Pakistan's minerals wealth: opportunities and risks

Pakistan is sitting atop vast untapped mineral wealth — copper, lithium, cobalt, gold and rare earth elements — critical for the energy transition and modern technology. The global demand for these resources is rising as nations are trying to meet clean energy goals and reduce carbon emissions. Electric vehicles, batteries and other low-carbon technologies all require rare minerals. Whether Pakistan's inefficient and inequitable mining sector can benefit from these opportunities remains to be seen.

Much of Pakistan's mineral extraction is done through artisanal and small-scale mines, which are operated informally, where workers toil in hazardous conditions. Such mining operations also pay little heed to environmental concerns, or the welfare of surrounding communities.

Despite such concerns, Pakistan is becoming a site of strategic mineral investments. China has steadily expanded its economic footprint in Pakistan, and is already engaged in the mining copper, gold and silver. The US is now seeking to catch up, eyeing Pakistan's critical minerals as part of a broader effort to secure supply chains for key technologies. A US metals company has signed an agreement with Pakistan, pledging to invest an initial $500, which includes plans to set up a poly-metallic refinery. There are also murmurs of Pakistan trying to woo larger investments and even offer the US a deep-sea port near Gwadar.

American efforts to channel investment into Pakistan's mining sector may be driven by strategic imperatives. However, if driven mainly by transactional and profit motives, these initiatives risk worsening existing fragilities.

A comprehensive approach which enables Pakistan to harness its mineral wealth implies focusing not only on extraction, but also trying to improve safety standards, labour protections and environmental oversight. Local communities also need to be given mandatory stakes in extraction projects. Tokenistic corporate social responsibility programmes will not suffice.

However, policymakers in the country seem more preoccupied with managing growing foreign interests by striking a careful balance between Chinese and American engagement and cultivating broader partnerships to avoid overdependence on any single power. It is encouraging that Saudi Arabia, Japan and the EU also seem interested in making investments. However, to position itself as a key supplier for diversified international investors, Pakistan must also create a more enabling environment for responsible extraction. Doing so will require balancing foreign engagement with domestic considerations as well.

Resource-rich areas such as Balochistan, Khyber-Pakhtunkhwa and Gilgit-Baltistan have longstanding grievances. Without fair benefit-sharing agreements, including local employment guarantees and equitable royalty distribution, large-scale mining will exacerbate existing inequalities. However, experts have pointed out how the recently formulated National Mineral Harmonization Framework is primarily meant to ease the regulatory environment rather than address such concerns.

Balochistan's recent provincial mining law, drafted under the Special Investment Facilitation Council, has also been criticised for ceding too much authority to the federal government, raising questions about transparency and resource distribution which are already the source of significant friction.

Ultimately, Pakistan's mineral wealth offers both opportunity and risk. The country could leverage its resources to spur economic development, technological engagement and regional influence. But mismanagement through elite capture, environmental negligence or poorly structured foreign investments could deepen inequities and exacerbate regional tensions.

The global scramble for critical minerals may enable the country's power elite to attract more funds, but how Pakistani policy and decision-makers harness these opportunities will determine whether the country benefits from this rush, or else, becomes another cautionary tale of the resource curse.