American Journal of Industrial and Business Management, 2013, 3, 514-524 Published Online September 2013 (
Regulatory Framework of Mineral Resources Sector in
Pakistan and Investment Proposal to Chinese Companies
in Pakistan
Muhammad Tayyab Sohail1*, Delin Huang1, Earl Bailey2, Malik Muhammad Akhtar3,
Muhammad Afnan Talib3
1School of Public Administration, China University of Geosciences, Wuhan, China; 2School of Resources China, University of Geo-
sciences, Wuhan, China; 3Schools of Environmental Studies, Institute of Geophysics & Geomatics, China University of Geosciences,
Wuhan, China.
Email: *,,,
Received *************** 2013
Copyright © 2013 Muhammad Tayyab Sohail et al. This is an open access article distributed under the Creative Commons Attribu-
tion License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly
This paper presents a scenario for mineral resources and development in this sector in Pakistan. Moreover it mainly
comprises of the policies regarding the location of minerals, their extraction, and at the end there are some important
suggestions for the Chinese companies as far as the investment point of view is concerned. Regardless of Pakistan’s two
successive mineral policies and abundant mineral resources, this sector’s contribution to overall GDP of country is not
sufficient. The reasons may be; inadequate monitoring and evaluation, lack of community base resources management
programs, insufficient tax compliance, political instability, weather related problems, insecurity within mineral rich ar-
eas and lack of foreign investment in the country. However, there is still room for improved technical and economic
analysis of the sector as well as tremendous opportunities for Joint Venture Agreement with other emerging economies
and international private partners. China has its own importance and reorganization in the world due to its economic
growth and production. Pakistan and China both countries have very good relation from the beginning. Both countries help
each other, if there is any need of help. There is still time to realize the national development benefits from the sector.
Keywords: China; Minerals Resources; Pakistan; Policy; Industry; Company
1. Introduction
Being an agricultural country, around 68% population of
Pakistan is concerned directly or indirectly to agriculture.
Moreover Pakistan is also rich in natural resources. But
it’s very miserable that this sector in Pakistan contributes
less than one percent to the national GDP at the end of
fiscal year 2011/2012 [1]. It is a very minute contribution
given to the total GDP instead of having an immense
quantity of mineral resources. This contribution to the
total GDP can be increased to 10% - 20% in the next ten
years which would be influential for the socioeconomic
development in the country.
In 1995, government of Pakistan formulated through a
broad-based stakeholder’s consultation process, and
launched the National Mineral Policy (NMP-1) [2]. The
policy was aimed to enhance the investment and opera-
tional environment of the mining sector to attract local
and foreign direct investments (FDIs). The revised NMP
of 2012 (NMP-2) is geared at identifying and learning
from the challenges of the first plan by focusing on five
thematic areas: 1) increasing contribution to GDP; 2)
international competitiveness and partnership; 3) coordi-
nation between state and provincial institutions; 4) sus-
tainable development; and 5) Encouraging small scale
local mining. After two sector policies and various
changes to the manner in which the industry operates,
there seems to be no positive turn around in the sector,
let alone any indication that its future is on a path of sus-
tainability. Apart from the minimal contribution to GDP,
the sector is also plagued by issues relating to local and
ethnic conflicts, which continue to be a hurdle to disrupt
operations and ward off potential investors as well as
*Corresponding author.
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
problems associated with natural hazards inter alia. The
government of Pakistan is now at a crossroads, where the
industry is concerned. Pakistani government ought to
take bold and innovative changes which are needed for
the development and better management in the sector of
mineral resources. This should be followed by an identi-
fication of the flaws and strengths in this environment
and relevant recommendations for the future. Accord-
ingly, attention is brought to the institutional framework
and the policy environment that impacts the development
and operation of the mineral sector.
2. Physical Geography of Pakistan
Pakistan has a landmass of 796,096 km2, making it the
eights largest countries in Asia, and a population of over
187 million with a growth rate of 1.6%/annum [3] mak-
ing it the sixth most populous country in the world. Lo-
cated at the crossroads of the strategically important re-
gions of South Asia, Central Asia and Western Asia,
Pakistan has a 1046-kilometre (650 mi) coastline along
the Arabian Sea and the Gulf of Oman in the south and is
bordered by India to the east, Afghanistan to the west and
north, Iran to the southwest and China in the far northeast
(Figure 1) and the geographical mapping location of
Pakistan by the geology survey of Pakistan.
