Afghanistan’s Economic Transition in the Making?:Community Perspectives from Aynak and Hajigak Mining Sites

The current state of Afghanistan is 12 years old and still faces multiple development challenges, despite the approximately 60 billion US dollars in support to reconstruction efforts by international donors[iii]. Advancements have been made in support of governance structures, the extension of rule of law and for stabilization of the country. The major challenge however, still remains: to earn the loyalty of Afghanistan’s citizens.

The mining sector offers a good opportunity to invite investment and generate revenues for the development of a diversified economy and to work on improving relations between the Afghan state and its citizens.

The focus of policymakers towards the mining sector is often on making the business environment welcoming for investment—rightly so because of the distinct nature of the sector. Investment in mining is risky because it requires huge capital investment in the beginning and it usually takes a substantial period of time for investors to recover their costs. The risks of investing in the sector stem from technical, political, social, economic, environment and cultural sources, risks that often cannot be estimated by stakeholders in urban settings. Communities living around mines therefore play an important role in both mitigating and accentuating the risk a mining company could face.

Despite being different from other mineral rich countries culturally, politically and socially, communities living around or affected by mines in Afghanistan react in a similar manner to protect their rights when threatened. Integrity Watch Afghanistan research for instance shows that many of the communities around the mines are not aware of the long-term impacts of mining and usually think in a short-term framework. They seek quick benefits because their memories of war and their history of displacement and relocation in the past three decades have weakened their safety net and reduced their sense of insecurity. It therefore is essential to consider people’s unremitting exposure to violence and conflict when looking into the impact of mining on the lives of local people.

Focusing on the Aynak Copper mine and Hajigak Iron mining site, this article looks at perspectives of communities living around mineral rich areas to understand their perception and their feelings at the dawn of mineral discovery and investment in their regions. Both sites have attracted lucre seekers alike and have already gained an almost folkloric status in the local communities’ imagination.

A long route to take: voices from the Aynak Copper Mine

Communities living around Aynak copper mine have already been impacted socially, culturally, economically, politically, and environmentally. The mine is located in the south of the country, in Logar province, about 1 hour drive southeast of the capital Kabul. Aynak is the first mine that has been awarded to a Chinese private joint venture called China Metallurgical Group Corporation and Jiangxi Copper by the Afghan government in 2008. Reports show poor environmental and labour standards in the extractive industry by Chinese investors. They are accused of violating environmental standards and often bring in a Chinese labour force to work in mines. Xinhua News Agency reports that China's top copper smelter has been accussed of discharging industrial wastewater into a local river in east China's Jiangxi province, causing serious water contamination that affects hundreds of thousands of people living down stream. Dozens of children in the village of Dexing were found to have excessively high levels of lead in their blood. Local residents pinpointed a lead production facility under Jiangxi Copper as the source of the problem.[iv]

Research findings in 2012 show that illegal acquisition of community land for copper mining at Aynak has fragmented the communities socially and physically. Accessibility to each village has become expensive and more difficult due to lack of transport. This is largely because the communities that have been displaced have neither been consulted not compensated and the company moved and started work without attending to outstanding issues. One of the residents of Davo, a small cluster of villages close to Aynak, voiced concerns, stating “we could attend weddings and funerals in other villages where our relatives stayed with ease before the project was given out. Now we have to take a long route to reach the other side of Aynak and we find that difficult. Women can’t attend social gatherings and events. They can no longer walk in the village thus their little world in the conservative communities have been made even smaller.”[v]

The demarcation of the area for mining has led to displacement of five villages in the beginning, and plans call for more villages to be vacated. There are thousands of families which are scattered around Mohammad Agha district where the mine is located. Many of these families have lost their source of livelihood, such as agricultural land and livestock because they have lost their pasture land. A resident of Seeso Tangia village said that some people from the local government departments came and smashed his crops in order to force him to vacate his land for the company to start working.[vi] Another resident said he had almond trees which were a source of income and he has lost them due to the investors. He further added that he is not compensated for his losses and his son has left for Pakistan to seek work.[vii]

