According to estimates, Pakistan is sitting on US$ 8 trillion worth of minerals. If only Islamabad could find a peaceful solution to the separatist insurgency in the mineral-rich province of Balochistan and assure safety to international investors, poverty would be a thing of the past, and Pakistan could emerge from the shadows to become a significant geopolitical force in South, Central and West Asia.
Writing in “Resources Policy” Volume 88, January 2024, Naqib Ullah Khan and his co-researchers say that Pakistan has the second largest coal reserves, second largest salt reserves, and fifth largest copper and gold reserves in the world.
It has 92 discovered minerals. Among them, some have been quantified as coal (185 billion tons), copper (7,000 million tons), gold (1,658 million tons), salt (10 billion tons), silver (620 million tons), lead-zinc (24 million tons), manganese (1.597 million tons), chromite (3 million tons), and iron ore (1,450 million tons).
Pakistan is recognised for the world’s fifth copper-gold reserves at Riko Dik, the world’s second largest coal reserves at Thar, and the world’s second largest salt reserves at Khewra and Bahdarkhel. The world-renowned Tethyan copper belt passes through Baluchistan. The world’s total coal potential is estimated at 861 billion tons out of which Pakistan possesses 185 billion tons.
But the current contribution of minerals to the national development fund is less than 2 percent. Compared to other mineral-rich developing nations, Pakistan’s mineral export’s share is only around US$ 0.5 billion, out of the world’s total share of US$ 401 billion.
Foreign interest
There is no dearth of mineral-hungry nations in the world who would invest in extraction in Pakistan. But the biggest obstacles to date have been political instability and Islamic terrorism at the national level, separatist militancy in mineral-rich Balochistan and a lack of development orientation among the Pakistani power-elite.
Earlier this month, Pakistan pitched for investments in its mines and minerals sector to delegations from the US, Saudi Arabia, China and elsewhere attending the Pakistan Minerals Investment Forum (PMIF). The aim of the forum was to spotlight Pakistan’s reserves of copper, gold, lithium and other minerals. In his speech Prime Minister Shehbaz Sharif said that Pakistan possesses mineral reserves worth trillions of dollars. But he wisely ruled out export of raw minerals and insisted that Pakistan would export only finished products. Pakistan’s powerful army chief Gen. Asim Munir assured that the military would “ensure a robust security framework and proactive measures to safeguard the interests and confidence of our partners and investors”.
As a result of the forum, several foreign companies signed agreements with Pakistan, including the Canadian firm Barrick Gold, which already owns a 50 percent stake in the Reko Diq gold mine in south western Balochistan. Pakistan has one of the world’s largest copper and gold deposits in Reko Diq.
China’s interest
In May 2024, Prime Minister Shehbaz Sharif invited Chinese firm, MCC Tongsin Resources, to invest in Pakistan’s mining sector and assured it of maximum facilitation. MCC Tongsin Resources, a research and investment company, is part of the China Metallurgical Group Corporation (MCC Group), which describes itself as the world’s largest and strongest metallurgical construction contractor.
“The company gave a detailed briefing to the Prime Minister regarding the construction of a mineral park in Pakistan and informed about further investment plans,” Sharif’s office said. Deputy Prime Minister Ishaq Dar held several meetings with Chinese business officials and entrepreneurs in China, and invited them to establish “labour-intensive industries” in Pakistan to address the unemployment problem.
China has been one of Pakistan’s most reliable foreign partners, readily providing financial assistance. In July 2023, China granted Pakistan a two-year rollover on a US$ 2.4 billion loan, giving the debt-saddled nation much-needed breathing space. China has invested over US$ 65 billion in energy and infrastructure projects as part of the China-Pakistan Economic Corridor (CPEC).
American interest
On April 9 this year, a US delegation led by State Department official Eric Meyer called on Prime Minister Sharif in Islamabad. Meyer, a senior bureau official (SBO) for the Bureau of South and Central Asian Affairs, highlighted Pakistan’s immense potential in the minerals sector, calling it a “game-changer” for the economies of both Pakistan and the US.
“Critical minerals are the raw materials necessary for our most advanced technologies,” Meyer told the Pakistan Minerals Investment Forum. “President Trump has made it clear that securing diverse and reliable sources of these materials is a strategic priority. Pakistan’s vast mineral potential can benefit both our countries,” he added.
According to an official statement, the US aims to share technical expertise, encourage investment, and promote responsible resource management.
Gulf states, notably Saudi Arabia are also eyeing investments in Pakistani mining projects. The recent agreement for Saudi company Manara Minerals to potentially buy a stake in the Reko Diq mine is illustrative of this trend.
Geostrategic angle
Pakistan is located in a geo-strategically crucial position. It is close to Central Asia, South Asia, West Asia and the Arabian Sea. Using this geo-strategic position, Pakistan can provide the shortest passage from Central Asian countries to the Indian Ocean, provide a sea link to Afghanistan and provide the shortest linkage between Western China and the Indian Ocean.
However, Pakistan is still a backward country. Its GDP per capita is only US$ 1,357 occupying the 154th position in the world. Since 2010, due to the 18th constitutional amendment, provincial governments have been empowered to design and execute their mineral policies. The provinces are responsible for regulating mineral resources except oil, gas and nuclear minerals. Some provinces still lack policies, but the mineral-rich province of Khyber Pakhtunkhwa (KP) has drafted good policies specifying the rights and responsibilities of local communes, mining companies and workers. However, overall, satisfactory results have eluded Pakistan. The laws are complex and tax and royalty rates are unfair. Local societies are by-passed. Even if Pakistan manages to double the mining sector’s share of GDP within a decade, it will at best reach an increase of 2–4 percentage points, experts say.
There are serious security concerns in resource-rich areas such as Balochistan that cannot be understated. Despite repeated assurances from military leaders—including a recent statement by Army Chief General Asim Munir promising robust protections for investors—the decades-long insurgency and sporadic violence in Balochistan continue to deter investment.
Pakistan’s current mining practices are outdated and inefficient. Advanced mineral processing and downstream industries are essential. But establishing such processing capacities, whether for metals, gypsum, or other minerals, requires significant investment in technology transfer, infrastructure, and skill development.
Pakistan has done the right thing by focusing on the mineral sector and inviting FDI from all quarters. Given the US and Chinese hunger for minerals, Pakistan could secure massive FDI, end poverty and become a major force in geopolitics. But it has to put its political and economic house in order first.
