AS the dust settles from the recent elections and the formation of government, it’s clear that the previous coalition is taking the reins of power. In their limited previous term, Shehbaz Sharif and his cabinet highlighted Pakistan’s mineral resources — (over)estimated at $6 trillion — as the linchpin of the country’s economic revival. The ambition aligns with the global race for green energy transition that has seen a rise in mining activities globally. However, having mineral resources does not suffice; the focus is on navigating a complex and competitive global mining landscape.

It takes decades to convert mineral deposits into a mine. Patience is key in the economic ecosystem of mining. The identification of ‘critical minerals’ stands at the forefront of strategic resource management. All mining-centric economies regularly update their list of critical minerals that reflects the shifting sands of economic, strategic, and technological priorities. Does Pakistan have a list of priority minerals? No, not at this point.

For Pakistan to rise in the mining sector, an essential step involves determining which minerals hold the greatest value and potential. Once that has been done, the new 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.

The reliance on domestic capital is important for national prosperity; however, 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.

We want to develop the whole value chain of minerals.

At the heart of every mining endeavour lies a stark reality: most projects fade away in the exploration phase, never reaching the stage of operation, let alone fruition. We are standing at the starting line. Let us value the economy of the Reko Diq project. Figures may vary, with some estimates of the project deposits at over $100 billion — keeping today’s prices in view. The project, with its promise of an aggregate turnover and exports of above $2bn per year, 7,000 jobs during the peak construction phase, and a staggering annual output of 80 million tonnes of gold and copper concentrate, paints a picture of opportunity that invites foreign interest. This comes with a projected $7bn infusion of — mainly foreign — investment, with over $250m already poured into exploration and feasibility studies. These numbers don’t only speak to the potential of Reko Diq project and mining, they also whisper of prosperity and invite foreign interest in other minerals.

Exaggeration and overestimation of deposits tend to bring dire consequences that can result in regional grievances. The recent discoveries of high-value minerals in Pakistan came out of Balochistan and KP — provinces at odds with the federal regime. Such overestimates fuel regional discontent. Presently, minerals account for merely 2.5pc of the country’s GDP. Asser­tions of a leap above 5pc associated with mineral exports are misleading.

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 mining hopes into another CPEC — promising but unfulfilled. For 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 minerals development into the economic framework.

The writer is a policy advisor in the Policy and Economics Branch of Energy and Natural Resources, Government of Canada.

X: @umerasks

Published in Dawn, March 7th, 2024