Iron ore and iron men
The challenges that come associated with this new enterprise will require a comprehensive policy, clearer guidelines
The writer is a doctoral researcher associated with the European Commission Propound Project and teaches at the University of Edinburgh in Scotland
The newly-discovered mineral deposit reserves of Chiniot in Punjab promise vast amounts of iron ore and — in all likelihood — also copper and gold in abundance. An estimated 500 million tonnes of good quality iron ore deposits, spanning approximately 2,000km, are speculated to be the economic potential.
At present, the international commodity price for iron ore is at around $68 per metric tonne. This would amount to a speculative accumulation of $34 billion from the forecasted reserve over the long-term. This was enough, for the prime minister to claim that it will “help the country get rid of the begging bowl culture for good”. But how the government and its leadership make use of this resource potential in reality is altogether a different question. This early stage discovery raises some queries about how such a treasure will be exploited for national prosperity. More importantly, we should ask what the given challenges and ramifications of this opportunity will be and who might actually benefit from it. Lessons of the past teach us that attempts to utilise and manage such mineral resource wealth have often been ruptured and we should be careful about how we react to this latest discovery.
We cannot forget our past experiences, such as the fallout from the Reko Diq mining project, which was meant to be the world’s largest copper and gold mining project and Pakistan’s largest-ever foreign direct investment, estimated to yield $60 billion over five decades, which ended up becoming a government policy failure instead. This demonstrates two critical concerns: the lack of policy and leadership to engage with international mining firms in negotiating contractual terms and second, the lack of transparency in terms of governance and monetary flows.
Besides Chinese companies that are keen on bidding and investing with their relatively limited expertise in mining, other foreign companies are likely to be hesitant to invest given past experiences of dealing with successive governments and given the volatile security situation that discourages long-term investment.
The Punjab government will need to come up with an effective plan and policy for labour-related matters including better pay and a safer work environment for the thousands who will be employed. The lack of safety measures for mine workers has consistently been reported in Pakistan over the years and just recently, miners rallied against increasing food prices while demanding reductions in accordance with fuel price cuts.
We must also remember that mining remains a dirty business for the environment and parliament must stop avoiding the issue. Iron ore mining and transport have serious large-scale environmental implications as we can see in the case of iron ore mining in Chhattisgarh, India, where serious problems, including that of soil erosion, mass deforestation, damage to agriculture land, contamination of rivers and the drying up of potable water have surfaced. The potential for gold mining in the Chiniot discovery is also a dirty prospect since an ounce of mined gold creates roughly 25 tonnes of destroyed toxic land. Permission to mine in environmentally responsible countries requires companies to provide detailed feasibilities to demonstrate their ability to manage waste. Yet, waste and damage remain a challenge, even in countries like the US, where water pollution and loss of surface and groundwater due to mining are big problems. How our government will regulate waste management in the region should be a huge concern given Pakistan’s growing water problems.
Some might be assured by the idea that the current top-tier leadership possesses good business acumen, but the challenges that come associated with this new enterprise will require a comprehensive policy and clearer guidelines. This is because at the ground level when stakeholders, including mining companies, labour groups and the district management come into the picture, they will need regulatory and operational clarity. Fulfilling the potential and promise of this discovery is an enormous task. The iron ore discovered will require iron men to take advantage of the opportunity.
Published in The Express Tribune, March 13th, 2015.
At present, the international commodity price for iron ore is at around $68 per metric tonne. This would amount to a speculative accumulation of $34 billion from the forecasted reserve over the long-term. This was enough, for the prime minister to claim that it will “help the country get rid of the begging bowl culture for good”. But how the government and its leadership make use of this resource potential in reality is altogether a different question. This early stage discovery raises some queries about how such a treasure will be exploited for national prosperity. More importantly, we should ask what the given challenges and ramifications of this opportunity will be and who might actually benefit from it. Lessons of the past teach us that attempts to utilise and manage such mineral resource wealth have often been ruptured and we should be careful about how we react to this latest discovery.
We cannot forget our past experiences, such as the fallout from the Reko Diq mining project, which was meant to be the world’s largest copper and gold mining project and Pakistan’s largest-ever foreign direct investment, estimated to yield $60 billion over five decades, which ended up becoming a government policy failure instead. This demonstrates two critical concerns: the lack of policy and leadership to engage with international mining firms in negotiating contractual terms and second, the lack of transparency in terms of governance and monetary flows.
Besides Chinese companies that are keen on bidding and investing with their relatively limited expertise in mining, other foreign companies are likely to be hesitant to invest given past experiences of dealing with successive governments and given the volatile security situation that discourages long-term investment.
The Punjab government will need to come up with an effective plan and policy for labour-related matters including better pay and a safer work environment for the thousands who will be employed. The lack of safety measures for mine workers has consistently been reported in Pakistan over the years and just recently, miners rallied against increasing food prices while demanding reductions in accordance with fuel price cuts.
We must also remember that mining remains a dirty business for the environment and parliament must stop avoiding the issue. Iron ore mining and transport have serious large-scale environmental implications as we can see in the case of iron ore mining in Chhattisgarh, India, where serious problems, including that of soil erosion, mass deforestation, damage to agriculture land, contamination of rivers and the drying up of potable water have surfaced. The potential for gold mining in the Chiniot discovery is also a dirty prospect since an ounce of mined gold creates roughly 25 tonnes of destroyed toxic land. Permission to mine in environmentally responsible countries requires companies to provide detailed feasibilities to demonstrate their ability to manage waste. Yet, waste and damage remain a challenge, even in countries like the US, where water pollution and loss of surface and groundwater due to mining are big problems. How our government will regulate waste management in the region should be a huge concern given Pakistan’s growing water problems.
Some might be assured by the idea that the current top-tier leadership possesses good business acumen, but the challenges that come associated with this new enterprise will require a comprehensive policy and clearer guidelines. This is because at the ground level when stakeholders, including mining companies, labour groups and the district management come into the picture, they will need regulatory and operational clarity. Fulfilling the potential and promise of this discovery is an enormous task. The iron ore discovered will require iron men to take advantage of the opportunity.
Published in The Express Tribune, March 13th, 2015.