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Tuesday April 23, 2024

Mining giant NRL considering local IPO

By Javed Mirza
May 18, 2021

KARACHI: National Resources Pvt Ltd (NRL), a joint venture of Pakistan’s six leading business houses formed primarily to develop Reko Diq reserves, would be open for Initial Public Offering (IPO) and stock listing in the future, its Chief Executive Officer Shamsuddin Sheikh noted in an interview with The News.

Formed in April 2019, NRL is a joint venture of Lucky Group, Arif Habib Limited, Liberty Group, Fatima Group, Mari Petroleum and South Western Mining Company. Sheikh, former CEO of Sindh Engro Coal Mining Company (SECMC), said each of NRL sponsor was commercially astute and had financial resources with a combined asset base of Rs1.2 trillion. “All of NRL sponsors are big market players and their flagship companies are all listed. Similarly, NRL or the project special purpose vehicle (SPV) will be open for stock listing in future,” Sheikh said. Talking about minerals and metal exploration sector, he said Pakistan was endowed with huge reserves of minerals due to its unique geological condition. Fortunately, Pakistan is blessed with all types of rock from pre-Cambrian to recent with exceptional geological and geomorphological features. There are 92 known minerals of which 52 are commercially exploited, including coal, copper, gold, chromite, mineral salt, and several other minerals. Despite huge resources, the mineral sector was showing slow performance. Recent Economic Survey of Pakistan indicated that overall contribution of mineral sector in GDP growth of Pakistan is about 2.5 percent.

Even though the sector has a lot of potential, it has not been able to “make a meaningful contribution because of lack of institutional capacity, common strategy amongst stakeholders, lack of Investor confidence and lack of favourable outcome in previous attempts,” Sheikh said, adding that hydrocarbon was a federal subject while mining was a provincial subject. Mineral development has contributed greatly in economic growth and social development of several developed and developing countries; Russia, Australia, Canada, China, Iran, Chile, South Africa etc.

“Mineral export of Pakistan is quite nominal if we compare it with neighbouring countries, even mineral resource of Pakistan is similar or somewhere greater than these countries, but unfortunately due to lack of planning and execution it is far behind in mineral extraction and their export.” In 2019, total mineral export of Pakistan was just $1.13 billion against total mineral import of $5.42 billion, which ultimately contributes to the increasing current account deficit.

It should be mentioned here that the contribution of the mineral sector to China’s GDP is 25 percent, Iran 22.1 percent, and Afghanistan 4.4 percent, while in Pakistan it stands at 2.5 percent. NRL CEO said NRL was been formed with the purpose of developing Reko Diq asset or the benefit of people of Balochistan and Pakistan. Tanjeel has approximately 0.7 million tons of exploitable copper with a revenue potential of $5-6 billion over next 10-12 years at current copper prices. Reko Diq is at-least 20-times of Tanjeel having 12 million tons of copper and 13 MOz of gold offering revenue potential of $150 billion over next 40-50 years. “Once in full production, Reko Diq could be the world’s 5th largest copper mine by production. Produce from Reko Diq will become single largest export of Pakistan.”

Sheikh informed NRL had presented a comprehensive strategy for developing a sustainable mining sector in Pakistan. “NRL strategy not only involves developing an asset for commercial return, but also involves resolving all sector issues so that Reko Diq project can become a catalyst for further investment in the sector.” He said NRL intended to introduce modern mining methods and develop the mine through world class consultants that would help establishing local expertise as well as result in technology transfer.

Furthermore, NRL has also offered to quantify resource potential of Chagai and develop a mineral cadaster, which is essential to introduce transparency in the sector and attract further investment. Mineral cadaster has played an important role in developing mining sector in many countries.