Afghanistan

EITI Status Yet to be assessed against the 2016 Standard
EITI Member Since 2013
Latest Data From 2013

Overview

The mining sector in Afghanistan has the potential to generate major government revenue for the country and is recognised as a valuable source of revenue to develop the national economy. The security background means that central government is hampered in its ability to manage and enforce revenue collection in accordance with its laws. Building on earlier efforts, President Ashraf Ghani announced reforms specific to the extractive sector as part of a wider anti-corruption package in May 2016. The government has committed to:

  • Support the 2016 EITI Standard,​ in particular the requirements on beneficial ownership​.
  • Enhance company disclosure​ (regarding payments to governments for the sale of oil, gas and minerals).
  • Supporting voluntary disclosures through EITI reporting ​and by some major companies regarding payments to governments for the sale of oil, gas and minerals.
  • Avoid doing harm by ensuring that licences are allocated fairly and openly, focus on building the institutions and human capacity, and work with the 34 provinces to work out their rights and status in relation to the mines.
  • Build the infrastructure and invest, so that the revenue creates jobs beyond the sector and builds a lasting legacy.
  • Collect basic information so that better assessments can be made of the potential and risks of the minerals and spending can be directed where it is most needed.

The EITI is, among other things, being used in Afghanistan:

  • as a diagnostics tool for cadastre system
  • as a way to strengthen the government’s revenue collection
  • to explain the artisanal and small-scale mining sector
  • to identify challenges and propose improvements to auditing practices

Beneficial ownership disclosure

Afghanistan asked companies to report their legal owners in the most recent EITI Report, listing individually any person or entity holding 10% or more of the shares. Beneficial ownership was not investigated, but President Ashraf Ghani confirmed in a meeting in May 2016 that "We will give the EITI beneficial ownership requirements high priority". 

We will give the EITI beneficial ownership requirements high priority.
President Ashraf Ghani.

Production

Production in Afghanistan is severely constrained due to the security situation and other limitations. Although there is much potential, for example for copper production in the Aynak copper project, most production is limited to coal. The latest AEITI Report shows that total production disclosed by the government for the year 2013 amounted to 1.6 million tonnes, of which the vast majority (1.5) was coal and the rest was cement.

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 underdeveloped.

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. Afghanistan is thought to be the world’s largest exporter of lapis lazuli, but all production is currently unregistered and untaxed.

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.

Oil and Gas Production (Sm3 o.e)

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Coal Production (Tonnes)

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Natural resources 

CommodityReservesUnitSignificance
CopperSoviet surveys in the 1970s and 1980s indicated resources of 240 Mt at 2.3 % CuMt There are around 300 documented copper deposits, occurrences and showings in Afghanistan
Rare Earths1.4MtOre grading 2.77% light rare-earth elements

Revenue collection

EITI Reports show that the largest source of government revenue from the extractive industries in Afghanistan are bonus payments (signature bonus) from the Aynak Copper Project. The security background means that central government is hampered in its ability to manage and enforce revenue collection in accordance with its laws

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Reconciled revenues by company

Revenue allocation

EITI Reports show discrepancies and some uncertainty about whether companies make payments to municipalities and whether these flows are material. A priori, the Ministry of Finance is the only entity that receives tax payments and the Ministry of Mines and Petroleum receives royalty payments. EITI Reports include recommendations on further work to clarify the actual situation of how revenues are collected and distributed.

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

  • Using EITI Reports to present previously unpublished studies on artisanal and small-scale mining.
  • Beneficial ownership

Implementation

EITI reporting in Afghanistan is serving as a diagnostic tool and leading to numerous recommendations for how to improve the governance of the sector. As a candidate country, Afghanistan is working to resolve these fundamental deficiencies before facing Validation later in 2016. Previous attempts at achieving compliance under the EITI Rules in 2013 and a follow-up in 2014 were unsuccessful. The Board decided at its meeting in Brazzaville in 2015 that Afghanistan would remain a candidate and be tested for compliance under the EITI Standard. The Board decided in Astana in October 2016 that Afghanistan’s Validation would begin in April 2017.

Governance

The multi-stakeholder group is chaired by the Minister of Mines and Petroleum and includes representatives from the Ministry of Finance, civil society and the private sector.  

Timeline

Validation

Afghanistan’s Validation against the Standard will commence on 1 July 2017. The country was admitted as EITI candidate in 2010.