No silver bullet

Chiniot’s iron ore reserves are a happy discovery, welcome development, but hardly a panacea for all our economic woes

It is hard to take the government’s enthusiasm over a natural resource discovery when its track record has been so laughably inaccurate over the past. Claims over the coal fields in Thar were greatly exaggerated and — more than 20 years after their first discovery — have yet to be corroborated by any internationally credible source. And now, the government’s claim that it has found 500 million tonnes of iron ore reserves in Chiniot is something we find ourselves a little sceptical about. We are not experts in geology, but we do believe that the government has a tendency to get overexcited about such discoveries and dangerously imprecise with the numbers. Nonetheless, even if one were to assume that the number is true, let us calm ourselves before we think that this mine will somehow magically solve all our economic problems, which is what appears to be implied in Prime Minister Nawaz Sharif’s statement on his visit to Chiniot.

Five hundred million tonnes of iron ore may sound like a lot, but that entire reserve is equal to what China produces in four months. It is what Australia produces in one year. And at December’s average international prices, it is worth about $34 billion, a tidy sum to be sure, but not exactly capable of launching a country as large as Pakistan into the economic stratosphere, especially since it would most likely not be extracted at anywhere near the rates of production seen in China or Australia. Even if we assume that tiny Chiniot produces iron ore from this mine at the same rate as the entire US — which is a little over 50 tonnes a year — that means that the mine will produce revenue of around $3.4 billion a year. Profits will be far less than that, which means that its impact on total economic growth will be negligible. We would do well to remember that there is no magic bullet to fixing our economy. There is no substitute for hard work or for taking tough decisions to move the economy forward. Chiniot’s iron ore reserves are a happy discovery and a welcome development, but hardly a panacea for all our economic woes.

Published in The Express Tribune, February 16^th,  2015.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.