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THE SAINDAK FILES

January 07, 2018

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A mineral-laden mountain in the backdrop of the Killi Bharath village | Photos by the writer
A mineral-laden mountain in the backdrop of the Killi Bharath village | Photos by the writer

The rumours were rather troubling: Saindak’s minerals-laden mountains were sinking. Such was the quantum of mining, went the grapevine. Gold, copper and silver blocks, which weigh between 600 and 700 kilograms each, are routinely sent to Karachi by truck.

The journey to Saindak from Quetta, the provincial capital of Balochistan, is about 660 kilometres long. Visitors first have to reach the bordering town of Taftan, before travelling another 30 kilometres to reach the main site of the Saindak project. But the journey paints a picture of desolation: until you reach Saindak, there is no human settlement barring a solitary village.

But as you approach Saindak, black-coloured mountains begin dotting the scenery. Quetta-based geologists explain that these are mountains that still contain minerals. The weather too is frigid. And as locals explain later, the water here is also salty due to the area being minerals-rich.

There is an unconstructed madressah as we enter Saindak — locals explain that construction was abandoned after Chinese officials’ working on the Saindak project objected to it.

Although mineral resources are aggressively being mined and sold from Chaghi district, the last to benefit are those native to the region

Our destination is Killi Bharath, a small village that comprises 35 scattered homes, which is situated a few kilometres away from the main Saindak project. Killi Bharath is actually one of six villages in Saindak. In Balochi, Saindak roughly translates as ‘black mound’. Killi Bharath is the only village that has potable water. Locals explain that people from far-flung areas come to Killi Bharath to get water for drinking purposes since natural wells are located in the village.

The road to Killi Bharath is kutcha and rugged. Inevitably our vehicle tyres go flat and we are forced to stop just outside the village. The village itself is a picture drawn in medieval times. The population is hardly a few thousand while most huts are constructed out of mud. The only people we can spot are four children in their traditional Baloch shalwar and kameez playing with old tyres near a house. Despite our requests, they do not come to us; they are shy. Two girls get scared and run away. A little boy rolls a worn-out tyre towards me to stop me from snapping pictures.

This little interaction is a microcosm of the security enveloping the village. The mountains in Saindak are surrounded by Frontier Corps (FC) check posts while all villages, and of course the mining project, are heavily guarded by security forces. While travelling from Taftan to Saindak, for example, we had to pass through around 10 checkpoints.

This security is despite the fact that the western part of Balochistan, where Chaghi is located, is comparatively peaceful. Ethno-nationalist sentiment hardly exists amongst people in this part of the province, which is why there is no grave threat to the Chinese involvement in Saindak. In fact, the Baloch people associated with the Saindak project themselves guard the bordering areas for a paltry 10,000 rupees a month.

And yet, Saindak is enveloped in secrecy. Locals claim that there is “an undeclared ban” on anyone from elsewhere entering Saindak, especially journalists. A story in Dawn’s July 24, 2016 edition reported that a Chinese media team from the CCTV channel were not allowed to visit the Saindak project on the pretext that they were travelling without a no-objection certificate. The team returned empty-handed.

Something is awry but what?

THE SAINDAK PROJECT

The South Ore Body which is nearing exhaustion
The South Ore Body which is nearing exhaustion

The Saindak copper and gold project is centred in Balochistan’s largest and most resource-rich district, Chaghi. But the great irony is that, with an official population of only about 226,000, it remains one of the poorest districts in Balochistan. If Balochistan is said to be the most undeveloped province in Pakistan, Chaghi is its most undeveloped district.

In 1961, the Geological Survey of Pakistan discovered copper deposits in Saindak. “In 1972 and 1973,” notes a document obtained from Balochistan’s mines department, “the [Geological Survey of Pakistan] and [the] United Geological Survey confirmed the existence of copper by diamond core drilling core of five holes in Saindak.”