3. Physical Geography of China
It is the world’s most populous country and second larg-
est country after Russia, with a population of over 1.35
billion. The People Republic of China (PRC) is a sin-
gle-party state governed by the Communist, with its seat
of government in the capital city of Beijing. It exercises
jurisdiction over 22 provinces, five autonomous regions,
four direct controlled municipalities (Beijing, Tianjin,
Shanghai, and Chongqing), and two mostly self-govern-
ing special administrative regions (Hong Kong and Macau).
The PRC also claims Taiwan which is controlled by the
Republic of China (Figure 1). China shares its border
with fourteen countries. Being the world’s largest econ-
omy Chinese companies invest in all over the world in
the field of information technology, minerals resources,
unconventional energy production sources, agriculture,
electronics industry etc. Chinese investors and companies
are in heavy collaboration with different countries in
different fields for example Pakistan, India, Arab states
and in African countries. Being a neighbor of Pakistan,
different Chinese companies like cellular, exploration,
and construction companies are having a great setup in
4. Mineral Resources in Pakistan
Pakistan can be assumed to be a heaven for mineral re-
sources. Several minerals deposit including coal, copper,
gold, chromite, salt, bauxite and others (Figures 2 to 5
and Table 1). A variety of precious and semi-precious
minerals are also mined, these include peridot, aquama-
rine, topaz, ruby, emerald, rare-earth minerals bastnaesite
and xenotime, sphene, tourmaline (Figures 2-5), and
many varieties and types of quartz [4] The mineral in-
dustry has grown since independence from exploring
only 5 minerals to the current 52. Since independence,
majority of minerals mined were discovered by the Geo-
logical Survey of Pakistan (GSP) [5]. Among the ap-
Figure 1. Political map of Pakistan and China and international location.
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
Figure 2. Major mineral resources of Pakistan (Source: Geological Survey Pakistan, 2003).
Aquamarine Topaz Ruby
Emerald Peridot
Figure 3. Important gemstones in Pakistan.
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
Copyright © 2013 SciRes. AJIBM
Figure 4. Distribution of Coal mines in Pakistan (adapted from Warwick and Wardlaw, 2003).
proximately 200 mineral rich countries in the world;
Pakistan has the second largest salt mines and coal re-
serves, fifth largest copper and gold reserves and world’s
second largest coal deposits of 185 billion tons. It has
more than 436.2 million to 618 billion barrels of crude
oil and 31.3 TCF of proven gas reserves. The current oil
production is 65,997 barrels/day while gas production is
4 BCF/day. Additionally, there is resource.
Potential of 27 billion Barrels of Oil and 282 TCF of
gas reserves which has not been explored due to lack of
vision and flawed policies [6]. Baluchistan is the richest
mineral resources province in Pakistan, but majority of
coal deposits are in Thar (Sindh province) (Figure 3).
Out of the fifty two minerals in the country, twenty are
from the Balochistan region (Table 1). Khyber Pakh-
toonkhwa is rich in gems. Apart from oil, gas and some
mineral used for nuclear energy production, which comes
directly under federal control mines, other mineral de-
posits are controlled by the Provincial government. Cur-
rently, approximately 52 minerals are mined and proc-
essed in Pakistan [7]. Coal is found in very large quanti-
ties in Thar, Chamalang, Quetta and other sites.
The Khewra Salt Mines, world’s 2nd largest mine pro-
ducing ~220 million tonnes of rock salt deposits. The
current production from the mine is 325,000 tons of salt
per annum. In Reko Diq, Baluchistan, deposits of copper
and gold are present (Table 1). There are also copper
deposits in Daht-e-Kuhn, Nokundi, and in the Chaghi
district. Iron ore is found in various regions of Pakistan
including Nokundi, Chaniot, Harripur and other Northern
Also in Kalabagh (less than 42% quality) where the
largest deposits are found. The Eastern shield slope zone
has considerable amount of limestone, gypsum, rock salt
dolomite, glass sand, celestial, coals, Cis-Indus salt range
and newly explored huge reserve in Sindh, which are
being utilized for energy generation. Similarly, moderate
quantities of gold and copper are found in Chagai, in the
Island Arc area where the Geological Survey of Pakistan
(GSP) has identified at least 12 porphyry type deposits
containing appreciable quantities of gold along with cop-
per and silver [8].
