Sunday, December 18, 2011

Critical pillar of Mine development

Afghanistan is set to open up its mining sector big time for foreign private investment. Time may be ripe for foreign investment to help the state generate revenues for its operations and obligations; however the current capacities of the ministry of mines remain dwarfed by bothersome margin. The Mining sector bears a huge potential for the development of Afghanistan provided it is developed well, properly inspected and audited

Afghanistan’s mining sector has been recipient of huge fund and technical assistance from the World Bank and other international donors to improve capacity at the ministry of mine. The major focus is on how to enhance tendering process and contract concession but there is so much more to mining then just that.

True Afghanistan is a baby among the mine rich countries and there is no doubt that Mr. Wahidullah Shahrani the minister of mines has initiated work for national mining policy, capacity development and five year business plan to encourage investment. Among the issues that require urgent attention are the Inspection, Audit, Labor Standards, Work Standards, and stricter Safety Standard.

Inspection of mining operation is very critical. Afghanistan has awarded about 110 small, medium and big contracts. The Qara Zaghan Gold Contract brings 26% royalty for the state which is very high rate. On paper the contract is very good but there is a need to upgrade current inspection capacity in the MoM in order to reduce the risk of manipulation of books and records as well as evasion of tax.

This can be done in different ways. The number of inspectors at the Ministry of Mines is currently insufficient and it can be easily increased. Further training will enhance existing skills. The country can ill-afford to see its mining sector develop at faster pace than the acquisition of appropriate capacity to ensure safety and Environment Standards, Labor Standards and Work Standards to name few. Good inspection capacity will ensure accurate revenue flow to the national treasury which is often quoted to be the raison d'ĂȘtre for opening the mining sector for private investors. If contract is not implemented and monitored as per the terms of the contract , reports not placed in public domain then the mining sector will not only fail to develop the responsible ways but it may also attract predators to invest in the sector and exploit mine in technically unprofessional manner and avoid lawful obligations. It is of immense importance that the inspection in the ministry of mine is developed adequately to measure up to its responsibility.

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