Digging for prosperity: The hidden challenges of mining in Pakistan

Pakistan's mining sector has found itself at the forefront of national discourse, driven by recent discoveries, government-backed investment drives, and a contentious new legal framework that has sparked debate across the country. 

With trillions of dollars worth of mineral resources—including gold, copper, rare earth elements, and gemstones—the government is aggressively pursuing foreign investment to unlock its vast underground wealth. 

The Shehbaz Sharif government is trying to generate enthusiasm among domestic and international investors for mining reserves at Reko Diq and Chagai in  Balochistan, in hopes that the country could transform its economic future through large-scale extraction. Further bolstering these ambitions, the government is expanding partnerships beyond traditional mining, with agreements signed for offshore oil and gas exploration, including collaborations with Turkey. By hosting the Pakistan Minerals Investment Forum 2025 the government signalled its aspirations to become a mining powerhouse.

Despite these promises  Pakistan’s mining industry continues to grapple with deep-rooted challenges. Security risks, administrative inefficiencies, and inadequate infrastructure have historically stalled progress. Moreover, the sector’s expansion raises concerns over labour rights violations, environmental degradation, and the notorious “resource curse,” a phenomenon where abundant natural wealth fails to translate into broad-based economic prosperity due to mismanagement and corruption.

These aspirational developments are clouded by federal overreach disguised as policy reform. Passed with remarkable speed and minimal parliamentary scrutiny in mid-March,  the Balochistan Mines and Minerals Act, initially flew under the radar, overshadowed by coverage of a deadly train hijacking in Balochistan. However, the bill was thrust into the spotlight after a similar legislative move in Khyber Pakhtunkhwa faced public backlash. Critics argue that, while the act is framed as an effort to streamline investment and transparency, a closer examination reveals a more troubling trend: a centralization of control over Pakistan’s mineral wealth, heavily influenced by the country’s powerful military establishment.

Pakistan’s Mines and Minerals Act is a calculated effort by the military-dominated federal apparatus to assert greater control over the country’s most precious natural assets—its strategic and rare earth minerals. The act marks a decisive shift in resource management, moving power away from provincial authorities and consolidating it under federal institutions closely linked to the military establishment. This encroachment on provincial autonomy has fueled concerns that Pakistan’s lucrative mineral deposits, particularly in regions like Balochistan and Khyber Pakhtunkhwa, are being placed under centralized control without adequate oversight or fair distribution of benefits.

In addition to concerns surrounding provincial autonomy, accusations that the federal government is leveraging legislation to consolidate authority over strategic and rare earth minerals have been voiced. This shift has sparked fears of political interference, opaque dealings, and the erosion of regional decision-making power, further complicating Pakistan’s bid to establish itself as a serious player in the global mining industry.

The establishment of the Mineral Investment Facilitation Authority (MIFA)—a body operating under the federal Special Investment Facilitation Council (SIFC)—effectively strips Balochistan of its decision-making power. With MIFA empowered to override provincial departments, the act marks a significant rollback of the 18th Amendment, which had previously secured exclusive provincial control over mineral resources.

Additionally, Sections 121 and 122 of the act supersede existing provincial laws, reducing Balochistan’s role in the licensing, bidding, financial regulation, and royalty decisions concerning its own resources. 
Passed quietly amid national distractions, the act’s sudden implementation and lack of transparency have heightened suspicions of political maneuvering, reinforcing concerns about federal overreach and military influence. By diminishing Balochistan’s control over its natural assets, this legislation risks exacerbating existing political and economic grievances in an already restive province. 

Centralized authority over Balochistan’s minerals risks mismanagement, perpetuating a pattern of economic marginalization that has long fueled unrest in the province.The Reko Diq case, a landmark conflict over mineral extraction rights,  stands as one of Pakistan’s most significant legal battles over mineral extraction rights, involving the Tethyan Copper Company (TCC) and the Government of Pakistan. In 2011, the Balochistan government rejected TCC’s mining lease application. TCC responded by filing a case with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), seeking $11.43 billion in damages for the abrupt termination of its contract. The case became a landmark precedent in Pakistan’s resource governance, highlighting tensions between foreign investment, provincial autonomy, and national sovereignty. The ICSID ultimately ruled in favor of TCC, ordering Pakistan to pay billions in damages, a decision that sparked intense debate over Pakistan’s handling of mineral wealth and its approach to international investment agreements.

There are several cases that underscore Pakistan’s struggles with resource management, where foreign deals, legal disputes, and governance failures have often led to economic losses rather than sustainable development.

The Saindak Copper-Gold Project, located in Chagai, Balochistan, has been a focal point of controversy due to opaque agreements with Chinese firms, raising concerns about local benefits, environmental impact, and revenue distribution. Operated by the Metallurgical Corporation of China (MCC) under a lease agreement with the Government of Pakistan, the project has faced criticism for limited economic returns to local communities despite generating substantial profits. 

The Khewra Salt Mines, a major source of Himalayan rock salt, have long been plagued by regulatory shortcomings, illegal extraction, and unsustainable mining practices. Despite their vast potential, concerns over transparency in trade agreements, particularly regarding Himalayan salt exports, have raised alarms about mismanagement and economic exploitation.

For Balochistan, mineral wealth represents not only economic potential but also a question of self-determination. The province’s past struggles underscore the dangers of shifting decision-making power away from local authorities, leaving its resources vulnerable to external control with little benefit to its people. The enactment of Pakistan’s Mines and Minerals Act signals yet another chapter in the ongoing battle between provincial aspirations and federal dominance, setting the stage for further debate over Pakistan’s governance and resource distribution policies.(By Vaishali Basu Sharma - The author is an analyst on geopolitical and macroeconomic issues)