Nov. 20 (Bloomberg) -- China Metallurgical Group Corp., the state-owned diversified metal producer, led a group that beat four rivals for the right to develop Afghanistan's largest copper mine with a $2.87 billion offer, a company consultant said.

Under China Metallurgical's plan, the Aynak mine will produce 200,000 metric tons of refined copper a year, Eddie Hedayat Azizi, the company's consultant on the bid, said today in a telephone interview from Kabul. Construction on the mine, located southeast of the capital, may start in six months to a year, he said.

A tripling in copper prices since 2004 fueled a five-way contest for rights to the deposit, overcoming concerns that a war between 41,000 NATO-led soldiers and a Taliban insurgency in the central Asian nation may impede construction. The Chinese offer beat bids by Hunter Dickinson Inc., Kazakhmys Plc, Freeport- McMoRan Copper & Gold Inc. and Russian billionaire Oleg Deripaska's Strike Force unit.

``China Metallurgical is a very strong, very powerful company that doesn't need anyone else's technology or anyone's money,'' Azizi said. ``People are eager to get to work, to put down their rifles and pick up shovels.''

China Metallurgical, based in Beijing, will build a 400-megawatt coal-fired power station about 280 kilometers (174 miles) north of the city to supply electricity to the plant, Azizi said. The area has sufficient coal reserves to fuel the plant for at least 50 years, he said.

Second Place

Closely held Hunter Dickinson, based in Vancouver, was informed overnight by Afghan authorities that its offer placed second and will be the reserve bid if a contractual agreement with the Chinese group can't be reached, said Bob Schafer, Hunter Dickinson's vice president of new business. The Chinese offer was ``about $1 billion too large,'' he said.

``If they're not seeing eye-to-eye, they'll come to us, but we're not holding our breath,'' Schafer said in a telephone interview from Vancouver. ``We're ready to talk to them, but I'm packing up our files and sending them to archive.''

The U.S. Geological Survey estimated in a report on Nov. 13 that Afghanistan has 60 million tons of copper. The nation also has 2.26 billion tons of iron ore and other minerals including gemstones and marble. The landlocked country, just smaller than Texas, shares a 47-mile border with China, the world's largest copper consumer.

China Metallurgical's group, which includes Jiangxi Copper Co., expects the mine to create as many as 3,000 new jobs in the area, which is about 22 kilometers from Kabul, Azizi said. Landmines will be cleared from the site ``in no time,'' he said.

To contact the reporter on this story: Stewart Bailey in New York at sbailey7@bloomberg.net.

Last Updated: November 20, 2007 15:08 EST