A Good Opportunity Lost
For some time, not much has been heard about Balochistan’s muchhyped Reko Diq gold and copper mining project. The story did surface again recently though only to reveal the continuing stand-off between the foreign mining consortium and the Balochistan government. The identified deposits of copper and gold at Reko Diq continue to remain where they have been for millions of years – under the rock and gravel – and the condition of the people of Balochistan remains as poor as it has always been. Had better counsels prevailed at the government level, the economic benefits of the Reko Diq project, which were projected as being substantial for the province, would have been on tap by now. To start with, in the Pakistan Government’s present penury condition, the annual budget of Balochistan at least would have increased exponentially through injection of 25% profit share in the project, plus 2% royalty and other taxes.
A look at the project’s impact on the socio-economic fabric of Balochistan reveals a tremendous development potential for the whole region. The Reko Diq mine development phase, spanning over 4 years, would have directly employed a workforce of over 11,000. Once commercial operations had kicked off, the number of directly employed workers would have averaged at 2,500. The company expected to employ no less than 70% of the workforce from Balochistan over an operational period of 5 years; this would have increased to 90% after 10 to 15 years.
The mining company would also have made significant investments into training and capacity building of the local workforce and would have invested in a long-term social investment plan as well. Since mining is one of the main sectors marked by the World Bank in its 2008 Balochistan Economic Report, the foreign investment would have led to development in the communication network, creation of more employment opportunities, access to basic health and educational facilities, local trade activation and community uplift. Gwadar, which was selected as the shipping port for the project, would also have received the much-needed boost from global freighters and commercial traffic.
Balochistan has the potential to become an important mining destination, provided it offers friendly mining laws, commercially enabling regulations and fair competition. The powers that be in Balochistan could have shown foresight and warmly welcomed the global mining players for an economic arrangement in which all partners would be winners, namely, the government, the global investor and, most importantly, the hapless people of this backward province.
Governments around the world have realized that investment and operations of a commercial magnitude are best suited to the enterprising private sector. As it is, the foreign direct investment situation in Pakistan has deteriorated quite dismally over the past few years. In such circumstances, the loss of such a project as Reko Diq can be termed as suicidal policymaking, if anything. The objective of public wellbeing is efficiently achieved when governments provide favourable conditions to investors. This is further reinforced by implementing regulations that facilitate competitive development of the economy. How long will Pakistan continue to lose opportunities just because its policies are short-sighted and not investor-friendly?