Frequently Asked Questions

The Khyber Pakhtunkhwa Mines and Minerals Act, 2025 is a provincial law that governs how mineral resources in Khyber Pakhtunkhwa (KP) province are managed, licensed, and developed. It replaces the previous 2017 Act and establishes the legal framework for:

• How mining licenses and permits are issued
• Who has authority to make decisions about mineral resources
• How revenue from mining is collected and distributed
• Environmental regulations for mining operations
• Rights and responsibilities of mining companies

This legislation directly impacts who controls KP's valuable mineral wealth and how the benefits from these resources are distributed.

This Act is important for citizens to understand for several key reasons:

• Resource Ownership: It determines who controls KP's natural resources, which belong to the people of the province
• Economic Impact: KP has an estimated mineral wealth of over 300 billion US dollars, including copper, gold, gemstones, lithium, and rare earth elements
• Provincial Rights: It has significant implications for provincial sovereignty guaranteed by Pakistan's 18th Constitutional Amendment
• Revenue Distribution: It determines how mining profits and royalties are distributed between local communities, the province, and federal entities
• Environmental Consequences: It establishes who sets and enforces environmental standards for mining operations

Simply put, this legislation affects who benefits from KP's mineral wealth and whether those benefits primarily stay within the province or flow elsewhere.

The 2025 Act creates several mechanisms that reduce provincial sovereignty over mineral resources in favor of federal control:

• Federal Representation: The Licensing Authority now includes federal officials with significant decision-making power
• Override Clause: Section 118 states that this Act overrides all other provincial laws in case of conflicts
• Federal Revenue Allocation: 25% of mineral revenue is directly transferred to a federal fund
• Expanded Strategic Minerals: The definition of "strategic minerals" has been expanded and can be further expanded by federal notification
• Judicial Bypass: Disputes bypass provincial courts and go directly to federally-appointed tribunals

These provisions represent a significant shift away from the provincial autonomy for mineral resources that was established by the 18th Amendment to Pakistan's Constitution, which explicitly granted provinces control over their natural resources.

"Strategic minerals" are minerals designated for special treatment under the Act:

• The 2017 Act defined strategic minerals narrowly as uranium and rare earth elements only
• The 2025 Act significantly expands this definition to include lithium, copper, gold, silver, cobalt, and rare earth elements
• Crucially, it adds that the Federal Government can unilaterally declare additional minerals as "strategic" at any time

This definition matters because strategic minerals receive special licensing procedures under Section 12, which allows them to be directly licensed to:

• Companies owned or controlled by the Federal Government
• Joint ventures with federal entities
• Foreign entities through government-to-government arrangements

This means the expanded definition, combined with the Federal Government's ability to add to it at will, creates a mechanism to potentially place all valuable minerals under federal control rather than provincial management.

Revenue allocation has changed dramatically between the 2017 and 2025 Acts:

This represents a 62.5% reduction in provincial control over mineral revenue (from 80% to 30%). The new allocation diverts 50% of what previously went to provincial control to:

• The Licensing Authority (which includes federal representatives)
• A new Federal Mineral Development Fund

For every 100 billion rupees of mineral revenue, the province now receives 50 billion rupees less than under the previous arrangement, with that money instead flowing to federally-influenced entities.

The Licensing Authority is the primary administrative body established by the 2025 Act with extensive powers over mineral resources. According to Section 3, it consists of:

• Director General (Chairman)
• Additional Director General (Member)
• Representative of the Ministry of Energy (Petroleum Division), not below Joint Secretary (Member)
• Representative of Ministry of Finance, not below Joint Secretary (Member)

This represents a significant shift from the 2017 Act's provincial Mineral Development Board, which had no federal representation.

The Licensing Authority has extensive powers, including:

• Granting, refusing, suspending or canceling mineral licenses
• Determining fees, rents, royalties and compensation
• Directing operations on mines
• Entering into agreements on behalf of the Provincial Government
• Controlling 25% of all mineral revenue
• Certifying environmental compliance
• Approving all inspections by other regulatory agencies

With federal representatives having decision-making power and no representation from local communities or elected provincial officials, this structure centralizes authority away from provincial democratic control.

The 2025 Act contains limited provisions for transparency in mining contracts:

• The Act establishes a Mineral Titles Registry (Section 10) to record applications, grants, and transfers of mining rights
• However, there are no explicit provisions requiring public access to this registry
• The Act does not mandate disclosure of contract terms, beneficial ownership, or foreign investor arrangements
• There are no requirements for public hearings or consultation before major licensing decisions
• Even provincial government access to full contract details appears limited

International best practices for mining governance typically include:

• Public disclosure of contracts
• Beneficial ownership transparency
• Published environmental impact assessments
• Community consultation requirements
• Public hearings for major projects

The absence of these provisions in the 2025 Act creates governance concerns about whether citizens will have access to information about how their mineral resources are being managed.

