China likes it rough

8 January 2008 By Martin Hutchinson

China s MCC beat three Western companies bidding for a $3bn copper project in Afghanistan. That fits a pattern: Chinese companies deal effectively with high risk environments. Their adventurousness in search of resources makes them welcome in unpleasant countries.

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The Chinese state owned mining company China Metallurgical Group Corporation (MCC) has become preferred bidder on a $3bn copper mining project at Aynak, 25 miles southeast of Kabul, Afghanistan.

The deposit is the second largest unexploited copper deposit in the world. MCC beat Phelps Dodge, Canada's Hunter Dickinson and the Londonbased Kazakhmys. The investment in this project represents 35% of all the international development money devoted to Afghanistan since 2002. Annual royalties are expected to be $400m, 40% of the Afghan state budget.

Afghanistan had a GDP per capita of $800 in 2006, growing at 8% annually, and a population of 31.9m, growing at 2.6% annually. It ranked number 172 of 179 countries on Transparency International's Corruption Perceptions Index.

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