Gold im­ports in­creas­ing

The Financial Daily - - NATIONAL -

rivers and river beds in Pak­istan are sources of placer gold de­posits.

The Sain­dak Cop­per and Gold mine is lo­cated near Sain­dak in the Cha­gai Dis­trict of Baluchis­tan. The dis­cov­ery of cop­per de­posits was made in 1970 with col­lab­o­ra­tion of a Chi­nese en­gi­neer­ing firm and the project was set up by end of 1995.

About 13.5 mil­lion dol­lars were in­vested by the gov­ern­ment of Pak­istan in the project. For de­vel­op­ing the Sain­dak mine, a for­mal con­tract for $350 mil­lion was en­tered into with China Me­tal­lur­gi­cal Group Cor­po­ra­tion dur­ing 2002 and the mine was leased for a pe­riod of ten years.

The lease was fur­ther ex­tended by an­other 5 years from Oc­to­ber, 2012. Mine, withan aver­age of 0.5 gram of gold per ton and 1.5 grams of sil­ver per ton. The mine is ca­pa­ble of pro­duc­ing 1.5 ton of gold an­nu­ally.

Antofa­gasta, the com­pany pos­sess­ing the RekoDiq field has tar­geted an ini­tial pro­duc­tion of 1, 70,000 MT of cop­per and 3, 00,000 ounces of gold a year.

Sarhad Devel­op­ment au­thor­ity has re­ported its find­ing of sev­eral gold bear­ing hori­zons in the re­gion of Chi­tral. The min­er­al­ized hori­zon con­tains the min­eral boulan­gerite which car­ries sig­nif­i­cant amount of sil­ver and gold. Gold, sil­ver and cop­per anom­alies are also found near the vil­lage of Zaluka, Dir. Sam­ple an­a­lyzed from this zonecon­tains 3-11 ppm gold along with sil­ver and cop­per con­tent.

Re­cently Pak­istan had dis­cov­ered a gold source that is the sec­ond big­gest near the dis­trict of Chin­iot which is in the Pun­jab prov­ince. Es­ti­mates say that this dis­trict may con­tain up to 500 mil­lion ton of gold in its 28 km area and will have a to­tal worth of about a tril­lion dol­lars.

There are many gold mines in Pak­istan

which is op­er­ated by Bar­rick Gold RekoDiq's min­eral re­source es­ti­mates to about 5.9 bil­lion ton with aver­age gold grade (0.22 g per ton) and aver­age cop­per grade (0.41pc). This at­tributes to about 37.5pc and is worth about 2.2 bn ton.

Magic moun­tain's: The RekoDiq gold

and cop­per min­ing project

In 1993, Si­ahRek and its nearby vil­lage Hu­mai got an­other name: RekoDiq gold and cop­per min­ing project.

Rutti is a mid­point in the vast tri­an­gle that is Cha­gai dis­trict, wedged be­tween Quetta to the north­east, Taf­tan(on the Pak-Iran bor­der) to the south­west and Ha­mun-e-Mashkel­lake to the south­east. To the east of the vil­lage is an area that has both wa­ter and veg­e­ta­tion and to its west is an im­mense noth­ing­ness: tiny ham­lets sep­a­rated by enor­mous stretches of desert,Si­ahRek be­ing one of them.

In 1993, Si­ahRek and its nearby vil­lage Hu­mai got an­other name: the RekoDiq gold and cop­per min­ing project. In the Balochi lan­guage, the name evokes in­fini­teriches, sand (rek) and mounds (diq) of gold.

In 1995, the gov­ern­ment launched a gold and cop­per min­ing project at Sain­dak but closed it down af­ter a trial run of a few months, due to a lack of funds and fall­ing prices of cop­per, gold and sil­ver in the in­ter­na­tional mar­ket. The project was restarted in 2001, af­ter the fed­eral gov­ern­ment awarded a min­ing con­tract to a state owned Chi­nese firm, Me­tal­lur­gi­cal Cor­po­ra­tion of China (MCC). The con­tract was ini­tially valid for 10 years but later it was ex­tended for an­other five years. It gives Balochis­tan only two per­cent roy­alty; the fed­eral gov­ern­ment owns 48 per­cent stake in it, while MCC has 50 per­cent share in its own­er­ship and prof­its.

The Chi­nese com­pany has been in­ter­ested in RekoDiq since the 1990s. Even when TCC was con­duct­ing its prospect­ing and ex­plo­ration work there, MCC ap­proached the pro­vin­cial and fed­eral gov­ern­ments with a pro­posal to de­velop the RekoDiq project. On Jan­uary 23, 2009, the steer­ing com­mit­tee re­jected MCC's pro­posal. Spec­u­la­tion about a pos­si­ble role for the Chi­nese firm in the fu­ture devel­op­ment of the RekoDiq project did not end. A suc­cess­ful bid for in­volve­ment in the RekoDiq project, ei­ther for a part or the whole of it, may help MCC get out of a min­ing project in Afghanistan where it no longer seems in­ter­ested in op­er­at­ing. In early 2013, news re­ports ap­peared about a con­flict be­tween the Afghan gov­ern­ment and MCC over MesAy­nak cop­per min­ing project in Logar prov­ince, south­east of Kabul, Wikipedia said.