One of the areas of significant mineral deposits is the
Federally Administered Tribal Areas (FATA). This is a
semi-autonomous tribal region in the northwest of pre-
sent day Pakistan, laying between Afghanistan to the
west and north, and the provinces of Khyber Pakhtunk-
hwa and Balochistan to the east and south, respectively.
The FATA comprises seven agencies tribal districts and
six frontier regions. The territory is almost exclusively
inhabited by Pashtun tribes, who also live in the neighbor-
ing Khyber Pakhtunkhwa and Afghanistan. The territory
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
Figure 5. Map of distribution of major minerals in Pakistan (the map shows location of Pet: Petroleum, U: Uranium, NG:
Natural Gas, Sr.: Strontium and Talc-Mineral-composed of hydrate and magnesium silicate) source Compare Info base lim-
ited, 2007.
Table 1. Estimated recoverable quantities of metals and
values in Baluchistan (Source: 2009 GSP and MOPNR).
Minerals Quantity
(Million tons) Current Price
(US$) Value
(Million US$)
Copper 1.69 2000/tones 3380.00
Gold 2.24 387/oz 867.00
Silver 2.49 5.0/oz 12.45
is governed through the Frontier Crimes Regulations.
Over the last decade there has been moderate increase in
mineral production in FATA, with an average 35% an-
nually since 2004 [9]. This equated to revenue of ap-
proximately Rs.31.5 million or USD 3.2 million. Simul-
taneously, mineral production within FATA during that
same period grew by almost 219%. To date nineteen dif-
ferent minerals deposits, including copper, manganese,
chromite, iron ore, lead, barite, soapstone, coal, gypsum,
limestone, marble, dolomite, feldspar, quartz, silica sand,
bentonite, marl, emerald and graphite have been identi-
fied in tribal areas within the FATA region, which are
still to be exploited. Limestone, chromite and quartz are
also in large quantities eastern, as well as small quantities
of coal with annual production of 5,705,190 tons in
2004-2005. However these have a low market value both
locally and internationally. So far no copper has been
extracted in FATA but large deposits exist in North and
South Waziristan agencies. For instance, in the Shinkai
area of North Waziristan an estimated 27 million tons of
copper reserves exist. Unfortunately, the proposed plan
of copper enrichment in FATA and establishment of a
prototype plant at Shinkai are still to materialize. Table 2
shows a summary of some copper, gold and silver depos-
its and reserves in Pakistan.
There is no doubt that Pakistan has a wide variety and
distribution of minerals. This fact alone supports the for-
mulation of an effective mineral policy and relevant sup-
porting plan for its implementation. The sector is a criti-
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
Table 2. Proportional policy concerns of NMP-2 and NMP-1.
Expansion of employment opportunities and enhancement of skills Economic development
Sustained development of mineral bearing area R&D enhancement, human resource development, as well as promotion
and marketing
Expanded business opportunities for local industries Competitiveness and Investment
Increased revenue flow to the Provincial and Federal Governments Effective Governance and management
Technology transfer Environmental Sustainability
Regional infrastructure development and an improved data base of
Pakistan’s mineral resources Encourage small scale mining and local private participation
cal feature in the ongoing industrialization and economic
development process of the country. The GSP calculated
the percentage distribution of coal use in Pakistan per
industry to be 23.1% Coke manufacturing, 65.4% Brick
Kiln production and the remaining 11.5% to power gen-
eration. Similarly, percentage share of fuel in commercial
energy composition is distributed as 1% nuclear, 30% oil,
11% Coal, 17% Hydro and 41% gas. These statistics
were published in the Energy Yearbook, 2007 [10].
5. Pak-China Relation
Pak-China friendship is inimitable. Pakistan was one of
the first countries to recognize the People’s Republic of
China. As it is quoted “Pak-China friendship is as high
as Himalayas”. We can exemplify a bit of this close re-
lation in 2008, when both countries signed free trade
agreement which helped to enhance the trade relations
among the two countries in a faster pace. Diplomatic
relation was established in 21 May 1951 between China
(Beijing) and Pakistan (Karachi) [11]. Karakoram High-
way also called Silk Road, a symbol of great friendship,
heading from Northern Pakistan to Western China that is
considered to be a wonder as far as mega structures are
concerned was mutually constructed by Pakistani and
Chinese engineers and opened in 1978. Both countries
have trade mostly via this route. China is 2nd largest trade
partner of Pakistan having current investment of $9 bil-
lion and china is developing infrastructure through power
plants, roads, and communication nodes in Pakistan.
