Karzai meets China leaders amid security concerns

BEIJING -- Afghan President Hamid Karzai met Friday with Chinese leaders amid security threats in the war-torn nation that have stymied a massive copper mine development by a Chinese consortium.

Karzai met separately with President Xi Jinping and Premier Li Keqiang at Beijing's Great Hall of the people, and the situation at the Aynak mine south of Kabul was expected to have featured prominently in the talks.

"We consider China to be an anchor of stability for this region and the larger world. Afghanistan recognizes China as a neighbor that has always been good to us," Karzai said after meeting with Li, who said the visit would "inject fresh momentum" into bilateral relations.

Following the meetings, Xi and Karzai presided over the signing of agreements on extradition, technical and economic cooperation, and education.

A consortium led by China Metallurgical Group Corp. bid $3 billion to develop the mine, promising also to build a power plant, railway and other infrastructure in Afghanistan, whose ravaged economy badly needs the jobs and investment. Six years later, work has yet to start, largely because of Taliban insurgent activity in surrounding Logar province. The consortium is now seeking to renegotiate the contract.

In an indication of the concern over the mining project, Afghan Minister of Mines and Petroleum Wahidullah Shahrani traveled ahead of Karzai for talks. Earlier in the week, Karzai's spokesman said the Afghan government was aware of the Chinese security concerns.

"This year there were three rocket attacks on Aynak and we believe the security was not sufficient and it was the reason the Chinese company stopped its work," spokesman Aimal Faizi said. "The Afghan government is seriously committed to providing security in Logar province."

Aynak, also known as Mes Aynak, is believed to hold the world's second-largest copper deposit, estimated at 6 million tons, but lies along a transit route for insurgents moving from safe havens in Pakistan.

MCC won the 30-year lease in 2007 in a bidding process marred by allegations of bribery and government interference. Since then, only a workers' compound has been constructed, although that was abandoned after being hit by rocket attacks last year.

The development is further complicated by archaeological work being conducted on Buddhist ruins at the site, which had been a major spiritual center along the ancient Silk Road by which Buddhism was transmitted to China.

The consortium wants to cut or reduce its contract commitments, including infrastructure development, an $800 million bonus to be paid to the government, and its promised royalty rate of 19.5 percent, according to Afghan reports.

Li Weijian, a Middle East expert at the Shanghai Institute of Foreign Studies, said conditions are always risky for companies entering countries with civil wars.

"For Chinese companies who longed for going abroad, few of them in the past did a thorough evaluation on the security situation of the target countries, but now many of them are closely following the progress of what happened in countries such as Syria and Afghanistan," Li said.

He said it would be "normal" now for Chinese companies to take a wait-and-see attitude on investing in Afghanistan while the security situation is unclear amid the pullout of U.S. troops.

Calls to the company's Beijing headquarters Friday rang unanswered or were picked up by people who immediately hung up.

Situations like the one at Aynak are growing more common as Chinese businesses expand overseas, often in countries considered too dangerous or unstable by their foreign competitors. In recent years, Chinese workers have been kidnapped or killed in countries such as Pakistan and Southern Sudan, and Beijing used its military to help evacuate 36,000 workers when Libya descended into civil war in 2011.

A second Chinese extraction project in Afghanistan is on hold over bureaucratic wrangling. China's state-owned National Petroleum Corp. suspended oil drilling in the Amu Darya basin last month because of a delay in the signing of a transit agreement with Uzbekistan to allow crude oil to be trucked to China.

Afghanistan is believed to be sitting on $1 trillion worth of gold, copper, iron ore, rare earths and other minerals, offering a potential economic godsend for the poor nation if foreign companies can be tempted to invest.

China has provided grants, material support and training for the Afghan government, and the sides have previously agreed to exchange intelligence and strengthen cooperation against terrorism, illegal immigration and drug trafficking.

The pullout of U.S. and other NATO forces from Afghanistan next year has raised concerns in Beijing over a possible overflow of insurgent violence into the northwest region of Xinjiang, which shares a narrow sliver border with Afghanistan.