Section 118 of the 2025 Act contains what is known as an "override clause" that states:

In plain language, this means:

• This Act takes precedence over all other provincial laws if there's any conflict
• Provincial environmental laws, labor laws, water rights laws, land use regulations, and indigenous rights protections can all be overridden
• Future provincial legislation that might attempt to regain control over mineral resources would be automatically subordinate to this Act

This override clause is particularly concerning for provincial sovereignty because:

• It creates a "super-law" that stands above all other provincial legislation
• It limits the provincial legislature's ability to modify mineral governance through other means
• It potentially subordinates many other areas of provincial authority whenever they intersect with mining interests

The 2017 Act had no such override clause, making this a significant new constraint on provincial legislative sovereignty.

Khyber Pakhtunkhwa has significant mineral wealth, with over 30 different minerals discovered across the province. The most valuable include:

• Copper and Gold: Major deposits in Chitral, Dir, and North Waziristan
• Gemstones: Emeralds in Swat, rubies, sapphires, topaz, and aquamarine
• Chromite: Significant deposits in Malakand
• Marble and Granite: High-quality deposits throughout the province
• Lithium: Recently discovered deposits with growing global demand
• Rare Earth Elements: Critical for advanced electronics and renewable energy
• Industrial Minerals: Limestone, dolomite, silica sand, and clays

The estimated value of these resources is substantial:

• Conservative estimates place the value at over 300 billion US dollars
• Some deposits remain unexplored, suggesting the actual value could be much higher
• With rising global demand for critical minerals like lithium and rare earth elements, the value is likely to increase

This substantial mineral wealth explains why control over licensing, revenue allocation, and management of these resources is so significant for the province's economic future.

The 2025 Act makes several significant changes to environmental protection for mining operations:

• Conditional Compliance: Section 38 requires miners to comply with environmental laws only "to the extent they are not inconsistent with this Act"
• Self-Certification: Section 42 states that "the environmental compliance certification provided by the Licensing Authority shall be deemed sufficient"
• Inspection Limitations: Section 50 prevents environmental agencies from conducting inspections without prior approval from the Licensing Authority

These provisions create three key concerns:

• Conflict of Interest: The same authority responsible for promoting mining development is also certifying environmental compliance
• Provincial Agency Bypass: The provincial EPA and environmental regulators lose independent enforcement authority
• Legal Subordination: Environmental laws can be deemed "inconsistent" with the Act and therefore not applicable

In contrast, the 2017 Act:

• Required strict compliance with all environmental laws without exceptions
• Preserved independent authority for environmental agencies
• Did not create certification authority in the mining regulatory body

This shift creates significant concerns for environmental governance, especially given mining's potential for serious environmental impacts including water pollution, deforestation, habitat destruction, and soil contamination.

The 18th Amendment to Pakistan's Constitution, passed in 2010, was a landmark change that significantly strengthened provincial autonomy, including control over natural resources:

• It shifted mineral resources from the Federal Legislative List to provincial control
• It gave provinces exclusive authority to make laws regarding mineral development
• It established that mineral resources within a province belong to that province
• It granted provinces the right to collect royalties and other charges from mineral exploitation

The specific constitutional changes included:

The 18th Amendment was designed to address long-standing provincial grievances about federal control of natural resources and to ensure that the benefits from these resources would primarily flow to the provinces where they are found.

Many provisions in the 2025 Mines and Minerals Act appear to contradict the spirit and intent of the 18th Amendment by:

• Establishing federal control mechanisms over provincial minerals
• Diverting mineral revenue away from provincial control
• Creating federally-influenced administrative structures
• Allowing federal designation of strategic minerals

The 2025 Act has mixed implications for local communities in mining areas:

• Revenue Allocation: The Act maintains the 20% allocation to local development funds (unchanged from 2017)
• Employment Quotas: Section 75 establishes improved provisions for local hiring and business utilization
• Representation: Local communities have no direct representation on the Licensing Authority
• Consultation: The Act has limited requirements for community consultation before licensing decisions
• Land Rights: Traditional and indigenous land rights receive minimal protections
• Environmental Impacts: Weakened environmental oversight could negatively affect local communities

Specific concerns for local communities include:

• Despite maintaining the 20% local development allocation, the provincial government's reduced share (30% vs. 80%) means less provincial funding may be available for broader regional development
• The dispute resolution mechanism bypasses local courts in favor of specialized tribunals, creating access to justice barriers
• The weakened environmental protections could result in increased pollution, affecting community health and livelihoods
• The "override clause" in Section 118 could potentially nullify local land use and community protection laws

While some positive employment provisions exist, the overall governance structure creates a system where decisions affecting local communities are increasingly centralized and removed from local influence or accountability mechanisms.