This led to the formation of the Resource Development Corporation on April 15, 1974, which was owned and managed by the government of Pakistan. The corporation later turned into the Saindak Metals Limited (SML), tasked with mining copper and gold from the region. Although the company was operational through the rest of the 1970s and 1980s, it only came into its own in the 1990s after it inked an agreement with a Chinese firm named the China Metallurgical Group Corporations (MCC). The pact was to build the Saindak Copper-Gold Project on a turnkey basis.

As per the terms of the first contract, claims a USAID report, the MCC was handed control of the mines (12,500 tons/day), the copper concentrate (12,000 tons/day), an electricity station (50MW/5MW backup power), a bulk water plant (32,000 tons/day), associated warehouses, buildings, workshops, housing on site. The MCC was also tasked with the construction of an airstrip and an additional 35km road from Taftan to Saindak.

“The agreement contained clause of facility of [sic] Supplier’s Credit of US$ 84 million against which equipment/machinery were to be supplied by the contractor (MCC),” reads the official document obtained from the provincial mines department.

The initial cooperation did not yield profitable results.

“During trial production in 1995, the project produced 1,500 MT of blister copper and sold [it] in [the] international market but due to low prices of copper, the project could not be made operational,” claims the document. “Due to this reason, from 1996 to 2001, the government of Pakistan sustained a loss of 300 million rupees annually.”

It was an irony in terms: Balochistan was bestowed with mineral treasures that were not producing handsome profits.

The next year, in 2002, the federal government looked into ways to turn the wheels of the project. A federal cabinet committee was constituted to recommend possible options and the committee recommended leasing the project altogether.

In effect, the government would keep away from the mining process in return for a share in profits. Under the lease agreement with the MCC, Saindak’s copper and gold mines were handed over to the corporation on October 2, 2002 for a period of 10 years. Once this lease expired, the government opted to renew it for another five years. When that expired, late last year, another five-year renewal was made.

While bilateral agreements sailed through, little of the handsome profits were reinvested into Saindak. The project has a corporate social responsibility component to it, in pursuance of the government’s vision to “ensure the contribution of the mining sector to poverty alleviation ... through the empowerment of communities.” A well-placed source within the Balochistan government says that funds in lieu of the Saindak project’s corporate social responsibility component, which are submitted at Account #1 of Balochistan’s finance department, do not trickle down to the people living in the vicinity of the project.

LAY OF THE LAND

There are three ore reserves in Saindak: South Ore Body, North Ore Body and East Ore Body. Each ore reserve is divided into ‘benches’. A bench is a narrow strip of land cut into steps. These zones are created along the walls of an open-pit mine. This helps workers and trucks get to a bench where mining is currently taking place.

But what is being mined is copper ore. This is then put through a process of smelting, or heating at very high temperature, to separate the ore from the copper. On average, the concentration of copper in ores (copper percentage) is only about 0.6 percent.

So, for example, the South Ore Body, consists of around 28 benches. It is dug deep inside and a row of dumpers is frequently filled with the copper that is being mined. With the help of submersibles, water is pumped out.

“From 2002 to 2017, the MCC has been working at the South Ore Body,” explains one former senior official of the Saindak project. “The total reserves in the South Ore Body are 111 million tonnes and its copper percentage is 0.430. Reserves should have lasted 19 years and excavation per day stands at 12,500MT.”

But, says the former official, “Due to high price of copper rates, the MCC increased its production, collaborating with SML illegally, in order to produce more and more copper,” he alleges. “As a result, the mines have been exhausted in just 15 years.”

The Saindak project site is an oasis of modernity amidst underdeveloped villages
The Saindak project site is an oasis of modernity amidst underdeveloped villages

Back at the South Ore Body site, work is still underway and dumpers line up to move inside the pit. They all seem in a hurry. I hail a dumper down and ask him why the rush to get inside the pit.

“Because the one who comes out of the South Ore Body earlier is given an extra three dollars by the Chinese,” he says, talking to Eos on condition of anonymity. “Sometimes this leads to accidents. One of our friends was injured recently while driving fast. By sheer luck, he survived but his dumper was smashed. He had to quit his job. He had severe injuries on his back. Since he could not drive a dumper anymore, he asked for another job which he was not given. That is why he quit.”

