The geological mineral endowment of Afghanistan is excellent, with known deposits of base and precious metals, industrial minerals, coal, and gemstones across a diversity of geological terranes. Much of the country has missed out on modern prospecting methods that search for shallowly buried deposits. There are also known resources resulting from surface prospecting more than a generation ago, which await further exploration. Afghanistan therefore offers excellent exploration opportunities to early entrants into the country's mineral sector.
A new Minerals Law has recently been passed that promotes private-sector led investments within a competitive business environment. The Ministry of Mines and Industries is implementing strategies to transition the agency into a regulatory role, using international standards of best practice for improved sector governance.
To assist in sector growth, an international presence by the World Bank, British Geological Survey and United States Geological Survey is working to increase the resource potential through legal reform, geological mapping, mineral resource assessment, capacity development of the professional staff, creation of new cartographic bases, and creation of new cadastre and mines inspectorate offices.
Scope of the Minerals Law
The Minerals Law defines:
- Mineral rights, by commodities and deposit type
- How tax, customs, and investment laws apply
- The role of the Ministry of Mines and Industries as a regulatory agency, seeking growth through private sector investment
The Minerals Law defines mineral rights for both metallic and coal mines ('licences') and quarry operations ('authorisations'), distinguishing between exploration and production activities:
- There is a clear statement of eligibility for individuals and companies to acquire and maintain mineral rights
- There are provisions allowing for the private sector to acquire significant land holdings for exploration and/or exploitation
As is required in modern mining laws, holders of Mineral Rights shall:
- Maintain positive relations with recognised land-owners and communities
- Comply with health and safety regulations
- Protect the environment
Taxation, customs duties, and mineral royalties
- The World Bank and International Monetary Fund are helping to define internationally competitive tax and royalty
- The Ministry of Finance has prepared generally applicable tax and customs laws, using international rates for the sector good practice
Protection of investment
- Holders of Mineral Rights have rights to foreign exchange and international banking provisions, provided that they have paid all applicable taxes, duties and other charges
- State guarantees provide for companies to organise their operations as they see fit, and to have access to raw materials, markets for goods and services, and sale of products
- The Ministry of Mines and Industries provides assurances of protection against financial consequences of legislation which becomes effective after issuance of the Mineral Right
Recourse, dispute resolution and appeals
- Procedures for recourse, appeals, and international arbitration that protect the rights of mineral holders the State, and other third parties are defined
- The Ministry of Mines and Industries will adhere to standards regarding transparency within the extractive industries
The Minerals Law 2005 can be downloaded here.
For further information, please contact
Hon. Eng. Ibrahim Adel
Minister of Mines
The Islamic Republic of Afghanistan
A copy of the World Bank study Transitional Islamic State of Afghanistan: mining as a source of growth can be found at: http://www.worldbank.org/ogmc