CIAO DATE: 12/2014
December 2014
United States Institute of Peace
Mining companies in Afghanistan are wantonly exploiting the country’s mineral resources with little or no taxes and royalties going to the government. Contracting of mines has been susceptible to political influence, there is little accountability and sometimes conflicts with local communities have led to violence and deaths. This Peace Brief examines these problems and offers some recommendations to improve the situation. Summary Case studies of five ongoing mining operations show that Afghan mining companies are wantonly exploiting easily extractable mineral resources with little or no taxes and royalties going to the government. Revenue losses from just two sources—royalties and land rent—at the five mines are more than US$50 million per year. Total revenue losses from all sources for the hundreds of mines contracted to different companies easily could be hundreds of millions of dollars annually. The tendering processes, awards, and contents of contracts issued, contract implementation, and actual operations at the mines all showed clear signs of political interference, favoring bidders that often had no prior mining experience. Companies usually began extracting resources soon after mining contracts were awarded, without paying any taxes and royalties—even though the contract called for an initial exploration period. Companies did not provide the legally and contractually required documents, such as exploration reports and environmental and social impact assessments. Effective inspections of mines were not conducted, and companies were not held accountable for payments due. Sometimes mining activities precipitated local conflicts, resulting in violence and deaths; weaker local communities called on Taliban elements for support in one such dispute. Serious reforms are needed to ensure that mining activities are developmentally beneficial and that revenues generated are paid to the government.
Resource link: Exploitation of Mineral Resources in Afghanistan [PDF] - 233K