Similarly, work is also now underway at the North Ore Body. According to the former Saindak official, the total reserves of the North Ore Body are 28 million tonnes while the mine has a projected life of four years. Copper percentage is 0.440. Interviews with officials in Saindak reveal that the North Ore Body will go around eight benches. It has already reached five benches, albeit within a mere five months.

At the mines, an old dumper without windows or air-conditioning stands out. It seems like a rickety vehicle from afar but there is a clamour to drive it. I ask one of the drivers why that is so.

“At first, none of the drivers would touch that old dumper,” he recalls, “so the Chinese thought that the dumper will be wasted. After that, they started giving three extra dollars to the driver who runs that old dumper. Now, everyone fights for the chance to drive that old dumper.”

Meanwhile, the East Ore Body is endowed with 273 million tonnes along with a copper percentage of 0.34, adds the former Saindak official. Its projected mine life is 45 years. Mining still hasn’t started but a Chinese official says that quality of the North Ore Body and the East Ore Body is inferior to the South Ore Body.

CHINESE INTEREST IN SAINDAK

By sheer luck, I was in Wuhan in the Hubei province of China late last year, where the MCC is headquartered. Officials of the corporation expressed optimism about Pakistan in general, with MCC Executive Director Mao Hongtao arguing that they have in recent times also undertaken many projects in Punjab.

“In the near future,” says Hongtao, “we’ll take our expertise to Pakistan and try to seek more projects from across the country, particularly in Balochistan.”

Hongtao claims that in the Saindak project, locals are recruited into the management while 90 percent or so of their technicians are local recruits. “We are also trying to find new sites in Chaghi district. We have not discovered them yet but we are searching around Naukundi and Dalbandin. We hope to get more projects and businesses into Balochistan.”

Indeed the Chinese interest in Chaghi has been growing by the day. Chaghi district is known as the ‘museum of minerals’ – such is the plethora of natural resources it is endowed with. Reko Diq, for example, which geologists estimate contains 11 times more deposits than Saindak, is also situated in the Chaghi district.

While the China-Pakistan Economic Corridor (CPEC) is a newer phenomenon, MCC’s involvement in Chaghi is more than two decades old. Chinese officials associated with Saindak project typically arrive in Dalbandin, the headquarters of district Chaghi, every Thursday from Karachi. The airport is tiny but thanks to the Chinese, it is operational. Even ordinary citizens of Chaghi can travel to Karachi from Dalbandin by airplane. From Dalbandin to Saindak is a road journey but Chinese officials are always provided strict security.

The process of smelting underway
The process of smelting underway

Guo Jizhou, who serves as director, deputy general manager, and as chief engineer of the MCC, is one official who has been to Pakistan. He says that Balochistan has lots of advantages, and “our company is looking forward to that.”

“I have been to Balochistan and it is a province replete with potential,” says Jizhou. “MCC has healthy cooperation with Punjab and it wants to have the same with Balochistan. I believe in the future, we will have more activities in Balochistan.”

Central to this discussion, however, is who gets to deal with the Chinese, or any other investor for that matter.

“The province can explore the precious metals itself after the passage of the 18th Amendment,” argues economist Syed Fazl-e-Haider. “Exploration rights of the Saindak project should have been handed over to the provincial government after the passage of 18th Amendment. Under the lease agreement signed in 2012, the province had only been receiving 25 percent share of net profit from the Chinese company.”

In principle, Balochistan has been empowered to take over the Saindak project. It can take any decision about its future and float international bids to award the lease of the mines to the highest bidder. And while the provincial and federal governments had decided in principle that the Saindak project will be handed over to Balochistan after the expiry of the last five-year lease agreement in October last year, the Saindak project was once again leased by the federal government for a new term even though that isn’t its constitutional right.

What compounds matters is that nobody is willing to provide answers for the many plights of Saindak. Pakistani officials, particularly from SML, avoid media interviews. They tend to award interviews only to those publications and periodicals which are dependent on their advertisements. In many cases, news about protests against the management of the Saindak project hardly gets to the local Urdu media. If any news does get published, it is one-sided and in favour of the project’s management.