Fear and expectations: voices from the Hajigak Iron Ore Site

Hajigak iron ore site, located in Bamiyan and Maidan Wardak provinces of Afghanistan’s central highlands is another important area which has charmed many investors and people. At the time of writing the contract for this mine is still in the process of negotiation with two big international investors, the Canada based Kilo Gold [viii] company and a consortium of 7 Indian companies[ix]. The communities living on the Hajigak Mountain and on two other sides of the mine are at the same time full of fear and expectations. The local residents are scared of losing their land to the project the way people in Aynak did. They also are averse to in-migration of people from other provinces. Nonetheless, they see investment in the iron ore site as a source of future employment, better amenities, and riches.

A local female health worker stated that she expects investment will bring employment for people, more schools and clinics, and better roads in the region.[x] A member of a newly created Shura, or community council, in the Kalo sub-district where Hajigak is located stated that he wants compensation for the losses people suffer to be assured and guaranteed that employment opportunities will be provided for the local citizens [xi]. Members of the Shura [xii] from the Maidan Wardak side of Hajigak narrate that they do not want Hajigak to be politicized and that the contract must be signed to bring investment, as they need jobs and other opportunities for their remotely located communities.[xiii] Despite their worries and concerns a senior member of the community said that communities look forward to companies operating mines there.[xiv] The majority of the people in Hajigak are fascinated by the prospects of Indian investment in Hajigak. They expect the presence of the Indian mining consortium to lead them to better life.

Sustainable and inclusive development of the extractives sector as first priority

The tone set after the discovery of minerals across Afghanistan has led to new perceptions, expectations, and attitudes among Afghan citizens. Citizens subjected to media reporting expect cash coming their way from the mining revenues. And, there is nationalistic rhetoric heard in political circles about political elites and warlords increasingly making investments in the mining sector, either directly or through their cronies. The sanguine aspect of the natural resources’ discovery is that it could be used to create employment opportunities, investments in human development, and development of other sectors such as agriculture and services. Likewise it can help transitioning the economy. However, there is a need for inclusive development of the extractives sector including transparency in tendering and short listing companies to invest in the sector, impartial evaluation of proposals of each company and accountability of political decision makers. Social and environmental assessments as required by Afghan regulations must be done by neutral experts and match international standards. A prudent use of the natural resources and of revenues generated from the mining sector could create spaces for sustainable development and for balancing work towards the stability of the ‘Social Contract.’ These important objectives can be achieved when civil society positions itself and plays its sacrosanct role holistically to shape the discourse around the extractives sector. The international donor community needs to help improve the capacity of civil society and the Afghan government needs to engage Afghan citizens through a dialogue to accommodate their concerns and utilise their recommendations.

Corruption has become systemic and fighting it requires serious cross-institutional cooperation and a civil society that understands the mining sector, and the risks associated with it, in order to monitor and hold the government and mining companies accountable. Stakeholders need serious capacity building and further dialogue with the government to work for transparency and accountability. 

The Natural Resource Charter[xv], the Equator Principles[xvi], the Extractives Industries Transparency Initiative EITI[xvii], the International Institute for Sustainable Development[xviii], the World Bank, and the IMF are involved at different levels to provide guidance, assistance, grants, and loans to resource-rich countries to avoid the ‘resource curse’ through legal, policy, and institutional mechanisms for effective revenue collection and management. Afghanistan’s natural resource sector has the potential to generate revenues for the government and for its citizens. However, governance is in deficit and mechanisms for efficient allocation of resource revenues are missing. The capture of resource rents requires an efficient fiscal regime, collection mechanisms and allocation of revenues based on strategic need assessments to generate sustainable revenue streams for the current and for next generations. The allocation of natural resources revenues must be based on inclusive discussion and decision making among stakeholders from government, civil society and parliament.