Afghan cabinet gives preliminary approval to delayed mining law

KABUL Sun Feb 24, 2013 8:00am IST

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KABUL (Reuters) - Afghanistan's cabinet gave preliminary approval to a long-delayed package of laws to govern mining, which officials hope will become a key driver of the troubled country's economy, the government said on Saturday.

The news will be greeted with relief by Western donors, who committed to provide $4bn in aid from 2012 to 2015 based partly on projections of future mining earnings, only to see cabinet reject the legislation in July due to concern the laws failed to protect national interests from foreign exploitation.

The draft legislation is now almost ready to be put to parliament, a statement from the office of Administrative Affairs and Council of Ministers Secretariat said.

Cabinet should give full approval in a second meeting on Monday, Afghan President Hamid Karzai's office said.

The ability of Afghanistan - regularly cited as among the world's poorest and most corrupt countries - to create mining revenues over the next decade is considered key to its survival.

The Afghan government said last year that oil and mining could contribute up $1.5 billion in revenue by 2016, but delays to the legislation's passage and ongoing concerns about insecurity have cast a pall over expectations.

The U.S. and other foreign donors were caught by surprise when the draft legislation was rejected by cabinet ministers and other senior officials. Karzai appeared to support the decision at the time, calling for the laws to be reviewed to ensure they better protected "the national interests of Afghanistan."

The latest announcement will be greeted with relief by foreign mining companies seeking to invest in what the U.S government has estimated as over US$1 trillion in untapped natural resources.

Government officials have previously said that once the package of laws is passed by cabinet, approval by parliament, which is due to return in the first week of March, could be reached within three to four weeks.

The laws aim to bring tender procedures into line with international norms and create regulations for employment, infrastructure and environmental protection, Afghan officials have previously told Reuters.

Afghanistan is believed to have rich deposits of gold, oil, copper, iron and other minerals and gemstones. A briefing paper released by the Pentagon in 2010 said the main resources were iron ore with an estimated value of $421 billion and copper deposits valued at $273 billion.

(Reporting by Mirwais Harooni; Writing by Dylan Welch; Editing by Jason Webb)

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