Take the February 2015 edition of a local magazine by the name of Taraqqi, for example. The edition carried an interview with Muhammad Raziq Sanjrani, who is managing director of Saindak Metals Limited (SML).

This is the same Sanjrani who was appointed by former Prime Minister Yousaf Raza Gilani. The National Accountability Bureau (NAB), however, had initiated an inquiry against Gilani over violation of rules and misuse of authority in appointing Sanjrani. A well-placed source from the NAB chapter in Balochistan claims that this and two other “illegal appointments” dealt a loss of 17.70 million rupees to the national exchequer.

In his interview, Sanjrani claims that due to the Saindak project, the lives of local people of Saindak have been improved economically. He claims in the interview that they had taken solid steps in education, health, and welfare of local people. Three years later, in 2018, the people of Saindak are still asking for education, health, and potable water.

ROBBERY IN BROAD DAYLIGHT

Chinese presence in Saindak predates the CPEC project
Chinese presence in Saindak predates the CPEC project

“I cannot call the 10-year lease agreement for Saindak mines signed in 2002 with MCC of China a transparent deal,” declares Syed Fazl-e-Haider, author of The Economic Development of Balochistan.

“Under the deal, Balochistan just received a nominal royalty, while the federal government retained 50 percent share of copper sales. The lease contract with MCC did not address the issues relating to excessive mining and the need for a monitoring mechanism to check and evaluate the production from Saindak. The Chinese exploited Saindak’s resources for 16 long years without any check. There was no tally of how much silver, gold and copper was separated during the 16 years from a mine with a 19-year life span.”

The economist suggests that a technical body for monitoring and evaluation of production and export of copper, gold and silver from the Saindak project should have been constituted before the copper and gold assets were handed over to the Chinese.

“Not only that, but the Chinese did not establish a refinery as per their commitment and took the blister copper to China for refining,” he explains.

An official from the Balochistan government retorts that it requires more than one billion dollars to set up a refinery in Pakistan. “This is quite expensive,” he says, the suggestion being that Pakistan cannot invest properly in its minerals sector.

But the issue of due process cannot simply be brushed aside. Locals allege that work at the North Ore Body had already started before Pakistan has signed the agreement on October 16, 2017 in Beijing to lease out the Saindak project for a third time to the MCC.

“Work had started two months before the extension of the new five-year lease,” claims one source, “and they will likely complete it within three years because they are working day and night.”

But more than Chinese officials, it is Pakistani officer bearers of the Saindak project who are tight-lipped about the legalities and due process involved. In Quetta, officials at the office of the Saindak project largely evade any questions asked. One official stayed mum while enquires were being made, only to eventually stand up to perform ablution and pray. Another official from SML says that, “we, the people of Balochistan, should be thankful to the Chinese for working at the Saindak site. This copper was a noose around our neck, all thanks to China for exploiting it.”

In Saindak, an Export Processing Zone Authority (EPZA) also exists to facilitate investors. This zone is duty free. According to well-places sources in the EPZA, during the work on the South Ore Body, around 19,000 to 20,000 tonnes of blocks would be extracted annually, which has now dwindled currently to 12,000 tonnes.

“The EPZA is an autonomous body, and the company working at the Saindak project is the seller. It sells minerals to several countries,” explains the source. “From 2003 to July 2017, 290,000MT have so far been exported with a total value of 2,000 million US dollars. EPZA takes 0.1 percent tax from the company, and collects one percent tax for the Federal Board of Revenue (FBR).”

And yet, despite the money being generated from the project, Saindak paints a picture of grave apathy.

In 2013, Dawn reported that the MCC Resources Development Limited (MRDL) working on the Saindak Cooper and Gold mining project had said that it paid 39.8 million dollars to the Balochistan government on account of royalty over the past 10 years from the Saindak project.

Meanwhile an official of the Saindak project shares with Eos the fact that from 2003 to 2017, their project has paid over seven billion rupees (Rs7,144,301,955 to be precise) to the provincial government of Balochistan.

