The mineral sector has contributed to the economic development of many countries including China, Italy, Turkiye, Spain, and Brazil. The exploitation of mineral resources creates multiple benefits to an economy including employment creation, increase in income level, trade and export promotion, and acceleration in the economic growth of a country.
Pakistan is endowed with around 92 types of minerals out of which 52 are commercially exploited. The main minerals include coal-185 billion tons, lead zinc over 23 million tons, copper around 6000 million tons, chromites over 2.5 million tons, gold over 1.6 million tons, silver over 600 million tons, iron ore over 1400 million tons, salt around 10 billion tons, aragonite/marble over 295 billion tons and gypsum around 4.8 billion tons. Pakistan has the world’s second-largest salt mines, second-largest coal deposits, fifth-largest copper & gold reserves, and billions of barrels of crude oil. However, despite possessing such enormous mineral resources, the mineral sector’s contribution to Pakistan’s GDP is just around 2.5 to 3 percent, which is negligible. The development of the mineral sector in Pakistan has been hindered by inadequate infrastructure, a lack of modern technology, and insufficient financial resources.
The GoP organized the first-ever Pakistan Minerals Summit in August 2023 to highlight the economic potential of the mineral sector. The Summit was attended by many distinguished guests from the Kingdom of Saudi Arabia, Azerbaijan, and many other countries. The panel discussions in the Summit deliberated on the present potential, available technology, opportunities for investment for foreign parties, future roadmap, and development of allied communities of the region. The summit concluded with a firm resolve to continue untiring efforts for the development of the mining sector. The stakeholders made commitments to provide a business-friendly environment, overcome red tape, and introduce one-window operations for investors in the mineral sector.
Pakistan needs to follow the commitments with solid steps to exploit the actual potential of the mineral sector for the economic development of the country. The following steps can help the country to transform the mineral sector into a driving force for the economy:
The government should invest in technology and exploration initiatives. More funds should be allocated for geological surveys and exploration to identify new mineral deposits. The GoP should encourage and facilitate public-private partnerships in the mineral sector and take measures to attract more foreign investment. Investing in advanced mining technologies can help a lot to improve efficiency and productivity in the mineral sector and reduce costs.
The lack of better infrastructure is a major hurdle in the exploitation of mineral resources. The GoP should take measures to develop and upgrade infrastructure, including transportation, to facilitate the movement of minerals from mining sites to ports. It will help promote mechanized mining and make exports more competitive and attractive to international buyers.
The GoP should take policy measures to create a predictable, stable and transparent regulatory framework to attract foreign investors in the mineral sector. Transparent and consistent policies will encourage long-term investments in the mining sector. The GoP should focus on streamlining the permit system to reduce delays and bureaucratic hurdles in the grant of permits for mining projects.
Pakistan can earn billions of dollars from the export of value-added mineral products. To realize this goal, the GoP should encourage the development of downstream industries that help add value to raw minerals. Pakistan mostly exports raw minerals. However, processing minerals into intermediate or finished products will bring more lucrative results to the country than exporting raw minerals. Investing in research and development will help explore new applications for minerals, and foster innovation and diversification.
Pakistan is currently focusing on a few traditional markets for the export of minerals. However, the GoP should cooperate with the private sector in identifying and targeting new markets for mineral exports. For this purpose, diplomatic efforts should be involved to establish trade agreements or partnerships with countries experiencing high demand for the minerals Pakistan produces. Conducting market research is also important to understand the specific requirements and preferences of target markets.
The world is getting more sensitive about the environmental impact of mineral exploitation. Therefore, Pakistan needs to adhere to international environmental and social standards in mining practices. With the use of advanced technology, responsible and sustainable mining practices should be used to enhance the country’s credibility and reputation in the global market as a responsible state that will also attract environmentally conscious investors.
The exploitation of mineral resources is a skilled-intensive job. The GoP should accord high priority to producing skilled workforce by investing in education and training programs for the mining sector. A skilled workforce will help in efficient, productive and safe mining operations.
The mineral sector is vulnerable to many risks including volatility in commodity prices, geopolitical risks, political instability, and economic uncertainties. It is, therefore, important for the GoP to implement risk mitigation strategies to address such challenges. The creation of financial instruments or insurance mechanisms to hedge against such risks can help mitigate risks in this sector.
Pakistan needs to showcase the export potential of its mineral sources in the potential markets. This can be done by actively promoting Pakistan’s minerals in international markets. Pakistan should ensure participation in international trade shows, exhibitions, and conferences to highlight the export potential of its minerals.
It is important to attract the private sector towards the exploitation of mineral resources. One of the best options to do this is to provide financial incentives, tax breaks, or subsidies to attract investors in the mining sector. The GoP should provide cooperation and support to the private sector in playing a significant role in exploiting the mineral sources.
To conclude, Pakistan needs to develop a comprehensive strategy encompassing various factors and engaging stakeholders from the government, private sector, and local communities. Moreover, periodic reviews and adjustments to policies based on evolving market dynamics will help ensure long-term success.
The writer is working for a trade body in Pakistan.