In 1995, the gov­ern­ment launched a gold and cop­per min­ing project at Sain­dak but closed it down af­ter a trial run of a few months, due to a lack of funds and fall­ing prices of cop­per, gold and sil­ver in the in­ter­na­tional mar­ket. The project was restarted in 2001, af­ter the fed­eral gov­ern­ment awarded a min­ing con­tract to a state-owned Chi­nese firm, Me­tal­lur­gi­cal Cor­po­ra­tion of China (MCC). The con­tract was ini­tially valid for 10 years but later it was ex­tended for an­other five years. It gives Balochis­tan only two per cent roy­alty; the fed­eral gov­ern­ment owns 48 per­cent stake in it, while MCC has 50 per­cent share in its own­er­ship and prof­its.

The fifth­largest de­posit in the world re­mains un­der ground in Pak­istan as a dis- pute over thatwho­has the right to de­velop that halts progress.

Tethyan Cop­per Com­pany (TCC) is a joint ven­ture of Bar­rick Gold of Canada and Antofa­gasta of Chile, had been awarded a li­cence for ex­plo­ration in the RekoDiq area in 2006. In 2011, TCC's ap­pli­ca­tion for a min­ing lease for the project was re­jected by the Balochis­tan gov­ern­ment of the then-chief min­is­ter As­lamRaisani, who de­cided to run the project on its own.

TCC took the case to the in­ter­na­tional arbitration court claim­ing dam­ages be­cause it had in­vested more than $500 mil­lion in ex­plo­ration and fea­si­bil­ity stud­ies.

There is po­ten­tial, for mul­ti­ple mine de­vel­op­ments over the next few decades. By re­fus­ing a min­ing li­cence with­out good grounds, it's send­ing quite a neg­a­tive sig­nal to the min­ing com­mu­nity said Tim Livesey, the chief ex­ec­u­tive of TCC, in 2012.

The re­jec­tion of a min­ing li­cence to the com­pany af­ter an ex­plo­ration per­mit had been granted was an un­usual de­ci­sion by the gov­ern­ment. Raisani abruptly closed off com­mu­ni­ca­tion with the com­pany and even re­fused to meet its ex­ec­u­tives.

Balochis­tan has al­ways been on the coun­try's po­lit­i­cal pe­riph­ery, and has suf­fered years of ne­glect. The Baloch na­tion­al­ist par­ties had reser­va­tions about the RekoDiq deal, signed with a for­eign firm by the gov­ern­ment of for­mer pres­i­dent Pervez Musharaf with­out tak­ing lo­cal lead­er­ship into their con­fi­dence.

Soon af­ter the re­jec­tion of TCC's bid, the Me­tal­lur­gi­cal Cor­po­ra­tion of China (MCC) came with a counter pro­posal for a min­ing lease for RekoDiq and of­fered Balochis­tan a larger share in in­come and roy­alty.

In 2002, MCC had ac­quired a lease the Sain­dak cop­per and gold project in the same dis­trict as Cha­gai, which was to­ex­pired in 2012. If the Raisani gov­ern­ment was se­ri­ous in its de­sire to de­velop de­posits us­ing lo­cal firms, why did it not op­pose the fiveyear ex­ten­sion in the lease pe­riod of the Sain­dakpro­ject.

The RekoDiq project be­came con­tro­ver­sial af­ter news sto­ries al­leged that the RekoDiq gold mines were be­ing se­cretly sold to for­eign firms for a neg­li­gi­ble price.

The dis­pute be­tween TCC and Balochis­tan be­gan af­ter the res­ig­na­tion of Mr Mushar­raf in 2008. Un­der his ad­min­is­tra­tion, TCC was awarded the project with min­ing rights and it signed a joint ven­ture agree­ment with Balochis­tan hold­ing 25per­cent in­ter­est in the project. But in De­cem­ber 2009, Balochis­tan said it was can­celling the TCC deal.That trig­gered a blame game, with each side ac­cus­ing the other of vi­o­lat­ing min­eral rules. In Jan­uary 2013, for­mer chief jus­tice of the Supreme Court Iftikhar Chaudhry de­clared the RekoDiq con­tract be­tween the Balochis­tan and TCC void.

Cru­cially, the gen­eral elec­tions of May last year brought a new gov­ern­ment to Balochis­tan, with Ab­dul Baloch re­plac­ing Raisani as chief min­is­ter.