6. Evaluation of Minerals Resources Policy
and Development
With constitutional backing, the Federal and Provincial
Governments jointly had responsible for the formulation
of the first National Mineral Policy in 1995 (NMP-1).
The policy was duly implemented by the provinces which
also simultaneously provided the appropriate institutional
and regulatory framework, while the Federal Govern-
ment assumed a supervisory role. This policy has since
been replaced by the NMP-2, with the same basic institu-
tional and management structure as the first. Instead of
regurgitating the content of the policies the review and
assessment will focus on the main policy directions in the
context of their overall aim (Table 2), which is to in-
crease the mineral sector’s contribution to the economic
development of Pakistan. The main challenges that
NMP-1 and 2 seeks to address revolve around the broad
themes presented in Table 2.
Countries that have demonstrated the long-term ability
to “manipulate” their mineral resources, not only adding
value to them, but substantively integrating the benefits
into their socio-economic development are better off than
those who have not. The focus of this policy objective is
to increase the economic contribution of the sector to
Pakistan’s economy through, mainly a facilitation of pri-
vate investments and Joint Venture Partnerships in the
mineral sector. The JVP agreement is perhaps one of the
most important developments in the global mineral in-
dustry today. This alternative policy focus needs more
substantive consideration, in particularly as it relates to
enhancing the sector’s competitiveness and attracting
potential local and foreign investment. The only portion
of the policy dedicated to this states that “A license/lease
may be granted jointly to two or more persons with re-
spect to an area where such an application is made jointly
and the liability of the applicants under the license/lease
in such a case will be joint and several” (NMP-2).
The formulating of a Joint Venture Agreement for
Mineral Exploration can be a tedious legal task, requiring
many hours of pother debate to achieve consensus and
agreement. This can be especially true within the gov-
ernance structure of the sector in Pakistan. Many coun-
tries now publish investor’s guides to mineral exploration
to enhance the sector’s JVP potentials and thus its com-
petitiveness. These guides are not only to educated po-
tential investors in their mineral industry about the pros-
pects of mining and exploration, but to also ensure that
investors align themselves with national development
priorities in consideration of their mineral exploration
investment plans.
The mineral sector contributes on average ~0.5% to
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
GDP annually, which is likely to increase considerably
with the development and commercial exploitation of
Saindak & Reco Diq copper deposits, Duddar Zinc lead,
Thar coal and Gemstone deposits. The sectors contribu-
tion to economic development is regularly revised down
due to the impacts of inclement weather conditions, such
as the torrential rains in Sindh Province during August
2011, which compelled the government to revise its GDP
growth target [12]. However, GDP data for the mining
and or mineral sector are not specific, but are truncated
with figures for the production and manufacturing sectors
generally. For example, the mining and quarrying sector
recorded positive growth of 4.4% for 2011-2012 against
the negative growth of 1.3% in 2009-2010 [13]. These
figures are also included within those for large scale
manufacturing which posted a growth of 1.05 percent as
compared to growth of 0.98 percent during the first nine
months of the fiscal year 2011-2012. With this sort of
double accounting, it is difficult to track real actions
within the industry. This is also compounded by the fact
that the large scale manufacturing industry includes other
sector’s contribution, such as: pharmaceutical, paper and
board, wood product, food beverages and tobacco, non-
metallic mineral products, leather product and textile.
