is focused on security. Its fastest rising competitor concentrates on commerce.

S Frederick Starr, the chairman of the Central Asia-Caucasus Institute, an independent research organization in Washington, said that sceptics might wonder whether Washington and NATO had conducted “an unacknowledged preparatory phase for the Chinese economic penetration of Afghanistan.”

“We do the heavy lifting,” he said. “And they pick the fruit.”

The reality is more complicated than that. The Chinese bid far more for the mining rights to the Aynak project and promised to invest hundreds of millions more in associated infrastructure projects than other bidders. It is a risky venture that has not yet proved to be economical, and it has already been dogged by allegations of bribery.

Strengthening hold
But the Aynak investment underscores how China’s leaders, flush with money and in control of both the government and major industries, meld strategy, business and statecraft into a seamless whole. In a single move, Beijing strengthened its hold on a vital resource, engineered the single largest investment in Afghan history, promised to create thousands of new Afghan jobs and established itself as the Afghan government’s pre-eminent business partner and single largest source of tax payments.

Afghanistan is not the only place where the US and China find themselves so oddly juxtaposed in the post-9/11 world. China is investing more in extracting Iraqi oil than American companies are. It has reached long-term arrangements to buy gas from Iran, even as the government there comes under the threat of Western sanctions for its nuclear programme. China has become a dominant investor in Pakistan and volatile parts of Africa as well.

But it is in Afghanistan where China’s willingness to take big risks for commercial and diplomatic gain are most striking.

China Metallurgical Group, often called MCC, will build a 400-megawatt generating plant to power both the copper mine and blackout-prone Kabul. MCC will dig a new coal mine to feed the plant’s generators. It will build a smelter to refine copper ore, and a railroad to carry coal to the power plant and copper back to China. If the terms of its contract are to be believed, MCC will also build schools, roads, even mosques for the Afghans.

But even if elements of the agreement fall through, the Chinese have already positioned themselves as generous, eager partners of the Afghan government and long-term players in the country’s future. All without firing a shot.

“The Chinese are much wiser; when we went to talk to the local people, they wore civilian clothing, and they were very friendly,” he said recently during a long chat in his Kabul apartment. “The Americans - not as good. When they come there, they have their uniforms, their rifles and such, and they are not as friendly.”

The Chinese, meanwhile, have rebuffed requests to join the Afghan war effort, saying that national policy forbids military action abroad except as part of a peacekeeping force. Instead, China’s foreign policy is based on commerce. Its state-owned companies have been snapping up energy and mineral resources worldwide for years now, often by overwhelming competitors with lavish offers.
Aynak’s riches had been known since the armies of Alexander the Great forged copper there 2,300 years ago. When the Soviet Union invaded Afghanistan in 1979, its geologists took core samples and extensively mapped the Aynak deposit, but were never able to begin mining.

Training camps
The Soviets were succeeded by Osama bin Laden, who used Aynak as a training camp while planning the September 11, 2001, attacks on the United States. After the US-led invasion of Afghanistan, Afghan geologists rescued the Soviet surveys of Aynak and hid them until more detailed exploration could resume.

That exploration — a detailed overflight of much of the country by American surveyors in mid-decade — showed Afghanistan to be far richer in oil, natural gas, iron, copper and coal than anyone had imagined. Aynak, in particular, was judged a world-class copper deposit, not just huge but of unusually rich quality, and the government chose it as the first major mineral concession to be auctioned to developers.

Indeed, outside experts say, the striking aspect of China’s Aynak venture is the degree to which it left competitors in the dust. Increasingly, the world’s richest remaining mineral deposits are in hostile territory - malarial jungles, combat zones, unstable nations that possess mineral riches but no realistic way to get them to market.

With government money and backing behind them, China’s state-run giants take risks in places that even the largest private behemoths will not tolerate, and they can add sweeteners — from railroads to mosques — that ordinary mining firms are ill-equipped to provide.

China Metallurgical, a Fortune Global 500 company that has so many subsidiaries that they are mostly identified by numbers, is a signal example. TheK corporation reports to the top level of the Chinese government. Big foreign investments like the one at Aynak require blessing at an equally high level. MCC has huge and productive investments around the world.

China Metallurgical is not talking. Its officials not only refused to be interviewed for this article, but also sought to prohibit a journalist even KKfrom photographing the mine site from afar.
stark contrast: While America spends billions of dollars fighting the Taliban and al-Qaida in Agfhanistan, China is securing raw material for its voracious economy. nyt
But the company clearly is undeterred. The Afghan government is seeking bids for its second great mineral project, a behemoth called Hajigak that is said to contain 60 billion tons of iron ore. There are seven finalists - all companies from India and China. MCC is one of them.