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The Aynak Copper Tender: Implications for Afghanistan and the West

The Aynak Copper Tender: Implications for Afghanistan and the West

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Published by easterncampaign
Author: Yeager James R.
Author: Yeager James R.

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Published by: easterncampaign on Nov 02, 2009
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01/02/2013

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The expectation of the “due diligence” phase of the Tender Process was that
several things would simultaneously transpire: (1) that the Transaction
Advisor, working with the Ministry of Mines, would conduct due diligence
on each of the six companies that indicated that they would bid for the
deposit rights; (2) that the British Geological Survey (BGS) had prepared all
relevant geo-science data and a data room in Kabul located at the
Afghanistan Geological Survey (AGS) where bidders were invited to visit
and review materials, speak with the BGS and AGS representatives, etc. and
(3) that the bidders would conduct their due diligence by visiting
Afghanistan, the Ministry of Mines, the Aynak site and inquiring on various
levels among government, other international firms and various agencies
facilitating private sector investment in Afghanistan.
In order to distribute the data concerning the Aynak Copper Deposit, each
Bidder was provided a portable hard drive with more than 80 gigabytes of
data. This disk was shipped to each company by courier from Kabul in early
January 2007. This disk not only contained all relevant technical data, but
applicable laws, and logistical information about travel visas, security,
lodging, and entertainment in Kabul, and a site visit; the Tender Plan
originally called for the companies to visit Kabul in January of 2007. The
visit dates were pushed back to April because of the likelihood of adverse
winter weather and the inability to provide the tender package on schedule.
In order to assist the company representatives, at least one staff member
from the MoM was assigned to each company as assigned by the minister.
The companies were divided into groups of three. The schedules were
prepared by the Technical Mining Advisor and approved by the Minister and
the Transaction Advisor. The objective of the visit was to provide each
company the opportunity to make a site visit at Aynak and to talk with each
Ministry represented in the Inter-ministerial Committee and to collect
sample and first-hand information about the deposit. The late Director of
AGS, Abdul Wasai, who had worked at the Aynak site during the 1980s, led

James R. Yeager

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each excursion. Each company was escorted to various ministries to
addresses issues including: taxes, security, environmental constraints, social
development and other factors that were to be included in their bid.

Observations

The fact that due diligence was not conducted on bidders and that actual
track records of bidders, as opposed to their own informational materials,
were not known to the evaluators substantially reduced the credibility of the
process. No independent evaluation of the bidders’ past performance was
considered. In addition, the rapidity with which the actual tender work was
happening left Ministry and donor representative officials to recognize and
appreciate the more than four years of work that the BGS staff in Kabul had
undertaken to reconstitute important geo-science and other technical data
that was essential in the preparation of the Aynak Data Packages. The BGS
prepared this information while training AGS staff which consisted of all the
archived Russian data and was provided in user-friendly electronic format.
For the Transaction Advisor to have suggested January travel to Afghanistan
seems to have been shortsighted and reflected either a lack of understanding
of the country’s annual climate conditions or an oversight in an attempt to
meet rapid tender timing that ultimately delayed the tender process for a
solid four months.

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