This is one major challenge in monitoring target for the
industry in order to determine if policy objectives to this
end are been met. The World Bank’s 2011 Economic
Update Report for Pakistan, had no information on the
specific mineral industry and failed to mention any min-
eral (even coal) in its analysis [14]. Since the WB and by
extension the IMF are important international partners in
the country’s economic development, this is a worrying
7. Competitiveness and Investment
The competition in the global mineral industry has never
been fiercer as it is today. The increasing importance and
impact of new players such as; China, India and Brazil
and the resurgence of Russia, Australia and Canada, are
adding dynamism to all facets of the market. These play-
ers are unreserved and relentless to securing their place
in the global industry. Pakistan should therefore align
itself with best practices of its neighbors (China and In-
dia). Moreover, the traditional players and leading in in-
novation and forging new partnerships with the emerging
players. The policy’s aim in this regard is to improve
Pakistan mineral industry’s competitive for scarce and
mobile international capital for investment in the sector
through a stable and enabling environment. This stable
enabling environment is proving a herculean task for the
successive governments since NMP-1. Pakistan is de-
pending on foreign aid (World Times, 2011) and is clas-
sified as a Lower Middle Income Country by the World
Bank, with debt to GDP ratio of 187.1 as of 2011. Addi-
tionally, the country faces significant economic, govern-
ance and security challenges to achieve durable devel-
opment outcomes. The persistence of conflict in the bor-
der areas and security challenges throughout the country
is a reality that affects all aspects of life in Pakistan and
impedes development. A range of governance and busi-
ness environment indicators suggest that deep improve-
ments in governance are needed to unleash Pakistan’s
growth potential. The World Bank (2010) ranks Pakistan
at 85 with a trade facilitation, as indication of the ease of
doing business. The rank represents the country’s overall
business climate based on seven Indicators. The low to
moderate ranking of Pakistan in these two categories
hinders its economic growth, compromising potential
benefits from its vast mineral resources wealth. The
global nature of the mineral industry negates an overly
national focus, as is the case with NMP-2. The policy
should reflect the global awareness of the national gov-
ernment towards the industry, and its willingness to be
flexible with national standards to accommodate global
technologies etc.
The World Bank [15] (CFAA, 2003) and GoP has em-
barked upon an extensive reform program to improve
governance, reduce debt, increase public investment, in-
crease revenues, and decrease unwarranted expenditures.
Achieving these reforms require: improvements in the
effectiveness and productivity of public spending, not
only through a better allocation of resources and a more
careful choice of policies and priorities but also through
better implementation, more efficient delivery of services,
and improved controls over financial flows. These re-
forms are also to be realized at the sectorial levels. Within
the mineral sector, the objective is to ensure smooth op-
erational and effective coordination between Federal and
Provincial institutions in the implementation of regula-
tory and legislative regime.
The NMP-2 does not fall short on delineating the
portfolio responsibilities of the Federal and Provincial
government and their associated agencies (NMP-2). This
focus is noteworthy. However, for the industry to find
and maintain a niche within the global market the Federal
Government must take the lead role through the Ministry
of Foreign Affairs (Foreign Affairs Division) and the
Ministry of Planning and Development through the Plan-
ning and Development Division. Especially, at the inter-
national level, investors are more willing to negotiate and
dialogue with national (federal) agents than those at the
provincial levels. Moreover many of the conflicts at the
provincial level, that affect the operations of the sector at
that level, for example those within the FATA, Giligit-
Biltistan, AJK and ICT are constitutionally addressed at
the Federal level. These and other constitutional conflicts
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
need to be resolved in the interest of better government
and management of the sector.
In addition to the federal and provincial government,
there are numerous private institutions also involved in
the management of the sector. The PMDC, created in
1974 to expand and help mineral development activities,
is an autonomous body connected to the Ministry of Pe-
troleum and Natural Resources (MPNR). The Corpora-
tion operates four coal mines, four salt mines/quarries
and a silica sand quarry producing ~10% of the coal and
45% of the total salt production in the country. It’s an-
nual turnover during the year 2003-2004 was Rs.584.864
million [16]. NMP-2 shows the government exercising
more flexibility and amicability with private companies
and investors. This was all part of the aim of securing
much needed FDI into the industry along with technical
assistance and advances in research and development.
Mineral Investment Facilitation Authorities (MIFAs)
are to be established at both level federal and provisional
level. At the provisional level it will provide Provincial
Mining Concession Rules, while at the federal level
MIFA-F will be reconstituted by the MPNR. There will
be Mineral Investment Facilitation Board (MIFB) under
the MPNR not only context of fiscal policies but also in
international contacts with donor agencies and negotia-
tion of mineral agreements to promote the mining sector.
Other important concerns under the governance challenge
are related to; Regulatory Framework, Fiscal Framework,
Legal Framework and Institutions and Research & De-
velopment. The concerns are range from licensing and
environmental protection.
Apart from satisfying its local environmental laws, the
main objective of NMP-2 is to ensure the exploration for,
and development and production of, Pakistan’s mineral
resources in an environmentally sustainable manner. Paki-
stan is signatory to fifteen Multilateral Environmental
Agreements (MEAs)/conventions/protocols and has rati-
fied all of them. Consequently, it is mandatory for the
state to ensure the implementation of the agreements that
have been endorsed. The international environmental in-
struments (conventions/protocols) may be divided into
five broad categories: 1) Biodiversity-related Conven-
tions; 2) Atmosphere/Climate Change (UNFCCC); 3)
Land Convention/Environmental Cooperation Conventions;
4) Chemicals and Hazardous Wastes Conventions; 5)
Regional Seas Conventions and related Agreements.
