China engages in copper politics – Syed Fazl-e-Haider

Interestingly, China is exploiting the world’s largest untapped deposits of copper under a security cover being provided by the US and Nato forces in the turbulent border areas of Afghanistan and Pakistan. China has already taken control of copper and gold deposits at Saindak and Aynak in Pakistan and Afghanistan, respectively.

China’s thirst for strategic mineral deposits to fuel its growing economy does not end here. Chinese companies are currently competing with Canada’s Barrick Gold and Chile’s Antofagasta to get a mining licence for Reko Diq, the world-class copper and gold mine in Balochistan’s Chagai district.

While the US wages a war in the region, China is engaged in a resource war. The US attacked Afghanistan in October 2001. In September 2002, state-owned Metallurgical Corp of China (MCC) acquired the Saindak copper project in Balochistan on lease for a period of 10 years.

In 2008, the MCC won a $3.5 billion contract to mine the Aynak copper deposits in Afghanistan’s Logar province after beating eight other leading mining groups, including Phelps Dodge of the US, Hunter Dickinson of Canada and London-based Kazakhmys.

And now, the same Chinese company has submitted a counter proposal to take control of the Reko Diq project offering the Balochistan government a larger share of the income and royalty.

The Reko Diq deposit is four times larger in copper ore tonnage than Saindak. Tethyan Copper Company (TCC), a joint venture of Barrick Gold and Antofagasta, is demanding the first right to resume mining at Reko Diq after it has completed the feasibility study of the project.

As China eyes Reko Diq, the third giant copper mine in the Af-Pak region, there are indications that copper politics is brewing in the region. The mineral resources in Reko Diq are estimated at 5.9 billion tonnes of which an estimated 2.2 billion tonnes are economically mineable.

‘Copper politics’ bring to mind the era of socialist Salvador Allende (1963-73) in Chile — the world’s top producer and exporter of copper. Allende was elected president of Chile in September 1970. In fact, it was not socialism, but copper politics that created the financial crisis in Chile during the Allende period.

By 1970, American copper companies like Anaconda, Kennecott and the influential Rockefeller Group subsidiary, ITT, earned massive profits in Chile. ITT had the largest holding by any single corporation with an investment of $200 million.

The Allende administration nationalised all copper mines in July 1971. It is believed that the CIA’s anti-Communist propaganda campaign in Chile, the economic boycott of the Allende government by the US, the ITT-Kissinger conspiracy against the Allende regime in Chile and tragic demise of Allende himself in September 1973 brought about the end of the copper politics era in Chile.

Are the border areas of Afghanistan and Pakistan also going to witness an era of copper politics like Chile? In that case, MCC is poised to earn huge profits like ITT.

Economic influence

China’s interests in Aynak, Saindak and now Reko Diq coincide with its plans for the development of western China, its regional trade links and expansion of economic influence in the region.

It would be a win-win situation for China if it succeeds in taking control of the Reko Diq mine, as it would be economically cost-effective for it to transport Afghan and Pakistani gold and copper to Beijing and international markets through Gwadar Port, which is also being developed by Chinese companies in Balochistan.

Ironically, China’s economic presence in the region is a result of the US military presence, particularly inside Afghanistan. The Chinese will continue to enjoy the American security shield for their mining operations as long as the war on terror continues. While the US spends billions of dollars on war, China is earning tens of billions of dollars.

The situation will get all the more complex thanks to a team of US geologists discovering $1 trillion of untapped mineral deposits in Afghanistan, particularly in the south and east along the border with Pakistan, where the Taliban-led insurgency is the most intense.

The region’s mineral wealth is attractive to resource-hungry China. After winning the Aynak contract, China is well-positioned to become the dominant force in Afghanistan’s mineral sector.

This upsets Washington, but it is a fact that copper mining in the region is dominated by the Chinese, who are wired to the Iranians through their oil investments, and the Pakistanis, because of the China-India competition.

However, if the rules of the game are changed, then Chinese interests would be at stake. But the fate of the people of the least-developed but resource-rich border areas of Afghanistan and Pakistan will not change. They will continue to suffer the twin scourge of poverty and militancy, exploitation of their mineral wealth and the CIA’s drone attacks. – The Statesman