Technical Analysis
Section-by-Section Analysis of the KP Mines and Minerals Act, 2025
Introduction
This technical analysis examines specific provisions of the Khyber Pakhtunkhwa Mines and Minerals Act, 2025, highlighting areas of concern related to provincial sovereignty, economic control, and governance. The analysis is organized by major sections of the Act and includes direct quotes from bill text, comparative analysis with previous legislation, and impact assessments.
Each section is evaluated according to three dimensions of concern:
This analysis should be read alongside the full text of the Act for complete context. References to specific sections are provided to facilitate cross-referencing with the original bill text.
Table of Contents
1. Definitions and Scope (Sections 1-2)
Expanded Definition of "Strategic Minerals"
Section 2(zz) introduces an expanded definition of "strategic minerals" that includes a much broader range of minerals than the 2017 Act. This expanded definition has significant implications for provincial control of mineral resources.
Comparative Analysis:
The 2017 Act limited "strategic minerals" to uranium and rare earth elements. The 2025 Act significantly expands this list and, crucially, adds a provision allowing the Federal Government to unilaterally declare additional minerals as "strategic" without provincial consultation.
Implications:
This expanded definition creates a mechanism through which the Federal Government can progressively claim control over additional mineral resources that would otherwise fall under provincial jurisdiction per the 18th Amendment to the Constitution.
The open-ended nature of the definition ("such other minerals") without requiring provincial consent creates a mechanism for unlimited federal expansion of control over provincial mineral resources.
Redefinition of "Owner" and Rights
Section 2(s) redefines "owner" in relation to mines and minerals in a way that diminishes provincial rights and strengthens federal control.
Comparative Analysis:
The 2017 Act defined ownership primarily through the provincial government and provincial entities. The new definition dilutes provincial claims by equating federal ownership claims with provincial ones and giving precedence to the Licensing Authority (which has federal representation).
Implications:
This redefinition creates a legal foundation for federal entities to claim mineral rights that previously would have been clearly provincial. The economic implications include potential revenue diversion away from the province and toward federal accounts or federally-favored entities.
2. Administrative Structure (Sections 3-7)
Licensing Authority Composition
Section 3 establishes a Licensing Authority with significant federal representation, undermining provincial autonomy in mineral resource management.
Comparative Analysis:
The 2017 Act established provincial control through the KP Mineral Development Board with no federal representation. The 2025 Act's Licensing Authority includes two senior federal representatives with significant decision-making power over provincial resources.
Implications:
This structure creates a governance mechanism through which federal interests can control or veto provincial decisions about mineral development. The representation from the Ministry of Finance creates a direct channel for federal influence over revenue matters.
The absence of local community representation or elected provincial officials further weakens provincial sovereignty and democratic accountability.
Powers and Functions of the Licensing Authority
Section 6 grants extensive powers to the Licensing Authority that exceed typical regulatory functions and create significant provincial sovereignty concerns.
| Problematic Authority | Constitutional Concern |
|---|---|
| Power to "direct operations" (6(1)(i)) | Creates direct federal operational control of provincial mines |
| Power to enter agreements (6(1)(k)) | Supersedes provincial government's treaty and contract powers |
| Fee/royalty determination (6(1)(d)) | Removes provincial fiscal autonomy guaranteed in 18th Amendment |
Implications:
The powers granted to this federally-influenced Authority create a mechanism to bypass provincial government authority entirely in most significant mineral development decisions. The power to "enter into agreements on behalf of the Provincial Government" is particularly concerning as it effectively subordinates the provincial government's treaty power to an appointed body with federal representation.
3. Licensing Regime (Sections 8-20)
Special Procedures for Strategic Minerals
Section 12 establishes special licensing procedures for "strategic minerals" that bypass normal provincial oversight mechanisms.
Comparative Analysis:
The 2017 Act had no comparable provision. All minerals, regardless of classification, were subject to the same provincial licensing requirements. This new provision creates a separate licensing track that heavily favors federal entities.
