Future of Afghan mining sector threatened by weak contracts

Afghan government must publish all oil and mining contracts and related documents ahead of key upcoming donor conference

Afghanistan’s future mining industry risks being undermined by contracts which are not fully transparent, don’t provide for engagement with local communities, and are missing important safeguards, said Global Witness in a report released today.

Ahead of a vital donor conference being held in Tokyo this July, Global Witness is calling on the Afghan government to publish all existing and future oil and mining contracts and associated documents to ensure they can be properly scrutinised.

The report, Getting to Gold, provides a unique analysis of two of the country’s biggest mining deals to date: the 2008 Aynak copper contract and the 2011 Qara-Zaghan gold contract. While welcoming the publication of the later Qara-Zaghan contract, the report raises serious concerns over levels of transparency in both deals, as well as the level of community engagement. The Qara-Zaghan contract also fails to include key international standards on the environment, security and social responsibilities, raising fears these omissions could contribute to future conflict and corruption.

“Afghanistan’s mineral sector will be critical in generating much needed income to fill the funding-gap post-Transition, but only if managed properly” said Global Witness campaigner Juman Kubba. “It’s crucial that the government takes heed of the findings in our report to inform how it negotiates other deals which are about to be signed, such as the Hajigak iron ore mine.”

The analysis found:

While the Qara-Zaghan contract is published, most of its key details are in fact included in subsidiary documents which are not public.
For both Aynak and Qara-Zaghan, security agreements governing armed protection around the mines have been negotiated separately and are not publicly available.
Where Aynak subscribes to some international guidelines, Qara-Zaghan commits only to conventions which Afghanistan has already signed up to and even then, the mining company retains the right to discard them if they deem them unsuitable.
Neither contract contains any contractual mechanisms to allow for local community concerns and complaints to be resolved. Neither is there any requirement for dispute proceedings to be public and open.
Official government oversight of the Qara-Zaghan project is limited by a requirement to give notice of planned visits. This requirement is not present in the Aynak contract.

As well as transparency over contracts, Global Witness is calling on the Afghan government to publish all associated project documents which cover security, social, environmental and human rights obligations, as well as details of the corporate structure and ultimate ownership of any investing companies. It is also appealing for environmental, social and human rights concerns highlighted in this analysis to be addressed.

“The Ministry has already committed publicly to full publication of all mining and oil contracts,” said Kubba. “With two key international conferences in Chicago and Tokyo coming up in May and June, now is the time to make good on these pledges.”

/ENDS

Contact: Juman Kubba, [email protected] +44 (0) 772 0972 394 or +44 207 492 5873 or Eleanor Nichol, [email protected] or +44 (0) 207 492 5885

Notes to editors:

Read the report, Getting to Gold, here
In 2010, the Government of Afghanistan announced huge mineral deposits, totalling an estimated US$1 trillion dollars. Since then, the Government and international community have been focused on developing the industry as quickly as possible.
The Aynak copper concession was awarded in 2008 to a Chinese joint venture, and is the largest mining deal ever signed in Afghanistan. So far, the contract remains unpublished but Global Witness has seen a copy. The Qara-Zaghan gold mine contract was signed in 2011 as part of a JPMorgan-backed deal signed with the Afghan Krystal company. In contrast to the Aynak contract, it has been published.