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China Metallurgical Group Wins Afghan Copper Mine Bid

State-owned China Metallurgical Group won a tender on Tuesday to develop a large Afghan copper deposit in a $3 billion-project, the largest foreign investment in Afghanistan's history.

The deposit, at Aynak, east of the capital Kabul, is thought to contain up to 13 million tonnes of copper.

The Chinese company will invest $2.898 billion in the project and after construction is complete in five years time, pay the Afghan government $400 million a year to operate the mine.

"This is the biggest investment in Afghanistan's history and 10,000 people will be employed to work there," Afghan Mines Minister Ibrahim Adel said.

Afghanistan's economy relies heavily on aid.

"We estimate there are 13 million tonnes of copper present," Adel said, adding the figure might rise to 20 million tonnes.

The Chinese group plan to extract some 200,000 tonnes of copper a year.

The deposit was discovered in 1974 and surveyed by Soviet geologists in 1979, but was never developed due to more-or-less constant civil war since then.

The site is peppered with exploratory holes drilled by the Soviets, littered with landmines and has a number of large craters from U.S. bombs dropped on what was then a military training camp in late 2001.

China Metallurgical Group will first have to build a power station to run to the mine and find coal deposits to fuel the power station. A small town is to be constructed at the site to house the mine workers.

Excess electricity from the power plant will be routed to Kabul which gets only a few hours of electricity a day.

The four losing short-listed bids were from Strikeforce, part of Russia's Basic Element Group, the London-based Kazakhmys Consortium, Hunter Dickinson of Canada and U.S. copper mining firm, Phelps Dodge.

China Metallurgical Group has invested US$1 billion in mining resources overseas, including iron, copper, gold, nickel, zinc and aluminium, according to its Web site.

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