Barriers to Development of Mineral Sector in Pakistan

4. LACK OF INFRASTRUCTURE IN MINERAL RICH AREAS

This is also a fact that almost no infrastructure like roads and electricity is
available in most of the mineral rich areas. Due to this the prices of
industrial minerals are affected and many industrial minerals have to be
imported utilizing our meager foreign exchange resources. If infrastructure
like roads and electricity has to be provided by Mineral Sector alone, it
would make the mining of most of the industrial mineral uneconomical,
which already has low unit value. Therefore, it may be made obligatory to
the Provincial Governments to provide necessary infrastructure on priority
to mineral rich regions. These priority areas be defined by provincial
mineral exploration agencies. This not only on one hand would provide
motivation to the mining industry and would also help to raise the living
standard of people of these godforsaken areas.

5. PAUCITY OF FUNDS

It is also an established fact that heavy finances are required to evaluate
and develop a mineral deposit for commercial mining but as a practice
every individual or a party having meager financial resources obtains
Lease but is unable to incur huge investment for mine development and
subsequent exploitation of the mineral. Hence the Lessee quests for
investor. It is also observed that in most of the cases they do not reach to
equitable terms and as such due to scantiness of funds, the mineral
though having demand in the market cannot be exploited till the matter is
settled. We think that here the role of Licensing Agency is crucial and the
leases should be granted only to financially and technically sound parties.
In case, if a Lessee does not start work in due course of time without
genuine reason, the lease should be cancelled according to Mine
Concession Rules. In addition to this, loan facilities on soft terms by Banks
may also be extended to this sector.

6. HIGH TRANSPORTATION COSTS

It is observed that most of the mineral deposits occur in remote areas
away from market and in case of industrial minerals cost of transportation
becomes so high that local minerals sometimes cannot contend imported
minerals. In spite of the fact that this is an era of competition thus to save
foreign exchange, it is proposed to give subsidy or tax holiday on some
important industrial minerals for a certain period.

7. VALUE ADDITION

Value addition of industrial minerals, gemstones and decorative stones is
another important factor to substantiate Mineral Sector in Pakistan. It is
estimated that a cut gemstone fetches ten times higher price than an uncut
stone. Similarly the decorative stones like marble and granite if exported to
the international market after cutting and polishing,
It is recommended that all out efforts should be made to create facilities for
processing of industrial minerals, gemstone and decorative stones cutting
and polishing in the country. Export of minerals and gemstones in raw form
may be prohibited.

8. MARKET- Demand and supply

It is misfortune that even after 56 years of independence, no outstanding
mineral based industry could be established in the country except marble
and ceramic. This is also a bitter fact that there exists no price and quality
control system for minerals in the country. Similarly, there is no demand
and supply control system by which mining of minerals could be regulated.
For example, few years back Peridot, a semi-precious stone had a great
demand in the market, as a result everybody in Kohistan rushed for mining
without considering its impact on price in the market. As a result, tons of
Peridot was available in the market dropping the prices and the miners had
to bear losses.
So it is suggested that a Regulatory Body may be framed at Provincial
and/or Federal Level to take care of quality, prices and demand/ supply
position of various minerals in the country.

9. LOCAL CONSTRAINTS

As minerals are mostly located in far flung areas and sometimes in tribal
areas (in Pakistan), where it becomes almost impossible for a Lessee to
start mining without the permission of local owner of the land including
influential people of the area. Even though, provision has been in Mining
Concession Rules that District Administration would assist the Lessees in
this matter but in most of the cases influential people make all these efforts
ineffective. On the other hand, if Lessee ventures to settle the matter with
them, the terms and conditions offered by the owner of the land under
lease area are unacceptable to the Lessee. Thus matter is referred to the
court where this is delayed for years.
Under this situation, it is proposed that in case the Lessee and owner of
the land do not reach a settlement, the Licensing Authority, as assessed
by the Revenue Department, may gather a fixed amount monthly or yearly
from the Lessee. This amount would be other than the royalty and paid to
the owner of the land directly by the Licensing Authority.

10. POLITICAL UNREST

Another important factor is the political unrest, which has blocked
investment in industrial sector of Pakistan probably including Mineral
sector as well. So it is fundamental requirement that political atmosphere
may be made calm and peaceful to attract local as well as foreign
investment in mining.