Pakistan, Kuwait to set up $1b fund

Fund will be spent on exploration of metals and minerals in Pakistan

ISLAMABAD:

As the government is keenly looking at the mining sector to give a fresh impetus to the economy in the backdrop of an out-of-court settlement of the Reko Diq project, Pakistan is set to establish a mining fund worth $1 billion in collaboration with the Gulf Arab state of Kuwait.

Sources told The Express Tribune that a state-owned company of Pakistan had been designated as lead entity for engaging in cooperation with Kuwait on the mining fund.

The two sides have held initial deliberations in this regard. A Kuwaiti company has shown interest in the mining of metals and minerals used in renewable energy.

According to sources, a detailed working plan with timelines will be presented to a joint working group in an effort to make further progress on the proposed fund.

A Mineral Cell has already been established under the supervision of the Petroleum Division and the government is working to revise the National Mineral Policy to stimulate foreign investment in the mineral-rich province of Balochistan.

The government seems determined to remove all hurdles in the old policy and introduce some measures in line with the requirements of foreign investors.

In this regard, work is underway on the second draft of National Mineral Policy. In addition, the first draft for updating the Mines Act 1923 has already been prepared.

Officials revealed that a gap analysis was being conducted to update the Provincial Mineral Concession Rules, which would be finalised in the coming months.

The government is considering making some amendments to the Regulation of Mines and Oilfields and Mineral Development (Govt Control) Act, 1948 to woo foreign investors.

Experts were of the view that the inconsistency in policies and activism in anti-corruption watchdogs had been the key factors behind the withdrawal of foreign investment from Pakistan.

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For instance, the activism by an anti-corruption body in the Reko Diq copper and gold mining project resulted in landing of the case in the International Court of Arbitration.

To meet demand of the foreign partner in the Reko Diq project, the government had introduced the foreign investment act to protect the investors.

Now, Pakistan is seeking capital injection into the mining sector from the United Arab Emirates (UAE), Saudi Arabia and Kuwait.

During the visit of caretaker prime minister late last year, Pakistan and Kuwait signed a memorandum of understanding on investment cooperation for the execution of water supply projects for the development of mines in Chagai and surrounding areas in Balochistan.

It was a big challenge for Pakistan to arrange water for developing mines in Chagai and its nearby areas. In this situation, Kuwait will help to initiate water projects, which can be part of the $1 billion mining fund.

Chagai is an important area that has large deposits of valuable minerals and in order to exploit the potential of mines and minerals, one of the basic requirements is the provision of water in the area.

The Irrigation Department of Balochistan approached the federal water resources ministry on November 15, 2023, requesting it to provide technical and financial assistance, devise a suitable plan to meet water storage requirements, and explore domestic and foreign avenues of funding.

The agreement between Pakistan and Kuwait is intended to facilitate investment in Pakistan and promote and foster brotherly relations between the two countries.

Sources said that Pakistan’s government was also engaged in talks with the UAE government for collaboration in the mining sector. Both sides are identifying the mining projects that require investment for development.

Pakistan is seeking investment from Saudi Arabia as well where a conference on the mining sector was held recently.

Published in The Express Tribune, January 20^th, 2024.

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