MINING SECTOR

Analysis of Pakistani Industries

Assignment 1

Submitted by:

GROUP 21
Youmna Naveed - 24571
Muhammed Saad - 24273
Maham Aamir - 24633
Sofia Naseem - 23989
Zohair Shaikh – 24669
Contents
Introduction:................................................................................................................................................3
The Mining sector at present.......................................................................................................................3
Transformation over the years.....................................................................................................................3
The future outlook.......................................................................................................................................4
The future of some of the notable mines..................................................................................................4
The future outlook of the sector...............................................................................................................5
Contributions of each member....................................................................................................................5
References...................................................................................................................................................6
Introduction:

We have all grown up learning that the land of Pakistan is rich with all kinds of resources man

could imagine. Fertile soil, warm, sunny climate, massive rivers and great mountains – which

means we also have an abundance of mineral resources. However, it is one thing to have such

blessings, but how we use these resources is a whole different story. In this assignment we are

analyzing what all has been done in the mineral rich mining sector of Pakistan, and what it future

looks like to us.

The Mining sector at present

Given Pakistan’s negative growth during the past few years, the Mining sector is an industry that

is hardly ever talked about. Even though, growing up, we have heard a lot about how Pakistan

has been blessed with an abundance of resources. However, how we as a country are utilizing it

has never been in the spotlight. Pakistan has the world’s largest salt mines and fifth largest

copper and gold reserves. Not only this but it has the second largest coal deposits and has been

estimated to have had an abundance of crude oil. This industry promises an average growth rate

of 2-3% per year, but we don’t see these numbers contributing to our GDP by much. (1) Pakistan

currently exploits 52 out of its 90 minerals and has a total production of 68.52 metric tons per

year. (1)The contribution of this sector to the GDP is around only 3%. (1). But on the bright side,

the record high GDP contribution that mining has done for Pakistan was in 2021 at a figure of

663084 PKR Million. (2) There is a huge gap in this sector due to non-investment friendly

mineral policies, lack of proper infrastructure required for mining, no updated technology, lack

of qualified human resource and less access to finance. (1)

Transformation over the years

Pakistan's mining industry has undergone a gradual transformation in recent years. The

government has taken steps to modernize and upgrade the sector, with a focus on improving

efficiency and increasing foreign investment.

Pakistan’s memorandum of understanding (MoU) with Saudi Arabia in February 2019, under

which Riyadh intended to invest $2 billion in Pakistan’s mining sector. But we have not heard

anything in this regard since long (Danish Ali). Another such opportunity was Reko Diq.

Unfortunately, the hysteria, instead of rational thinking, engulfed most of the discourse in 2011

which culminated in the eviction of foreign investor (Danish Ali). Another such example is

Tuwairqi Steel Mills established with an investment of $340 million with promise of another

injection of $1 billion in the second phase. Its designed capacity was 1.28 million tons of high-

grade steel while in the second phase the capacity would have grown to 1.5 million tons per year

(Danish Ali).

As for coal-fired power plant goes, work on the project started in May 2014, this was the first

plant of Sahiwal Coal Power Project, which was said to supply some 660 megawatts to the

national grid (Correspondent). Power production on Thar coal stands as the third cheapest source

among as many as 124 plants operating on various fuels including gas, RLNG and oil in the

country, according to the latest government merit order dated September 16, 2022. Thar coal can

meet Pakistan’s electricity demand for several centuries and, as all the coal reserves will not be

utilized for power production, there could be many other uses for the excess coal (Siddiqui,

Third power plant launched on Thar coal).

As of 2008, 300 to 500 tons of chromite are being produced at Muslim Bagh and Khanozai daily.

It is taken in trucks to Karachi where it is crushed and packed in bags for export to foreign

countries. The mineral is being sold between Rs30,000 to Rs45, 000 in the local market (Fazl-e-

Haider). Pakistan is among the top exporters of chromite and is ranked at number 4, but the

quantum is very low as Pakistan exported $95 million in 2021. Pakistan does not have any high-

tech processing plants to add further value to chromite. The country exports chromite in three

forms, i.e., lumps, concentrates, and fines (Farooqui).

Pakistan has the fifth largest reservoir of gemstones in the world. The country exports gemstones

worth at least$3.7 billion annually. Pakistan has the potential to export 800,000 carat Ruby,

87,000 carat emerald and five million carat Peridot annually. However, the yield is much less

due to limitations in terms of mining and processing skills and technology (Afsar).

Despite these positive developments, the sector still faces challenges, including inadequate

infrastructure, low levels of technology adoption, and limited access to capital. The mining

industry has been slow towards the adaptation of machine automation technology as compared to

other industries due to the complex nature of mining processes and exceptionally long lead time

required in developing and modifying any sort of mining equipment (Khan).