This raises the question: where has this money gone?

ANOTHER SUI?

Were a phenomenon to be a one-off, it can be dismissed. But twice?

Much like Sui, the last to benefit from the national gas being extracted from there, Saindak is also the last to draw any benefit from the sale of its mineral resources. Locals allege that there has been no development over decades in Saindak. Despite extracting gold and copper for over one-and-a-half decades, they argue, why has the administration of the Saindak project not yet constructed a metalled road?

Having visited the nearby places of Saindak project, especially bordering Taftan, there is much weight in the locals’ grouse. The legend of sinking mountains does not stand the test of evidence but the state of abject helplessness among the people is almost palpable. One senior Pakistan Customs official, who requested anonymity, tells Eos: “According to an agreement, 5 percent from out of 100 per cent total revenue of Saindak project, ought to have been spent on the welfare of the local people, including those of Taftan.”

Ground realities tell us otherwise.

“We had no electricity for several decades in our village,” narrates a resident in Killi Bharath. “After making a huge hue and cry, two days ago the MCC Resources Development Limited working on the Saindak project supplied solar panels to our village. That is why we now have electricity.”

In fact, most interviewed about the role of the SML in Saindak are quite critical of the company. They accuse the SML of stepmotherly treatment to the locals. Roads do exist on routes that lead to the company sites, they claim, but villages have been left without any paved roads. Situated some two or three kilometres away from each other, the villages remain disconnected.

Others accuse the SML of reneging on its promise to send students from the villages for studies on scholarships. Eventually only five youngsters from various villages of Saindak were sent to a vocational training centre in Quetta, where they are monthly given a stipend of 10,000 rupees. Then there is anger over not a single female doctor being present for the needs of the six villages of Saindak. Nor does the company provide its ambulance to locals.

As opposed to what the Chinese have been told, locals of Saindak are only given labour, security, and other menial jobs.

One local claims that in admin, the mining deputy director does not have a professional degree, while in the same mining department MSc degree holders, who have studied geology, have been appointed as dispatchers. He further claims same is the case with the MCC Resources Development Limited deputy director.

Jalil Mohammadani, who is a local politician and former mayor of Taftan, says they (locals) are not given jobs, but when they protest they are only given security jobs. “Mostly, big jobs and positions are given to ones who are out of the province despite the fact that locals of Chaghi do have professional degrees, but they are not prioritised.”

Meanwhile, agriculture seems to have disappeared from the area. Abdul Razzaque Mohammadani, who is a resident of Kachao at the Pakistan-Iran border, says that due to security measures now, they are always barred from entering Saindak. This wasn’t always the case since water for the Saindak project used to be brought from Kachao, Thang Kachao, and Sarzi which are situated at the Pakistan-Iran border.

But Mohammadani’s area became a dumping yard of sorts for Saindak after potable water was found elsewhere. “Chemicals of the mines get mixed with water in nearby places,” he explains. “Our camels expire and their heads swell when they drink the water. About 500 of our tribesmen’s camels have died so far after drinking the contaminated water.”

Far from empowering the locals, the opposite became true.

“The project has done nothing for us; our agriculture is finished and our date exports are finished,” asserts Mohammadani. “As a result, people have migrated away from Kachao.”

As for smelter workers of Saindak, they work in an environment filled with toxic gases. The masks provided to them are made from cloth rather than the special masks needed to work in such depths. So, what do the workers do? They drench it thrice in water to save themselves from gases. In the past, they would be given milk packs to replenish energy but now the company has stopped providing those.

“Most workers of smelter are locals from Saindak, which is why they are prioritised lower than others,” says a worker at a smelter. “Some of us locals have been working regularly for over 15 years. Despite that, we are not given annual awards or other remunerations.”

“We work in smelters that are operating at 800 degrees [Celsius],” comments another on conditions that seem like an impossibility to others. “When we cough sometimes, we throw up blood.”

The writer is a member of staff. He tweets @Akbar_Notezai

Published in Dawn, EOS, January 7th, 2018