Mining the earth for natural resources is a profitable business strategy employed by many nations, including China, Italy, Turkey, Spain and Brazil.
The contribution of the mineral sector is multifarious: trade promotion, facilitation in natural resource exploitation, improvement of per capita income, increased employment, expansion of the communication base for economic activities, enhancement of income level, and acceleration of economic growth.
Several developed countries have been exploiting their original mineral resources by using them as intermediate goods and finished products. Many of the countries are importing minerals from other countries, refining them, adding value, and then exporting them.
Pakistan is endowed with huge reserves of minerals covering an outcrop area of 600,000 km due to its unique geological condition. Fortunately, Pakistan has been blessed with all types of rock from pre-Cambrian to recent with exceptional geological and geomorphological features.
There are 92 known minerals, of which 52 are commercially exploited. They include coal, copper, gold, chromite, mineral salt, and several other minerals. Baluchistan is especially blessed with copper, gold, lead, zinc, iron ore, magnetic sands, and stones.
Reko Diq in Balochistan is one of the world’s largest underdeveloped copper-gold deposits, with an estimated cumulative revenue of over USD 100 billion over 50 years. We have seen a significant contribution of the mineral sector to our country’s GDP and have the potential for further growth. According to the National Account Statistics, our mineral sector saw a growth of 4.9 percent in FY24.
We are still far away from achieving the full potential of our mineral sector. A number of gaps exist in exploitation and marketing of mineral. To tap its mineral wealth, Pakistan must develop uniform and investment-friendly, national and provincial mineral policies with a smart regulatory framework.
Moreover, mining is an industry where initiatives to attract the interest of global investors are compulsory.
The successful revival of the Reko Diq project shines as the country’s beacon of hope in this area.
Apart from that, the establishment of a new federal initiative, the Special Investment Facilitation Council, to de-risk the project investment is important: however, the settlement of the Reko Diq project through international arbitration and legislative support remains a cautionary indicator for foreign investors. It is anticipated that the SIFC will be able to prevent such events and act as a pivotal concierge service for future mining projects in the country.
An enhanced mandate for the SIFC must guide both the federal and provincial regulatory regimes in terms of facilitation in this challenging area.
As discussed above, the formulation of a new national mineral policy with an appropriate regulatory framework for the facilitation of investment, particularly foreign investment is required by provincial directorates of mines & minerals by aligning provincial mineral policies with the new national mineral policy.
Estimation and mapping of mineral reserves and deposits using modern scientific methods such as geo-modeling and 3D modeling, in consultation and partnership with PCSIR, GSP, etc., may be done.
The development of mine access roads for the existing and potential mineral-rich areas by the provincial government, with the lead role of the Directorate of Mines and Minerals, may be done collectively by the provincial-federal governments.
On the other hand, for rising in the mining sector, an essential step involves determining which minerals hold the greatest value and potential.
Once that has been done, the government will need to design a comprehensive policy to cover the entire minerals value chain. This would include i) upstream—the exploration and extraction of minerals; ii) midstream—processing and refining; and iii) downstream—manufacturing the products for the end user.
Overlooking a single piece of this chain could derail the anticipated outcomes for the entire sector.
Additionally, the government’s role in regulating and managing the supply chain, including ensuring transparency in mining activities, tax collection, and environmental protection, is vital for the sector’s sustainable growth.
Policies that promote efficient transportation, processing, and export of minerals can directly impact Pakistan’s economic performance.
However, with the mineral sector falling within the ambit of the 18th Amendment, the provinces should build their own capacity for geological and geophysical studies, leading to the extent of feasibility studies. Moreover, mining projects should be advertised internationally, and each one should be given to the company that gives the best offer and has the potential as well as proven financial and technical capacity to carry out the project. The bidders should have on-ground activities already in the mining sector in other parts of the world.
Summing up, we are not at the stage where mining will bridge the import-export gap, enhance GDP, help social well-being, or fund government spending in the short term. It’s a myth until we reach downstream manufacturing, a decades-long goal. We don’t want to be a resource-exporting country forever; instead, we want to develop the whole value chain of minerals.
Nevertheless, we must avoid turning untapped mineral economy hopes into another CPEC—promising but unfulfilled. For tapping the mining to significantly benefit Pakistan’s economy, transparency is crucial, unlike CPEC, where it is missing. For the major part, Pakistan will still rely on its agriculture and industry sector, where the latter could be improved by bringing untapped into tapped minerals development into the economic framework.
Copyright Business Recorder, 2024
The writer is an economic analyst.
Email: [email protected]
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