Recent global experiences demonstrate that minerals can drive substantial economic growth in low and middle-income countries. With the right strategies, Pakistan can leverage its rich mineral resources to boost growth and reduce foreign dependence.
Pakistan is home to vast mineral resources, including significant copper and coal deposits. However, efforts to capitalize on these resources have historically fallen short. Change may be on the horizon, as the Special Investment Facilitation Council (SIFC) prioritizes mineral development and plans to establish a dedicated mining ministry.
Estimates suggest Pakistan’s mineral reserves are immense, with copper deposits ranging from 1.4 billion to 3.5 billion tons, iron ore between 1.5 billion and 3 billion tons, and coal reserves at around 165 billion tons. Additionally, Pakistan has substantial deposits of chromite, bauxite, manganese, salt, gold, and silver. The sector currently employs approximately 300,000 workers, and the U.S. Energy Information Administration ranks Pakistan among the top ten countries for shale oil and gas resources.
Historically, countries like the U.S., Canada, and Australia have successfully relied on minerals for economic growth. More recently, nations such as Chile, Peru, Botswana, and Indonesia have witnessed rapid GDP growth through mining. Effective government policies played a crucial role in these successes, utilizing tax revenues to invest in public goods and fostering links between the mining sector and other industries.
Critics have raised concerns about the so-called “resource curse,” arguing that reliance on mining can lead to inequality and a lack of resource efficiency. However, recent trends have renewed confidence in minerals as a pathway to inclusive growth, especially when accompanied by active government policies.
Research by World Bank experts highlighted how mining-dependent economies like Chile and Indonesia outperformed non-mining countries across various indicators, largely due to government investment in public goods and the development of value-added industries. In Chile, for instance, the mining sector fostered a diverse range of local businesses and improved governance.
Successful mineral development requires collaboration between governments and mining companies. Chile’s example of building an industrial cluster around mining resources showcases how joint efforts can enhance local capacities and create a sustainable ecosystem.
To avoid the pitfalls of the resource curse, Pakistan must establish genuine partnerships with mining firms. These companies should contribute to infrastructure costs, corporate social responsibility, and workforce training, while gradually moving toward local ore processing.
Attracting foreign direct investment (FDI) based solely on tax incentives risks creating a dependency that could undermine the economy. The government should ensure that profit generation aligns with national goals and encourage investment in technology and sustainable practices.
Key reforms are needed for Pakistan to fully realize its mineral potential. This includes improving geological surveys, addressing infrastructure gaps, facilitating access to local financing, and expediting permit processing. The government should also aim for stable tax policies and transparency in dealings with the private sector, ensuring that revenue growth directly benefits citizens.
In the past, inconsistent treatment of mining investors has harmed both parties and damaged Pakistan’s reputation. Establishing cooperative agreements with investors is essential for the success of mining projects.
By revisiting its public policy approach, prioritizing transparency and collaboration, and focusing on national objectives, Pakistan can unlock the full potential of its mineral wealth for sustainable economic growth and inclusive development.
