Tuesday April 16, 2024

Reko Diq: deal to reform Balochistan’s mining sector

By Jan Achakzai
November 28, 2022

It is expected Barrick Gold’s lawyers will be able to get $9 billion penalty against Pakistan quashed by December 15. In addition, $4 billion will be invested in Reko Diq project by that date. This has been stated by the counsel for a Canadian copper and mining company before the Supreme Court.

He noted Reko Diq deal of $4.297 billion was the single largest investment in Pakistan’s history. This project is a game changer in large-scale mining expansion in Pakistan. The project would create 7,000 jobs in Balochistan initially and 4,000 jobs in the long-term. Barrick Gold would build an underground pipeline from Reko Diq to the port of Balochistan, besides undertaking road and community development projects in the province.

Metals in large quantities, such as copper, gold, iron and lead are only found in Balochistan. While, stones (nonmetallic) are abundantly available in KP and presently mining at a large scale (of a nonmetallic kind) is mostly taking place in KP. At an individual level, mining of chromite, fluoride, granite and marble is being undertaken in Balochistan at a substantial level.

However, Reko Diq is different from other places because of its metallic resource and its colossal quantity (Billions of tons of copper and gold). If Reko Diq’s deal is implemented correctly, it is going to develop Pakistan’s economy substantially. Furthermore, four further deposits of this level are available in this area whose licences have been approved. So, at least five Reko Diq level initiatives can be realised and two out of them (in addition to current Reko Diq) will be rolled out soon after their mining licences have been approved.

Comparing Saudi Arabia’s $1.3 trillion, Pakistan’s mineral assets in Balochistan are estimated at around $50 trillion. Balochistan has a vast reservoir of strategic minerals needed for socio-economic development, defence and IT sectors. They include petroleum, zinc, mercury, platinum, nickel and graphite.

The drive for a green future has transformed energy markets worldwide which will result in a steep rise in the price of these minerals (e.g, 40 percent). However, to ensure successful expansion of large-scale mining in Balochistan, the most critical steps need to be taken on a priority basis. For example, a multi-layered security mechanism to thwart the enemy’s design to sabotage these projects should be developed.

Any Nushki-type terrorism-related incident around Reko Diq and other two potential sites will be a disaster costing both prestige and fortune. Even if it requires a separate security division, it is still worth it.

The borders have to be iron-walled and infiltration must not be allowed on any pretext, no matter what the strategic objective is. In other words, these national assets need to be jealously guarded against cross-border raids.

From a business point of view, a very elaborate communication and infrastructure system needs to be immediately implemented in its entirety. New transport companies, new by-the-road-stopovers and additional logistical support are inevitable. Also, keep in mind CPEC should not be mixed with indigenous CPEC development.

Above all, political management in terms of administrative and narrative facilitation needs to be launched from tomorrow. This is going to be the major impediment as the anti-development narrative incentivises groups to oppose such strategic projects to grab more power seats. Make no mistake, political management will also be a necessary condition for it to proceed smoothly.

The granite iron and lead contracts in the region of Dalbandin and Chaghi must be expedited, awarded and executed. This is to utilise the communication infrastructure that would otherwise be built for Reko Diq.

There is a need to develop an intricate administrative system that combines the current (weak and corrupt) Mining Ministry of Balochistan Government with the Corps Headquarters’ civilian interface for timely execution, availability of expertise and removing bottlenecks.

To establish oversight with clear responsibilities, a special committee consisting of Corps Commander, Chief Minister and Governor should be formed at the highest level of the province. This will ensure smooth execution of these contracts and facilitate mining extraction for investors.

We should hand over the task of one-window facilitation for investors to the dysfunctional Governor’s Office so that it can be strengthened technically. This is an absolute prerequisite set by foreign investors and the diplomatic corps in Islamabad to invest in and roll over projects in Balochistan.

Saudi Arabia’s strategy to develop its mining sector is a case study to ponder. KSA will be a leader in the mining sector as per “Vision 2030” of Mohammad bin Salman, the Crown Prince. Therefore, Pakistan can learn from KSA example. Sadly, we lack political will in Islamabad for now.

Jan Achakzai is a geopolitical analyst, politician and former advisor to GOB. He tweets at @Jan_Achakzai