Minerals Law of Afghanistan, 2005

The  minerals endowment of Afghanistan is excellent, with known deposits of base and precious metals, industrial minerals, coal, and gemstones across a diversity of geological terrenes. Much of the country has not been explored by  modern prospecting methods that search for  hidden deposits. There are also known resources resulting from surface prospecting undertaken more than a generation ago, which await further detailed 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 is implementing strategies to transform the agency into a regulatory role and industry enabler, using international standards of best practice for improving sector governance.

 The  World Bank, the British Geological Survey, and the United States Geological Survey have been helping in capacity building for private sector involvement  in the mining and oil and gas sectors by providing  training opportunities for professional staff, creation of new cartographic bases, and establishment of new cadastre and mines inspectorate offices.

Scope of the Minerals Law :

The draft Minerals Law defines: 
-    Mineral Rights, by commodities and deposit type; 
-    How tax, customs, and investment laws apply; and 
-   the role of the Ministry of Mines as a regulatory agency, seeking growth through private sector investment.

    Mineral Rights :

The Minerals Law defines Mineral Rights for both metallic and coal mines ('licenses') and quarry operations ('authorizations'), distinguishing between exploration and production activities.   It includes: 
-   A clear statement of eligibility for individuals and companies to acquire and maintain Mineral Rights; and 
-   Provisions allowing for the private sector to acquire significant land holdings for exploration and/or exploitation General obligations.

As is required in modern mining laws, holders of Mineral Rights shall: 
-   Maintain positive relations with recognized land-owners and communities; 
-   Comply with health and safety regulations; and 
-   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 rates for the sector; and

-   The Ministry of Finance has prepared generally applicable tax and customs laws, using international 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 organize their operations as they see fit, and to have access to raw materials, markets for goods and services, and sale of products; and

-   The Ministry of Mines 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; and

-   The Ministry of Mines will adhere to standards regarding transparency within the extractive industries.

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

Minerals Law

Mining Regulations