Commentary | May 19, 2014

Mining Laws Passed

Afghanistan's new mining laws will set the stage for vital, regional economic growth. 

After two years of protracted deliberations in parliament, the Lower House (“Wolesi Jirga”) has finally adopted a series of new mining laws to provide a stronger legal framework for investment in Afghanistan’s mining sector. Among other provisions, the law enables corporate businesses, already investing in the exploration of Afghanistan’s natural resources, to bid for extraction. A subsequent addendum to the legislation requires 5 percent of mining revenues to be allocated for development projects in mining areas.  

The EastWest Institute welcomes the adoption of these laws as a significant achievement. The new legislation could not come at a more critical time—just a few weeks before the second round of presidential elections—as Afghanistan  prepares for a historical political transition, with potential consequences to regional security. In this time of uncertainty, EWI is about to release a new report, Afghanistan Reconnected: Regional Economic Security Beyond 2014—focusing on the country’s regional economic potential. This work has engaged leading private sector leaders, parliamentarians and governmental officials from Asia and beyond. EWI plans to launch the report officially on June 11, 2014, at the institute’s Brussels Center.

Ramazan Jumazada, MP from Afghanistan and member of EWI’s Parliamentarians Network for Conflict Prevention, says: “We do believe this will have a very significant impact on attracting domestic and foreign investment in Afghanistan. The mining sector is a very good alternative for Afghanistan’s sustainability and will help Afghanistan to reduce its dependency on foreign aid.”

The mining sector is Afghanistan’s largest medium and long term economic asset. Official sources have estimated $1 trillion in proven mineral resources and the potential for an additional $3 trillion. 

With the withdrawal of most foreign troops by the end of 2014 and the reduction of foreign aid, Afghanistan’s economy will have to become more self-sustaining and generate sufficient state revenue. To ensure this transition, Afghanistan must increase domestic and foreign investment in key industries, such as the mining sector. Developing Afghanistan’s mineral resources—including copper, iron ore, gold, oil and natural gas—will increase the potential for prosperity and economic growth.