It is clear that if any steps were ever taken to revive or modernize the sector, they were either

delayed or abandoned a while later. As a result, even if there existed a glimmer of hope that the

sector will grow, there was hardly any reinforcements done to sustain that hope.
The future outlook

The future of some of the notable mines

KHEWRA SALT MINES

The Khewra Salt mines are the world’s largest salt mines, with around 6.7 billion ton of salt in

them (Pakistan possesses worlds largest salt mines). It is estimated that these salts can last for

upto 400 years to come (Pakistan possesses worlds largest salt mines). Ever since Pakistan has

stopped exporting their Himalayan Salt to India at cheap rates as a raw material, they have

started to earn more of the profits for themselves which previously went to India (Cameron). The

Khewra Salt Mine is a tourist destination, as well as a working mine that is not only producing

salt, but also raw material for various salt products such as salt lamps, salt cutlery, etc. which

people use for their supposed healing benefits (Cameron). I think the future of Khewra Salt

Mines is very bright and profitable.

REKO DIQ

The Reko Diq project was on hold ever since 2011, but was finally declared legal on 9th

December 2022 (Bhatti). 50% of Reko Diq is owned by Canadian mining giant, Barrick Gold,

25% by the Balochistan Government and 25% by Pakistani companies (Desk). The project is

expected to be complete by 2027-28 (Desk) and the first five year’s output is expected to be 430

million pounds of copper and 280 thousand ounces of gold (Barrick). The Balochistan

government reaps dividends and royalties without having to financially invest in the project.

Upon successful completion, Reko Diq is expected to become a world class mine by Barrick.
THAR COAL MINES

While work has been going on for years on using coal for power production, a lot of companies

are now also working to figure out how coal can be used in other industries such as making

syngas which can be used as raw material for other industries such as the fertilizer industry.

(Siddiqui, The Express Tribune ) Many companies are at work, trying to use coal for purposes

other than power generation. The result in the coming years would be a reduced import bill as

fuel, power, raw material is provided within Pakistan rather than abroad (Siddiqui, The Express

Tribune ).

The future outlook of the sector

Pakistan's mineral sector is lagging far behind the world's mineral market despite having vast

reserves and a comparative advantage (pcgov). The public sector needs to do much more to

ensure the growth of the mining industry. The Reko Diq project has a high chance of success and

growth, and the Siandaq copper-gold mine is a significant benefit to the state. However, the

development of the mining industry remains elusive. According to Huma Naz Sethi's book "The

Environment of Pakistan," there are still problems in the mining industry in Pakistan, including a

lack of financial and technical resources and institutional mismanagement, making the future of

the industry uncertain. Despite this, there has been an increase in GDP from the mining industry

in 2020, which is a promising sign for the industry's future growth (economics). With the

devaluation of the currency, it could become a lucrative source of exports.

Foreign companies are exploiting the country's resources without paying enough to the

government or the locals (dawn). In my opinion, these multinational corporations have damaged

the industry, and if the public sector does not take action to mine the country's resources, the

future of the mining industry may not change in the years to come.
Contributions of each member

“The mining sector at present” – Sofia Naseem

“Transformation over the years” – Zohair Sheikh and Maham Aamir

“Future outlook of notable mines” – Youmna Naveed

“Future outlook of the sector” – Muhammed Saad

References
1.
https://www.pc.gov.pk/uploads/pub/FIRST_05_PAGES_STRATEGY_FOR_MINERAL_S
ECTOR_DEVELOPMENT_IN_PAKISTAN.pdf. n.d.
2. https://tradingeconomics.com/pakistan/gdp-from-mining. n.d.
Afsar, Afsana. "Harnessing the Economic Potential of Pakistan’s Gemstone Industry." 1 April
2020. CENTRE FOR STRATEGIC AND CONTEMPORARY RESEARCH.
Barrick. REKO DIQ. n.d.
Bhatti, Haseeb. SC declares agreement for Reko Diq revival legal. 9 December 2022.
Cameron, Abby Narishkin and Steve. How 800 million pounds of Himalayan salt are mined
each year. 6 February 2021.
Correspondent. "PM set to inaugurate country’s first coal-fired power project in Sahiwal today."
25 May 2017. The Express Tribune.
Danish Ali, Atta Ur Rehman. "Adoption of autonomous mining system in Pakistan – Policy,
skillset, awareness and preparedness of stakeholders." Resources Policy (2020).
dawn. n.d.
Desk, BR Web. Supreme Court declares new Reko Diq mine deal legal. 9 December 2022.
economics, trading. n.d.
Farooqui, Yasir Nawaz. "Analysis of Chromite Potential." 2022.
Fazl-e-Haider, Syed. "Modernising chromite mining." 25 August 2008. DAWN.
Khan, Dr Shahbaz. "Mining: an engine of progress." 31 January 2021. The Express Tribune.
Pakistan possesses worlds largest salt mines. 2009.
pcgov. n.d.
Siddiqui, Salman. 24 February 2022.
—. https://tribune.com.pk/story/2344975/pakistan-mulls-uses-of-thar-coal. 24 February 2022.
—. "Third power plant launched on Thar coal." The Express Tribune (2022).