Potential & Opportunities in Mining Sector

Pakistan, owing to its unique geological conditions, is endowed with huge mining/ minerals potential encompassing variety of deposits including metallic, non-metallic and industrial minerals.The outcrop covers about 66% of country’s total area and has the great geological potential for the discovery of sizeable new mineral deposits. Pakistan’s mining sector have tremendous potential for long term sustainable development. Presence of critical minerals in the country makes the sector more lucrative for foreign investments to support the green transition initiatives. Large portion of country’s minerals potential resides in Balochistan province where, number of projects are already in progress. Domestic public and private enterprises have enhanced their capabilities in exploration, mining and beneficiation operations and their expertise are being expanded further. The latent potential of the sector has promising dividends for the investors and reconstitution of Reko Diq Project in Balochistan Province has further boosted investors’ confidence and attracting foreign investments.

Exploration & Mining of Copper-Gold in Chagai, Balochistan

Exploration & Mining of Lead-Zinc in District Khuzdar, Balochistan

Mineral Development Framework – Chagai

Integrated Soda Ash Manufacturing Plant

Thar Coalfield

Prospect of Metallic Minerals in Gilgit-Baltistan

Exploration of Metallic Minerals in Khyber Pakhtunkhwa

Coal Gasification & Liquefaction at Thar Coalfield

Assembling Plant for Mining Machinery

FISCAL INCENTIVES

Under the Government’s schemes, the following incentives are available to the mining companies:
• Concessional Customs Duty & Sales Tax on Import of Machinery [Exploration (0%) & Development (3%, 5%)];
• Foreign equity of as much as 100 percent is allowed;
• Expatriate facilitation is offered;
• Export Processing Zone incentives (depends on economics of project and export potential);
• Inclusion in the China-Pakistan Economic Corridor (depends on case-to-case);
• Protection from Expropriation;
• Repatriation of Capital & Profits allowed

A- Foreign Private Investment (Promotion and Protection) Act, 2022

This bill aims to protect the rights of investors and adjudicates various tax concessions and exemptions to investors, including the provision of Export Processing Zone incentives and facilitation of investment. The Foreign Investment Protection Act also facilitates and encourages direct foreign investment in high capital intensive industries in which direct foreign investment is required through guarantees assured by laws and regulatory measures.

B – Fiscal Incentives for Thar Coalfield

• Thar Coalfield declared as Special Economic Zone.
• Zero percent customs duties on import of machinery.
• Exemption on withholding tax on dividend for initial 30 years.
• Exemption on withholding tax on procurement of goods and services.
• Exemption for 30 years on other levies including special excise duty, federal excise duty, WPPF and WWF.
• Free of sales tax on import of coal-mining machinery & equipment for Thar coal.
• Input tax adjustment for power producing units using Thar coal.

C – Special Economic Zones

• Exemption from income tax for ten years for Zone Developers, Codevelopers and Zone Enterprises;
• One time exemption from all custom-duties and taxes on the import of capital goods to Zone Developers, Codevelopers and Zone Enterprises.

D – Export Processing Zones

• Exemption of all custom duties and taxes of machinery, equipment, and materials.
• Freedom from national import regulations and not applicable of exchange control regulations of Pakistan.
• No sales tax on inputs including electricity / gas bills.
• Domestic market available to the extent of 20%.

E – General (Income Tax Ordinance, 2001)

• Tax credit for employment generation by manufacturers – the rate 2% of tax payable for every 50 employees. (64B).

 

National Mineral Policy

Punjab Mineral Policy

Kpk Mineral Development Policy

Balochistan Minerals & Mines Development Policy

 

Institutional Framework

In accordance with the Constitution of Pakistan, the exploration and development of minerals except mineral oil, natural gas and nuclear substances are under the regulatory authority of respective Province. The Federal Government is mandated with geological surveys (that help identification of potential mineral bearing areas), co-ordination and formulation of policy/plan for development of mineral sector at national and international levels. Several Federal organizations are extending services for exploration and development of mineral resources in the country.

