ISLAMABAD: The Asian Development Bank (ADB) has agreed to provide policy and advisory technical assistance to Pakistan to help resolve the dispute of mining transaction at Reko Diq and other immediate barriers to attract investment into the mineral sector in Pakistan with a focus on Balochistan.
Other issues acting as irritants include award and monitoring of licensing, environmental and social safeguards, and mine security, sources informed Dawn.
The current legal framework does not provide sufficient criteria or detailed explanations for the licensing process. This is a strong deterrent to investors who shun arbitrary, discretionary regulatory decisions and are concerned over the outcome of the Reko Diq mining project dispute.
In May this year, the federal government and the Balochistan government requested the ADB for such an assistance, which is not included in the ADB’s Country Operations Business Plan 2014-2016, but falls within the broader ambit of the Country Partnership Strategy (CPS) for 2009-2013.
Reko Diq in Chagai district of Balochistan had world class copper and gold deposits which, if developed, would set the standard for large-scale mining in Pakistan and encourage further substantial investment in the mineral sector.
In 2010, a joint venture completed an extensive and detailed bankable feasibility study consisting well over $200 million to establish the basis to develop the Reko Diq mining project.
The proposed $3.3 billion project would build and operate a copper-gold open-pit mine with an estimated mine life of 56 years, using high-efficiency mining techniques and cutting-edge technology.
The project came to a standstill in late 2011 after the provincial government rejected the joint venture application for a mining lease. In November 2011, the joint venture commenced international arbitration proceedings against the federal and provincial governments.
After coming into power, Prime Minister Nawaz Sharif asked the new chief minister of Balochistan and the minister for petroleum and natural resources to find a way to resolve the dispute, mindful that the outcome of the international arbitration cases could have an adverse effect on Pakistan and make it more difficult to attract foreign direct investment into the mineral sector.
Unlike Chile, Tanzania and a number of other developing countries with similar mineral endowments, Pakistan has not yet been able to develop its large-scale mineral resources.
World class large-scale mineral deposits are found throughout Pakistan, and in particular in Balochistan for copper and associated gold at Saindak, now being mined, Reko Diq and other areas under exploration.
Other investment opportunities include Duddar in Balochistan for zinc and lead, Punfmin and Chiniot for iron ore, and Thar for coal.
Sources said that ADB has suggested that fiscal rules and mechanisms, such as stabilisation and savings funds based on international best practice are needed in Pakistan to allocate mineral sector revenues between current consumption and long term savings – and between federal, provincial and local governments, local communities, beneficiaries and other stakeholders.