These legislations should form the basis for establish-
ing environmental standards, for the sector. These should
also form an important part of an investor’s guide to JVP.
The NMP-2 needs to be broadened to include this im-
portant consideration, especially if it intends to expand
globally and attract international interests and multina-
tional financing from WB and IMF etc. The relevant
ministry should make it mandatory for all Licenses for
mineral exploration be automatically accompanied by an
Environmental Impact Assessment (EIA).
This focus encourages small scale mining and local
private participation in the development of the sector.
This shows an appreciation of the correlation between
mineral exploration and the community development.
Other important aspects involve people participation,
resources assessment and social and physical infrastruc-
ture. Strategies on community based resource develop-
ment in mineral exploration are some of the most impor-
tant aspects in preserving the social side of the sector.
This is often achieved by the implementation of regular
Social Impact Assessment (SIA) study to determine the
possible and potential impacts on the community of min-
eral exploration projects. Too often the economic and
financial gains from mineral exploration highlighted and
placed at the center of planning and policy making. This
is evident in the aim of increasing the sectors contribu-
tion to GDP.
There are mounting evidences of large corporations
making large profits from mineral exploration projects,
yet the communities in which they operate are poverty
stricken and suffer from general blightedness. Planners
and community development practitioners should be
specifically trained to ensure that communities are not
disenfranchised from exploration of their resources base.
Similarly, they should be equipped with the requisite
skills to identify alternative economic bases, when min-
ing operations are discontinued. Communities must be
protected against the negative aspect of resource de-
pendency and the resources curse [17].
One very important consideration in the focus local
involvement and community development is the issue of
minerals and production facilities in indigenous and tribal
areas. Many such areas still exists in Pakistan. There must
be special consideration to the rights and delicacy of such
cultures and customs during pre-mining and postmining
operations. At the federal level the Ministry of Minorities
through the minorities Affairs Division must assume the
lead role in the local involvement within the industry.
7.1. Mineral Resources and Development of
Pakistan’s endowment in mineral wealth, a relatively
large labor force of 58.41 million and a mineral/manu-
facturing industry accounting for approximately 20.1%
of employment, should be a receipt for high growth and
socioeconomic development. For this turn around to oc-
cur there needs to be significant modification of not only
the policy and legislative environment that governs the
industry, but also significant changes in the structure of
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
management and trade policies for to attract the foreign
investment. Pakistan is the sixth most populous country
in the world having a large share of “young population”
i.e. 63% below 25 years of age (UNDP 07) Successive
failed to moderately successful policies have caused
unemployment to mount to 15%.
There is a strong positive correlation between eco-
nomic growth and natural mineral resources wealth. Nei-
ther [18] Dollar nor Kraay (2002), or other recent studies,
have investigated whether a country’s export structure
affects its poverty conditions. If a state’s dependence on
mineral exports tends to increase its poverty rates, it
could help explain why many mineral-rich countries have
persistently high poverty rates; it would also inform pol-
icy interventions in the sector. If it does not, it would
support Dollar and Kraay, and encourage policymakers
to focus their efforts elsewhere. Many recent studies im-
ply that mineral wealth, or more specifically, a state’s
dependence on mineral wealth will hurt the poor. Six
different mechanisms could bring this about; four
mechanisms are economic and two are political. First, the
volatility of minerals prices may hurt the poor, who are
normally the first to feel the negative effects of market
anomalies. For at least the last century, the international
prices for primary commodities have been more volatile
than the prices for manufactured goods [19]. Since 1970,
this volatility has grown worse [20]. Economies that are
more dependent on minerals exports are hence more
likely to face economic shocks. Export volatility appears
to pose greater problems for the poor, since the poor are
less able to guard against negative shocks [21]. Even
though debate amongst researches and intellects [22]
within the sector wades on, there is no denying that with
the correct mixture of legislation, policy, management
and efficient implementation and monitoring strategies,
this correlation can work in favor of national develop-
7.2. Human Resource Development
In order to improve the technical and intellectual resource
based of the sector, a strong, educated and productive
workforce is necessary. The Technical Education & Vo-
cational Training Authority (TEVTA) is trying to achieve
this goal, but there is still a demand for more profession-
als and engineers in the mining sector. The government
needs to make more scholarships and training programs
opportunities available. In the short term, the hiring of
highly skills foreign professionals is always a viable op-
tion for the industry. These should operate alongside lo-
cal experts as a means of technological transfer for long
term sustainability of the sector. Investments should be
made to increase the number of facilities for technical
education and training and the government should foster
collaboration among the local, private and public sectors.
