Response to Global Witness’ recent report on Aynak Copper project

We have received the “Copper Bottomed” report released on 20 November 2012 by the London-based organisation Global Witness (GW), which includes 95 recommendations to the Ministry of Mines (MoM) and 39 additional recommendations for the international donor community. These recommendations range from ones specific to the Aynak copper project to others relating to overall management of the national extractive industries sector.

In response to the specific recommendation to renegotiate clauses of the Aynak contract, we would like to reiterate that this contract was formulated in 2008 under significant scrutiny from the whole of Government and the international community, and it was reviewed by the International Advisory Council on Sustainable Resource Development for Afghanistan, which “did not find any serious problems concerning fairness of the Contract. The IAC considers the document to be reasonably well constructed and clearly written”.

The Aynak project represents the largest private sector project in the country’s history, and it will generate more jobs, revenues, and enhancements to Afghanistan’s infrastructure than any other single project to-date. It is true that as with any major, multi-billion project, issues arise. Some tasks, such as the mechanics and logistics of community resettlements, are being undertaken for the first time in Afghanistan, and the procedures and guidelines developed based on this experience are being formalized in regulations and policies for future projects. However, all issues have been so far successfully addressed by the Ministry and the Consortium as part of the process of implementation. The Government honours the agreements it enters into, while ensuring that the people of Afghanistan get the best possible deal from the contract.

The report also sets out a substantial list of recommendations in a wide range of areas, including: contract transparency, community development, environmental management, and security. While we welcome their constructive input, we would like to note that due to lack of interaction with MoM, and Global Witness’ limited presence in country, the report includes a significant number of recommendations that have either already been implemented, or are in the process of being addressed. 

For instance, the report calls for publication of mining contracts, which are publicly available on the Ministry website (www.mom.gov.af) along with a commitment that going forward, all new contracts will be published within 72 hours of being enacted. The Ministry has also taken steps to address the outstanding issue of the Aynak contract, and confirms that it has reached an agreement with the Consortium; publication is imminent.

Moreover, the Ministry of Mines has undertaken a number of other significant initiatives that are not reflected in the report, such as: establishing strong community consultation and grievance redressal mechanisms, updating the sector regulatory framework for project monitoring, implementing an aggressive capacity development programme for contract management, managing the national cultural heritage and many others. We are also putting in place safeguards against conflict of interest not only for government officials, but also for national and international advisors. Governance standards for public access to information, transparency, anti-corruption and rules of conduct have been introduced as statutory requirements under the revised sector legislation, which is currently under review.

In addition, the GW report highlights a number of issues thought to be missing from the Aynak contract, such as provisions for community participation, monitoring of environmental impacts, land compensation, etc. It must be noted that these issues are clearly defined in the laws, regulations and international standards that the Consortium is required to adhere to as specifically stated in the contract.

Lastly, the report seeks to compare a world-class copper deposit (Aynak) to a relatively small gold deposit (Qara Zaghan), which we believe is a flawed approach. These projects are at very different stages of development - Aynak is an exploitation contract covering a well-defined ore deposit, whereas Qara Zaghan represents an exploration contract for a project with only limited geologic information. As such, Global Witness’ requirement for expected and actual production rates is unrealistic. Despite criticisms on social provisions in the Qara Zaghan Gold contract, the developer is implementing a highly successful community development programme in full coordination with mining affected communities. We would urge Global Witness to conduct a field visit and witness these positive developments first hand. 

Despite these omissions, we welcome some of the report’s recommendations and we intend to pursue them. For instance, the Minister of Mines has issued instructions for work to start on formulating procedures for increasing transparency in terms of beneficial ownership for subsidiaries and sub-contractors involved in the exploration, development and operation of extractive industry projects. 

The Ministry of Mines has committed to publish and distribute to the public an Annual Report of its activities and accomplishments during 2012. That report, which will be available in Dari and English on the MoM website, will provide detailed information on the issues that are of interest to the people of Afghanistan and to our international partners.

The Afghan Government, through the Ministry of Mines is determined to ensure that the agreements on the minerals and petroleum sector in Afghanistan give the best future for the Afghan people, in terms of revenue, jobs, investment, social development and environmental protection.  We look forward to continuing our dialogue with donors and civil society to ensure that “best practice” is carried out by both the Afghan Government and by investing companies on behalf of our people.