Economic Impact Analysis:
This provision creates a mechanism through which the most valuable minerals (including gold, copper, lithium) can be diverted to federal control through federally-owned or controlled entities, bypassing competitive bidding processes.
With the expanded definition of "strategic minerals" (Section 2(zz)), this creates a system where potentially unlimited mineral resources can be placed under this special federal licensing regime, severely limiting provincial economic benefit.
Mineral Titles Registry
Section 10 establishes a Mineral Titles Registry with inadequate transparency provisions and potential for governance issues.
Governance Analysis:
While the registry itself is standard for mineral governance, the Act notably lacks provisions for:
- Public access to registry information
- Disclosure of beneficial ownership
- Transparency of contract terms
- Provincial government access rights
Implications:
The lack of explicit transparency provisions creates a governance risk where licensing decisions, terms, and beneficial ownership information can remain hidden from public and provincial government scrutiny. This undermines accountability and creates conditions where corruption and conflicts of interest can flourish.
4. Fiscal Provisions (Sections 21-35)
Revenue Allocation Mechanism
Section 29 creates a revenue allocation mechanism that diverts significant mineral revenue away from the province.
Comparative Analysis:
The 2017 Act directed 80% of mineral revenues to the Provincial Consolidated Fund and 20% to local development. The new allocation reduces direct provincial revenue from 80% to 30% - a 62.5% reduction in provincial control of mineral wealth.
Economic Impact Analysis:
This arrangement creates a severe economic sovereignty issue where the province retains direct control of only 30% of revenue generated from its natural resources, with another 20% restricted to specified local uses.
The 25% allocation to the Licensing Authority (which has federal representation) creates potential for federal influence over a quarter of provincial mineral revenue.
The direct 25% allocation to a Federal Fund represents a direct transfer of provincial resource wealth to federal control - a severe violation of the resource sovereignty principles established in the 18th Amendment.
Financial Impact Estimate:
Based on projected mineral revenues of 100 billion rupees annually:
| Allocation | 2017 Act | 2025 Act | Change |
|---|---|---|---|
| Provincial Control | 80 billion Rs | 30 billion Rs | -50 billion Rs |
| Local Development | 20 billion Rs | 20 billion Rs | No change |
| Licensing Authority | 0 | 25 billion Rs | +25 billion Rs |
| Federal Fund | 0 | 25 billion Rs | +25 billion Rs |
Federal Mineral Development Fund
Section 30 establishes a Federal Mineral Development Fund that receives 25% of provincial mineral revenue but lacks provincial oversight.
Constitutional Analysis:
The establishment of a federal fund that receives provincial mineral revenue with no provincial representation in its governance structure appears to violate the 18th Amendment's provisions for provincial resource control.
The phrase "such other purposes as the Federal Government may determine" creates an unrestricted ability for the federal government to use provincial mineral wealth for any purpose it chooses.
There are no transparency or reporting requirements to the province regarding how these funds are spent, creating a significant accountability deficit.
5. Environmental Governance (Sections 36-45)
Environmental Protection Provisions
Section 38 establishes environmental protection requirements that weaken provincial environmental oversight.
Comparative Analysis:
The 2017 Act required strict compliance with all provincial environmental laws. The 2025 Act's phrase "to the extent they are not inconsistent with this Act" creates a mechanism to override provincial environmental laws.
Implications:
This provision creates a legal basis for mining operators to avoid compliance with provincial environmental standards by claiming they are "inconsistent" with the Act.
The vague reference to "good mining industry practice" without defined standards creates a weak governance framework subject to interpretation that may favor industry interests over environmental protection.
Environmental Compliance Monitoring
Section 42 establishes environmental monitoring provisions that bypass provincial environmental agencies.
Governance Analysis:
This provision creates a concerning governance structure where the same authority granting mining licenses is also responsible for environmental compliance certification, creating an inherent conflict of interest.
Implications:
The provision "notwithstanding any other law" appears designed to override provincial environmental protection laws and agencies.
