UPDATE 2-Afghan ministry does not see delay at MCC's Aynak

* Mine development vital for revenue

* Major deposit useful for copper-hungry China

* Government, MCC are coordinating to protect relics

HONG KONG/KABUL, Nov 19 (Reuters) - The Metallurgical Corp of China Ltd (MCC) said on Friday the discovery of an ancient temple could delay its Afghan copper project, but Afghanistan’s Mines Ministry does not foresee any impact on the massive development.

The Aynak mine, southwest of the Afghan capital Kabul, is currently being developed and due to begin production in 2013. It is expected to contribute $300 million to $400 million to national coffers each year once it is running at full capacity, the country’s mining minister has said.

It is a crucial component of plans to wean the country off the foreign aid that currently makes up most of its budget, and has been embraced by both President Hamid Karzai and the alliance of industrialised nations pouring cash into the country.

“The MCC project is the biggest investment in Afghanistan and we don’t think the construction will be affected by the discovery of ancient sites,” said Jawad Omer, spokesman for the Ministry of Mines and Industry.

The government and MCC already had an agreement on protecting cultural sites, are coordinating construction work and would build a museum at the site to house valuable finds, Omer added.

The area has long been exploited for the rich copper deposits in its rocks and is dotted with ancient smelting sites.

But archaeologists recently uncovered Buddhist remains in the area, including a temple, stupas, frescoes and statues several metres high, some more than 15 centuries old. [ID:nSGE67F08L]

MCC said the effort to uncover and preserve the relics could slow its work, and an Afghan who visited the site recently said they had been banned from using some explosives.

“(The discovery) may affect the progress of building the mine. Details should depend on the Afghan government’s policy,” MCC’s board secretary Huang Dan said in an email sent to Reuters.

Other work for the project is proceeding normally, she added.

The Aynak copper project is 75 percent owned by MCC and 25 percent owned by China’s top copper producer, Jiangxi Copper .


The Aynak mine is regarded as one of the world’s major copper ore bodies, with proven reserves of 9 million tonnes of copper.

China is the world’s top copper consumer but can produce less than one third of its needs, making the Aynak supply vital.

The mine is also the biggest overseas copper project for MCC, and will channel concentrates from Aynak into refined copper production at the firm’s subsidiary Huludao, which currently has to buy them on international and Chinese markets.

The mine is expected to have annual capacity of 200,000 tonnes of metal in the first phase, expanding to 320,000 tonnes.

Revenue earned abroad rose from 2.5 percent of the company’s total 2006 to 8.7 percent of revenue in the first six months of 2009, MCC said in a 2009 prospectus for a share offering.

“We expect that a significant portion of our revenue and profits will continue to be derived from international projects and other overseas operations,” the prospectus added.

But the remote site has seen some clashes. Despite beefed up security the Aynak site was not visited for the prospectus and could become more vulnerable if the insurgency strengthens.

Violence in Afghanistan is at its worst since the Taliban were overthrown in late 2001, with record casualties on all sides of the conflict, and the insurgency spreading to previously peaceful northern and western parts of the country.

MCC warned this year that construction of Afghanistan’s first major rail line, which it plans to build as part of its mining investments, could be in jeopardy if security worsens.

“If the security situation gets worse, then at that time the investors will have to assess how to go forward,” MCC President Zou Jianhui said, after launching a feasibility study on the line, which gives two years before a final decision must be made.

Additional reporting by Tom Miles in BEIJING; Writing by Emma Graham-Harrison in KABUL; Editing by Sanjeev Miglani If you have a query or comment on this story, send an email to