Baloch's gov­ern­ment is now con­sid­er­ing rene­go­ti­at­ing the deal with the TCC. Both the fed­eral and pro­vin­cial gov­ern­ments now wish for an out-of-court set­tle­ment with the TCC. If a deal with TCC is now the best choice, why did the pre­vi­ous gov­ern­ment re­ject the com­pany's bid for a min­ing lease?

In early 2013, Raisani was re­moved from the post as the law and or­der sit­u­a­tion in Balochis­tan broke down. Af­ter step­ping down, he linked his re­moval to his de­ci­sion to scrap RekoDiq deal.

The for­mer chief min­is­ter failed to serve the in­ter­est of Balochis­tan when he tore up the TCC deal.

For in­stance, how would the cash­starved prov­ince, which is un­able to pay even the fee for le­gal ex­perts, pay the dam­ages if the in­ter­na­tional court rules in favour of TCC. In case of an out-of-court set­tle­ment, TCC would be in a stronger po­si­tion to bar­gain over the is­sues re­lated to the devel­op­ment of the gold mine. The RekoDiq project could lead to the devel­op­ment of a mod­ern min­ing in­dus­try and change the destiny of the coun­try's least de­vel­oped prov­ince.

Arbitration pro­ceed­ings have fur­ther de­layed the mine's devel­op­ment, which has not been worked since 1993 when BHP Bil­li­ton signed a deal with Balochis­tan. While BHP had an ex­plo­ration deal, it did no prac­ti­cal work and sold its 75 per­cent in­ter­est to TCC in 2000. In 2006, TCC was taken over by Antofa­gasta and Bar­rick Gold.

TCC de­serves credit for the dis­cov­ery of the huge RekoDiq de­posits. The com­pany was will­ing to make an in­vest­ment of $5bn over five years. It could have been the big­gest for­eign­fi­nanced project in the coun­try's his­tory.

The cus­tom andim­port taxes are: Gen­eral duty ap­pli­ca­ble in Pak­istan is 0.17 pc

Im­port Pol­icy

Ac­cord­ing to im­port and ex­port of Gold, Gold Jewelry and Gem­stones Or­der, 2001, there are few norms and stan­dards to be main­tained and kept in mind while con­duct­ing ex­port, im­port un­der the said Or­der.

Du­ties and Taxes

Im­port of gold and gem­stones un­der all schemes shall be ex­empt from nor­mal im­port tar­iffs. The im­port of other raw ma­te­ri­als, tools, ma­chin­ery and equip­ment un­der im­port of gold and gem­stones against ex­port of jewelry or im­port en­ti­tle­ment shall be al­lowed free of cus­toms du­ties and ad­vance in­come tax. In case an ex­porter uses du­ty­paid raw ma­te­ri­als pro­cured from the mar­ket, duty draw­back shall be ad­mis­si­ble ac­cord­ing to the stan­dard duty draw­back sys­tem in force. Sales Tax on ex­port of Gold Jewelry and Gem­stones is zero-rated. An ex­porter can claim re­fund of Sales Tax paid on raw ma­te­rial in­puts. Ad­vance Tax at the rate of 75pc shall be charged on ex­port of Gold Jewelry and Gem­stones along with 0.25pc Ex­port devel­op­ment sur­charge.

Pak­istan im­ported over 500 kg of gold in fis­cal 2018.

The gold im­ports into the coun­try in­creased by 24.28 per­cent dur­ing the fis­cal year 2017-18 against the im­ports of the cor­re­spond­ing pe­riod of last year, Pak­istan Bureau of Statis­tics ( PBS) re­ported.

In terms of quan­tity, Pak­istan im­ported 509 kilo­grams of gold dur­ing the pe­riod un­der re­view com­pared to the im­ports of 440 kg dur­ing last year, show­ing an in­crease of 15.68 per­cent.the

Mean­while, on a year-on-year ba­sis, the gold im­ports into the coun­try in­creased by 86.70 per­cent in June 2018 com­pared to same month of last year. The gold im­ports in June 2018 were recorded at $1.404 mil­lion against the im­ports of $0.752 mil­lion. Gold and Sil­ver Rates in Pak­istan