The federally-influenced Licensing Authority becomes the final arbiter of environmental compliance, effectively removing this authority from provincial environmental agencies.
This creates a significant risk where environmental standards may be compromised in favor of mining development, as the same authority responsible for promoting mining is also certifying environmental compliance.
6. Enforcement Mechanisms (Sections 46-70)
Inspection and Enforcement Authority
Section 50 establishes inspection and enforcement provisions that weaken provincial oversight mechanisms.
Comparative Analysis:
The 2017 Act maintained standard provincial inspection regimes. The 2025 Act creates a single enforcement authority and explicitly blocks other provincial agencies from enforcement actions without prior approval.
Implications:
This provision creates a significant barrier to provincial labor, safety, and environmental agencies enforcing their respective laws in mining operations.
The requirement for "prior approval" from the Licensing Authority (with federal representation) effectively subordinates all provincial regulatory agencies to this federal-influenced authority in matters related to mining operations.
Dispute Resolution Mechanism
Sections 65-70 establish a dispute resolution framework that restricts access to provincial courts.
Legal Analysis:
This framework creates a specialized legal channel that bypasses provincial courts entirely. Appeals go directly from the Appellate Tribunal to the Supreme Court, eliminating the normal role of provincial high courts.
Implications:
This provision effectively removes provincial judicial oversight of mining activities, centralizing legal authority at the federal level.
The explicit exclusion of civil court jurisdiction removes important checks and balances that would normally protect provincial and community interests.
This creates significant barriers to justice for local communities affected by mining operations, as they must navigate specialized tribunals rather than accessing provincial courts.
7. Overriding Provisions (Sections 118-120)
Override Clause
Section 118 contains an override clause that is fundamentally concerning for provincial sovereignty.
Constitutional Analysis:
This override clause places this Act above all other provincial laws, effectively creating a legal mechanism to nullify any provincial legislation that might contradict or limit provisions in this Act.
Implications:
This represents one of the most severe violations of provincial legislative sovereignty in the Act. It effectively subordinates all other provincial laws to this federally-influenced mining legislation.
Provincial laws on environmental protection, labor rights, water resources, land use, and indigenous rights can all be overridden by this clause if deemed "contrary" to the Act's provisions.
This clause creates a legal foundation to systematically dismantle provincial authority across multiple sectors whenever mining interests are involved.
Power to Remove Difficulties
Section 120 grants broad powers to modify the Act's application without legislative approval.
Governance Analysis:
While "removal of difficulties" clauses are not uncommon, this provision is unusually broad in allowing modifications to the Act's implementation without legislative oversight.
Implications:
This provision creates a mechanism for the executive branch to substantially modify the implementation of the Act without returning to the legislature.
The phrase "necessary or expedient" provides extremely wide latitude for making changes, potentially allowing substantial modifications to be made through simple notifications.
The lack of any time limitation on this power (often such clauses are limited to 1-2 years after enactment) makes this an ongoing governance risk with no sunset provision.
Conclusion
This technical analysis has identified seven major areas of concern in the Khyber Pakhtunkhwa Mines and Minerals Act, 2025. The Act systematically undermines provincial sovereignty through mechanisms including:
- An expanded definition of strategic minerals that creates unlimited federal control potential
- Administrative structures with significant federal representation and influence
- Special licensing procedures that favor federal entities
- Revenue allocation mechanisms that divert 70% of mineral wealth away from direct provincial control
- Environmental provisions that override provincial environmental laws and agencies
- Enforcement mechanisms that subordinate provincial regulatory agencies
- An override clause that places this Act above all other provincial legislation
The cumulative effect of these provisions is to create a comprehensive framework for federal control of provincial mineral resources that fundamentally contradicts the principles of provincial resource sovereignty established in the 18th Amendment to the Constitution.
This analysis should be read alongside the full text of the Act for complete context. We recommend that stakeholders carefully consider these provisions and their implications for Khyber Pakhtunkhwa's constitutional rights and economic development.