Afghanistan has extensive mineral deposits and potential for oil and gas production. Due to conflict, political instability and inadequate infrastructure, the extractive industries are relatively under-developed. In recent years, the country has seen increasing investor interest in exploration and development.
The Afghanistan Geological Survey identified six major metals and minerals opportunities in the country – copper, iron-ore, rare-earth metals, gold, gemstones and marble. Deposits have been estimated to be worth over USD 1 trillion.
Most gemstone mining is artisanal. Operations are small-scale and output is supplied mainly to local and regional markets.
Globally significant deposits include the copper deposit in Aynak, Logar province and iron-ore in Hajigak, Bamyam province. Consortiums of Chinese and Indian companies have signed contracts to develop these mines.
Developing transport infrastructure that would link deposits to global markets remains a challenge. Governance challenges, as well as the security situation, pose additional hindrance to the development of the sector.
Afghanistan announced its intent to implement the EITI in March 2009, and became an EITI Candidate country 10 February 2010. While there were some delays in implementing the agreed workplan, the first EITI Report was published on 1 August 2012 covering two years of data (the Solar Hejri calendar years 1387 and 1388, 21 March 2008 – 20 March 2010). The Second EITI Report covering 1389 (21 March 2010 – 20 March 2011) was published on 13 October 2012.
On 10 April, the EITI Board finalised its assessment of the Validation Report from Afghanistan and concluded that Afghanistan had made meaningful progress in implementing the EITI. The EITI Board decided that Afghanistan will retain its status as a Candidate country for another 18 months by the end of which it must complete the remedial actions requested by the Board and demonstrate Compliance with the EITI Requirements.
Implementation activities are currently focused on following up on the recommendations from the Validation, including refreshing MSG composition and membership. Preparations for the EITI Report covering March 2011-March 2012 have not yet begun.
With the expected increase of revenues, it is significant that the government has committed to publish all mining, oil and gas contracts. Over 200 contracts have been published, including the Amu Darya oil, the Qara Zaghan gold and the West Garmak coal contracts. This does not yet include the contract relating to the Aynak copper mine. Another large contract is expected to be signed shortly in relation to the huge Hajigak iron ore project. Disclosure of social payments is also being discussed by the MSG.