For cen­turies, gold has been the most pop­u­lar pre­cious metal and has been used as an in­vest­ment by countless in­di­vid­u­als. Many in­vestors pre­fer to buy gold as it pre­vents the risk of loss by di­ver­si­fy­ing it through the uti­liza­tion of de­riv­a­tives and fu­ture con­tracts. Re­cently, the Gold Rates in global and do­mes­tic mar­kets had closed at flat rates on tech­ni­cal ground due to var­i­ous rea­sons. Pak­istan seek­ing help from the In­ter­na­tional Mone­tary Fund (IMF) had se­verely shaken the coun­try's econ­omy. How­ever, be­cause of Saudi loan, Ac­cord­ing to the ex­perts, the Fu­ture Gold and Sil­ver rates in­Pak­istan has been on a rise ever since the prices had gone up dur­ing late Oc­to­ber. Re­cently, the Gold rates in Pak­istan closed at $1,337 an ounce with a stun­ning $1 up­ward vari­a­tion in price value of the pre­cious metal and the pre­vi­ous trad­ing ses­sion and do­mes­tic bul­lion also wit­nessed the same trend of price hike. Gold in 24 karat closed at Rs 51,097 per 10 grams, while per tola in 24 karat gold at Rs 59,600, ac­cord­ing to deal­ers.

One can find live in­ter­na­tional gold rates in ac­cu­rately con­verted Pak­istani ru­pee rates in var­i­ous karats in­clud­ing, 24K per Tola, 24K per10gm and 22K/Tola and 22K per10gm. Ad­di­tion­ally, the as­so­ci­a­tion of Karacpre­hiSaraf Jeweler, which is re­spon­si­ble for set­ting and man­ag­ing the gold rates for lo­cal mar­kets in Karachi pro­vide the rates for 24K/Tola, 24/10gm, and karat 22K/Tola, 22K/10gm and sil­ver per 10/gm per or­d­ing to dif­fer­ent ci­ties such as Karachi, Is­lam­abad, La­hore and Rawalpindi. The rates are up­dated on a daily ba­sis.

The coun­try World's Largest

Pro­ducer of Gold

China pro­duces more gold than any other coun­try in the world, fol­lowed by Aus­tralia, Rus­sia, and the United States.

The pro­duc­tion of gold is so im­por­tant What are the trends and the eco­nomic in­flu­ences that drive pro­duc­tion and also price. To un­der­stand the first pointone has to un­der­stand the de­mands for gold. Gold has com­mer­cial de­mand that it is fash­ioned into jewelry but also a fi­nan­cial de­mand as it is used to man­age risk in fi­nan­cial port­fo­lios and to pro­tect the wealth of many. It also has pe­riph­eral uses in tech­nolo­gies such as the smart­phone.

China pro­duces more gold than any other coun­try in the world. Asia as a whole pro­duces 22pc of the world's to­tal pro­duc­tion. Cen­tral and South Amer­ica ac­count for 17pc with North Amer­ica con­tribut­ing 15pc. Africa pro­duces 20pc and the for­mer Soviet Union C.I.S re­gion 14pc. Amaz­ingly, gold re­cy­cling ac­counts for one third of the to­tal pro­duc­tion.

Be­low taken list of the top gold pro­duc­ing coun­tries in the world.All num­bers taken from the US Ge­o­log­i­cal Sur­vey.

Top Gold Pro­duc­ers

1. China - 440 Tons

In 1990 the Chi­nese Gov­ern­ment passed laws mak­ing it eas­ier to buy gold. As a re­sult, de­mand rose, as did in­vest­ment in bars and coins. To­day, China pro­duces 440 met­ric tons of gold ev­ery year, more than any­where else in the world. An­other fac­tor that may be re­spon­si­ble for the de­mand of gold is the growth of wealth in China. Since 1980 an in­crease of 20pc of the pop­u­la­tion of China chose to live in ur­ban areas. As the wealth per capita in­creased so did the de­mand for gold. Most of the gold that is pro­duced in China re­mains in the coun­try.

List of coun­tries by gold ex­ports

The fol­low­ing is a list of coun­tries by gold ex­ports. Data is for 2016, in mil­lions of United States dol­lars, as re­ported by The Ob­ser­va­tory of Eco­nomic Com­plex­ity. Cur­rently the top twenty coun­tries, as of 2016, are listed, their 2012 fig­ures are also pro­vided by Wikipedia.

In­dia is im­port­ing gold from more than 40 coun­tries across the world. Switzer­land, UAE, USA, Ghana and South Africa are the top gold ex­porter coun­tries of In­dia. In­dia's gold im­port rep­re­sents 8.4pc of world im­ports dur­ing the year 2016. In­dia recorded gold im­port value of USD 22944490 thou­sand in 2016.

Gold in In­dia tra­di­tion­ally seen as stor­age of wealth by buy­ers while the In­dian gov­ern­ment con­sid­ers it un­pro­duc­tive as it leads to idle sav­ings rather than the in­vest­ments. The gold de­mand in In­dia is ap­prox­i­mately 700 to 800 ton per an­num. With an aim to re­duce de­mand for gold coins man­u­fac­tured out­side In­dia and to re­cy­cle the gold avail­able in the coun­try. The gov­ern­ment has also in­tro­duced In­dia gold coin in the year 2015 to re­duce the im­port.

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