8. Pak-China Trade Relations
Pakistan and China are already co-operating closely in
the development of Gwadar Port, which would help eco-
nomic activity in Pakistan and provide an important ac-
cess route to the sea for China’s Western regions, Af-
ghanistan and Central Asian states. A large number of
important projects such as the up-gradation of Karakoram
Highway, Thar Coal Mining, up-gradation of Pakistan
Railways and Power Generation Projects—both nuclear
and non-nuclear—are some of the examples of this ex-
panding economic cooperation. Pakistan and China signed
a Free Trade Agreement in 2006. The base year for tariff
reduction/elimination for China was 2006 and for Paki-
stan fiscal year of 2006-2007. Pakistan received market
access at zero duty on industrial alcohol, cotton fabrics,
bed-linen and other home textiles and other goods. China
also reduced its tariff by 50% on knitwear and woven
garments. Bilateral trade had reached US$ 5.79 billion in
2011. The balance is, however, in favor of China. The
balance of trade increased from US$ 2.34 billion in
2007-2008 to US$ 2.5 billion in 2010-2011. Important
factor of trade deficit with China is growing exports of
Chinese products to Pakistan including raw materials and
capital goods. Since these are more economical, busi-
nessmen are inclined to buy more from China. Pakistan,
therefore, should be looking at China not simply as an
export market, but as a primary source for import of
capital goods and industrial raw material. Table 3 shows
trade balance between Pakistan and China. It is however
encouraging that over the last five years; average rate of
growth in exports from Pakistan has been 33% while
average increase in imports from China was 19%. Paki-
stan and China will enter Phase II of FTA in 2013 when
the present FTA will conclude by the end of 2012 [23].
9. Conclusion and Recommendations
Conclusively we can say that nature has bestowed Paki-
Table 3. Pak-China Trade (Value: US $ Million).
Year Exports Imports Trade Balance
2005-2006 437 1.843 1.406
2006-2007 548 2.321 1.773
2007-2008 685 3.029 2.344
2008-2009 661 2.708 2.344
2009-2010 1.211 3.284 2.073
2010-2011 1.645 4.145 2.500
(Source: Trade Development Authority of Pakistan & state Bank of Paki-
Copyright © 2013 SciRes. AJIBM
Regulatory Framework of Mineral Resources Sector in Pakistan
and Investment Proposal to Chinese Companies in Pakistan
stan with natural resources in an immense amount so that
development in this sector can turn Pakistan’s economic
instability to developed financial and economic stability.
But due to lack of better policies, lack of funds, lack of
human resource, lack of machinery, lack of expert this
sector is not getting the pace as desired. Pakistani gov-
ernment ought to take some influential and rigid steps to
provide a better platform for the international especially
Chinese investors, exploration and mining companies
regarding oil and gas, minerals, gems etc. Moreover it
should provide a space as far as safety and security is
concerned so that the international investors and compa-
nies can do their job in an appropriate way without any
fear. Being a close friend China can do a lot for the de-
velopment of this sector, so that the interested companies
can come to Pakistan for the exploration of mineral re-
sources, which can result into the economic growth of
both countries and as a repercussion Pakistan can cope
up lots of problem which it is facing, e.g. economic in-
stability, indebted of IMF and World Bank, unemploy-
ment, poverty, lack of technical education etc. On the
other side Chinese investors and companies can enhance
their setup on large scale, their growth and man power.
As a moral of story through the development in mineral
resources can make Pakistan a progressed and developed
10. Acknowledgements
I would like to say thanks China Scholarship Council
(CSC) funding authority and Prof Huang Delin for his
expert and professional supervision. We express grati-
tude to our families and friends for their unending sup-
port. Tayyab Sohail would also like to make special men-
tion of the support of his parents and sisters and brother
(Rukhsana, Aysha and Tahir Sohail). I would also want
to mention my best Chinese friend Nurbiyam. She al-
ways helped me in china.
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