Press Release / Aug. 19, 2014

Gaps in new Afghan mining law pose a threat to stability

Afghanistan’s new mining law has serious weaknesses, warns Global Witness, as President Hamid Karzai signed the bill onto the statute books. The gaps in the law increase the risk that the country’s mineral wealth will fuel conflict and corruption instead of development, the campaigning group adds.

The law – which sets out how Afghanistan’s US$ 1 trillion of mineral riches are regulated –does not include several basic safeguards against corruption and conflict, posing a threat to Afghanistan’s bid for stability and development. A series of major copper and gold contracts which have been held up pending the passage of the law are now likely to be finalised – but will be subject to significantly weaker transparency and oversight.

Publication of these contracts, for example, will not be required under the law, leaving a door open for potential abuses.   

“This law leaves out protections that are an increasingly routine part of international best practice,” said Stephen Carter, head of Global Witness’ Afghanistan team. “Without these protections, there is an even greater danger that natural resources will fuel conflict and corruption rather than benefitting the Afghan people and helping to reduce the country’s dependency on foreign aid.”

Global Witness is calling on President Karzai to amend the law, and meanwhile to ensure the regulation that accompanies the legislation fixes its most important weaknesses.

This is a landmark opportunity: a strong mining law could help kickstart the economy and ultimately fund the Afghan government. In a country where one in three people live below the poverty line, and where mining is a source of revenue for insurgents and armed groups, this is urgently needed.

“Amending the law should be a key priority for the new Afghan government, but at a minimum they can strengthen it significantly if they put in place strong regulations,” Carter said. “It will be a critical test of how serious the government is about ensuring resources that belong to the whole Afghan people actually benefit them.”

Global Witness, drawing on a wide range of Afghan and international expertise, has highlighted a range of concerns around the law, as well as a small number of positive provisions.

  • The new law does not provide for publication of all mining contracts or of the real ‘beneficial’ ownership of mining companies, making it very difficult for Afghans to know what deals have been signed in their name or who has benefitted.
  • It leaves out basic safeguards for the bidding and allocation of licenses, despite this being one of the areas most vulnerable to corruption, which can cost countries billions of dollars.
  • The law also sets out a complaints and conflict-resolution process that is likely to be impossible to use for small communities affected by mining. There is no provision for community monitoring of mining.

The law has some positive points, like a requirement for companies to follow the reporting requirements of the Extractive Industries Transparency Initiative. It also has a number of environmental and social protections – but they are significantly weaker than the previous mining law. For example, assessments about the social and environmental impacts of mining are now made only after a contract has already been allocated, and rules for compensation have been changed to apply only to owners of land – not the people who are living on it.

There is no shortage of countries around that world that have seen mining fund armed groups and fuel corruption. A strong law is the first step to making sure Afghanistan is not one of them.

“The Afghan government is understandably impatient to develop mining, but putting in a strong foundation for the sector takes no more time than putting in a weak one – and is surely worth doing given the very real danger of abuses,” Carter said. “Proper safeguards are not an obstacle to using Afghanistan’s resources to help the country – they are an essential precondition for it.”

/ Ends

Contact: Stephen Carter, email: [email protected] / tel +447803052872 / +441539432166

Notes to editors:

A shaky foundation?,” Global Witness’ analysis of the mining law, can be found at http://www.globalwitness.org/sites/default/files/library/SHAKEY_FOUNDATION_GW.pdf