Regulatory Regime

Each Province has promulgated its own laws and rules/regulations governing mining concession and occupational health & aspects. The rules explicitly specify the procedures, guiding working principles and responsibilities of departmental authorities, besides the obligations of mining concessionaires. Concession Rules provide for different kinds of mineral titles, to be granted and renewed for sufficient period to allow for the intended exploration, development and exploitation of any mineral deposit by the mineral title-holder.
Types of mineral titles/extractive contracts in practice are as follows:-

Reconnaissance/Prospecting/Exploration Licence:

  • Mode of grant: Principal of first come first served subject to fulfilment of approved technical and financial criteria.
  • Max. Tenure: RL-01 years, PL-5 years, EL-9 years.
  • Investment: Licensee incurs all expenditure on prospecting and exploration works, infrastructure, machinery deployment etc. Mining Lease:

Mining Lease:

  • Mode of grant:
    (i) Auction in case of area having proved minerals.
    (ii) Conversion of prospecting/exploration licences
  • Max. Tenure: 30 years, renewable
  • Investment: Lessee incurs all expenditure on development works including mine design, provision of infrastructure, installation of mines and mineral processing plants and procurement of requisite machinery.

Barite Lead-Zinc, Gunga, Khuzdar – Bolan Mining Enterprises

Bolan Mining Enterprise is a joint venture between Government of Balochistan and Pakistan Petroleum Limited each with a 50% working interest. The company carried out detailed exploration work and established a resource of 69 million tons of Barite-Lead-Zinc in Gunga, District Khuzdar. Mine planning and financial close is underway.

• Feasibility study completed • Resources estimated to 69 million tons (JORC) • Exploration and resource drilling ~12,000 metres • Mine planning of 2.5 million tons ore production per annum • Capex ~ 150-200 Million USD • Projected IRR: >53% • Projected NPV@12%: > $357m • 4 years payback period expected • $140m and $230m peak annual revenues

 
 

Integrate Iron Ore Mining & Steel Mill Complex at Chiniot – Punjab Mining Company

Punjab Mining Company (PMC) was established in 2009. PMC is the specialised mineral sector entity of the province of Punjab. Chiniot Iron Ore project is located in Chiniot District well connected with rail line, motorway, highway and adjacent to the Special Economic Zone. Iron ore resources have been estimated at 250 million tons at NI 43 101 Canadian standards.

• Iron Ore Resource of ~ 250 million Tons @ 27% TFe is available at Chiniot • NI 43 101 Compliant Resource Report • Mine Capacity planned 4.2 Million tons per annum • Steel Mills 01 Million Tons per annum • Estimated investment cost USD 1.3 Billion • Expected IRR >20% • Connected with Rail line, Motorway, Highways, and adjacent to • Special Economic Zone

 
 

Thar COAL BLOCK-VI – ORACLE POWER PLC

Oracle Power Plc, through its subsidiary Sindh Carbon Energy Ltd (‘SCEL’), holds a mining lease of Coal Block VI in the Thar coalfield. The lignite coal resources have been estimated over 1.4 bn tonnes of JORC compliance. In 2016 the Project was elevated to priority project status in CPEC and at the 9th JCC meeting in 2019 incorporated into an oil & gas group. The resource has a number of development paths including mining the coal as feedstock for the proposed mine mouth power plant; direct sale of the coal to other power projects; gasification of the coal to produce urea/fertilizer and liquids. Feasibility study has been completed and company is in process of financial close

 

PAKISTAN MINERALS SUMMIT 2023

Unveiling the theme of the landmark ‘PAKISTAN MINERALS SUMMIT, took place on August 01, 2023, in Islamabad The Summit on ‘DUST TO DEVELOPMENT: INVESTMENT OPPORTUNITIES IN PAKISTAN’ hosted by the Government of Pakistan, brings together international investors, mining industry giants, corporate leaders, and government stakeholders to create a roadmap for tapping into the tremendous mineral riches the country offers today.

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