Evaluation of the Obstacles to Developing the Aynak Copper Mine in Afghanistan

Abstract

The Aynak Copper Mine was first discovered in 1973, and mining was initiated by the Metallurgical Company of China in 2009. However, its use has been suspended several times and the mine has never been fully exploited due to political unrest and terrorism, among other issues, in Afghanistan. Afghanistan has been recognized as one of the most fragile, conflict-affected, and landlocked countries in the world by international organizations and the global community, especially after the events of 9/11. Hence, understanding the obstacles influencing the development process of the Aynak Copper Mine is of crucial value in sustaining the development of the overall economy and society in Afghanistan. The aim of this paper is to explore the factors that have caused suspensions of the developments of the Aynak Copper Mine, which may apply to other developing projects in Afghanistan and in other fragile states. The findings will provide a better understanding of the difficulties in maintaining a sustainable environment for developing the regional economy in Afghanistan, and fill a gap in the literature with regards to the applied and theoretical economic growth model in fragile states. The materials of this research are partly based on a radical analysis of the official documents of the Afghan government and international organizations. We adopted statistical analysis to identify the factors associated with the progressive process of developing the Aynak Copper Mine, and an ordinal logit regression to analyze those factors. We specifically considered the factors associated with the degree of administrative capacity, labor investment, labor productivity, capital investment, efficiency of capital, terroristic activities, and religious issues. Among these factors, the relationships between the degree of administrative capacity, terroristic activities, and religious issues were strongly associated with the development status of the Aynak Copper Mine. The other investigated factors were not found to be relevant. This study is among the first on the Mining Project in Afghanistan.