Pakistan seeks investments to unlock vast potential of its mineral wealth

ISLAMABAD: As global demand for critical minerals continues to surge, Pakistan is looking to attract billions of dollars in investment to unlock the potential of its untapped minerals sector.

The industry is worth an estimated US$6 trillion, even though it only accounts for 3 per cent of Pakistan’s gross domestic product.

Earlier this month, the country sought to attract foreign investors to help grow the sector through the Pakistan Minerals Investment Forum in Islamabad. 

SURGING GLOBAL DEMAND

Many of the minerals in Pakistan - such as gold and copper - are already seeing global demand, said Patrick Barnes, head of metals and mining consulting team at data and analytics solutions provider Wood Mackenzie.

“The most exciting part is that (Pakistan) tends to have the kind of deposits that people are looking for right now. Probably the hardest thing to find in the mining world right now is a large, high-grade copper deposit,” he added. 

“The world needs crazy amounts of copper to enable the energy transition, to enable electrification, to enable electric vehicles. All these things use a lot of copper.”

The Reko Diq Mine, for instance, is poised to unlock one of the largest copper and gold reserves in the world.

The planned mining operation in Balochistan province is expected to generate an estimated US$74 billion in free cash flows over the next 37 years.

It is jointly owned by Canadian mining firm Barrick Gold and the Pakistan government. 

Herman Cornelissen, head of sustainable development at mining consultancy DMT Kai Batla, said: “So gold is a very big driver of investment, and in that respect the resources at Reko Diq are significant. They certainly have the potential to generate significant revenues for Pakistan.”

Pakistan's mineral-rich areas cover 600,000 sq km, more than twice the size of the United Kingdom.

Of the country’s more than 90 known minerals, only 52 are mined on a commercial level for applications that range from construction to paper production and even explosives.

Pakistan's Petroleum Minister Ali Pervaiz Malik told CNA that the government is promising incentives, and will streamline regulatory frameworks.

VOLATILE SECURITY, HIGH ELECTRICITY TARIFFS

However, security is a major issue.

A long-running insurgency in Balochistan has disrupted mining operations for over a decade. Recent terror attacks on civilians and foreign workers have also shaken investor confidence.

Many global investors have expressed doubts about the safety of their future operations, and are concerned about increasing attacks by militant groups opposed to mining in the region.

To reassure potential investors, the country's army chief Asim Munir promised to ensure a robust security framework and protect the interests of investors.

Another challenge is Pakistan's high electricity tariffs and surplus capacity.

In the last financial year, only 34 per cent of the energy generated was used due to structural inefficiencies.

Acknowledging the problem, Malik said: “The grid has to improve its game, improve on the efficiency front, and dismantle the perverse incentives in the pricing regime, so that people can also rely on the grid for reliable and economical power.”

Ahmed Hayat Lak, managing director of Pakistan's Oil and Gas Development Company, said collaboration is important when it comes to tapping Pakistan's vast mineral resources. 

"In the case of Reko Diq, a lot of services are being procured from the US. So we would like to see an ever closer union in this regard, and they should come forward not in terms of daily service providers but as well as completely invested in our sector,” he added. 

“It is important that we have world class partners, we have world class technology and we have world class services.”