Chiniot minerals: Sifting fact from fiction

The immediate motivation to write this article came from Ansar Abasi’s story titled, “Chiniot-from a dream ‘treasure trove’ to steel mills promise” published in another paper on April 14. Given the assertions made by the senior journalist, it is important to put the record straight and take the people of Punjab into confidence by sifting fact from fiction.

Punjab has been blessed with the rich endowment of mineral resources as presently more than 20 minerals are under excavation including coal, rock salt, limestone, gypsum and silica sand etc. However, metallic minerals like iron, copper, nickel and gold etc constitute high value inputs with the potential to revolutionise the industrial base of any country. The only known deposits of iron ore in Punjab were reported in the Kalabagh and Makarwal area where Germans conducted feasibility studies in early 1960s for the establishment of a steel mill plant.

However, under the political prudence of that era, the steel plant was established at Karachi. Presently, Karachi Steel Mill is closed since last two years due to changed market dynamics, obsolete technology and organisational incompetence.

Russian geo-scientists under OGDC, Pakistan, reported prospects of some presence of iron ore in the broader areas of Sargodha and Chiniot through an aerial survey conducted in 1969. After 20 years of pause, Geological Survey of Pakistan initiated some research work and early drillings, which strengthened the prospects about iron ore presence. Due to lack of funding, this work was stopped.

Subsequently, Punjab Mineral Development Corporation (PUNJMIN) initiated exploratory work at Chiniot in year 2005 to 2007 which resulted in confirmation of the presence of iron ore at Chiniot. At Rajoa, the survey was conducted which showed massive prospects but without conducting any substantial drilling work, it was concluded by local geologists that the area has more than 500 million tons of iron ore.

Early preliminary conclusions about the presence of iron ore in a wide range of area led to a serious change of heart and the whole area under scrutiny along with its all potential iron ore deposits was handed over to a fake company, named Earth Resource Private Limited (ERPL). This joint venture agreement between PUNJMIN (on behalf of Government of Punjab) and ERPL transferred the exclusive rights of exploration, mining, sale and establishment of steel mill to this fake company, without any feasibility study or competitive bidding process.

This single act sold the dream of having first indigenous iron ore based steel mill to some unknown hands. It was a broad-day robbery of the rights of common man by the then government. This process was initiated in year 2006-2007 and concluded before the general elections of 2008 in Punjab.

Upon assuming office in 2008, Chief Minister Shehbaz Sharif initiated stern corrective measures which led to the cancelation of the fraudulent deal but the matter was challenged in Lahore High Court. After continued legal battle by the Government of Punjab, LHC declared the joint venture null and void and an act of daylight robbery and resultantly, Government of Punjab itself engaged systematically to explore the underlying assets, to be used for national development. The administrative will and political vision of the Chief Minister was the determining force in this retrieval of iron ore deposit. As a matter of fact, ERPL took the litigation up to the Supreme Court level but remained unsuccessful.

It was the judgment of Lahore High Court in 2010 which quoted the figures of 500 million tons of potential iron ore at Rajoa and 110 million tons at Chiniot, based on the statements of departmental representatives of PUNJMIN, in the absence of any concrete and authentic scientific work about the quality and quantity of these resources.

Chief Minister, Punjab rejected the proposal of funding the exploration program at Chiniot and Rajoa through a World Bank loan and categorically directed that it must be done with our own meagre resources because such loans come with many inhibitory clips and pre-conditions. Consequently, Punjab Mineral Company was established to steer the process on best corporate practices. Credibility of the work was established through the selection of a renowned international contractor (Chinese) and a consultant (German) in early 2014.

Over a span of more than two years, extensive geophysical survey was conducted which led to drilling of 71 boreholes for a total core length of 62000 meters. The resultant resource model confirmed the presence of 150 million tons of iron ore in Chiniot on NI 43-101 Canadian standard which is highly conservatives in its approach. The present market value of this iron ore, when converted into iron concentrate, comes to almost Rs. 650 to 700 billion.

A team of international consultants, selected for Transaction Advisory Services in 2016, has prepared the business case feasibility for establishment of steel mill plant of 1-million-ton production capacity for Hot Rolle Coil (HRC). The expected investment for establishment of mining, processing and steel mill complex would be worth USD 1.5 billion. Government of Punjab is expected to get more than Rs 100 billion in royalty and taxes over the life of the project, whereas thousands of locals are expected to get direct and indirect employment. Due to strong fundamentals, this project has been included, in-principle, in CPEC in the 6th JCC meeting at Beijing, China.  

Geological scientists working with Punjab Mineral Company (PMC) have concluded that more than 2000 Sq Km of area adjoining Chiniot and Rajoa carry the prospects of presence of metallic minerals including precious metals. Under the instruction of Chief Minister Punjab, phase-II of the project has already been initiated in March, 2017 to explore resource corridors, not only in the adjoining areas of Chiniot-Rajoa but also in the rest of Punjab including Kalabagh.

The extended research conducted in Phase-I has led to identification of 29 other areas with high potential of mineral presence. These areas are spanning around Chiniot, Rajoa, Chak Jhumra, Wad Syedan, Ghutti Syedan, Shaheen Abad, Sargodha and Sangla Hills. Detailed reconnaissance over these area is being planned by new German Geo-consultant Fugro, which will be starting expansion drilling on the Chiniot deposits in the coming months as the contractor for Phase-II is in final process of selection. This presently measured 150 million tons of deposit at Chiniot has shown good prospects of expansion in the north and south direction.

Globally, the process of exploration, mining, processing and smelting has long gestational periods. However, under the vision and support of Chief Minister, Punjab, the progress achieved in last three years has put Punjab on the geological map of globe, among areas where exploratory work is being conducted on high international standards.

In order to meet the growing technological and administrative challenges in future, Mines and Minerals Department has been undergoing institutional restructuring, since last 10 months under the supervision of international team of Earnest & Young Global Mining Advisory Services. Recent reforms have led to enhancement of non-tax revenue recovery from Rs 3 billion to Rs 10 billion in one year due to revamping of auction procedures in mineral sector.

Government of the Punjab reiterates its resolve to discover and utilise the natural endowments for the economic growth of Punjab and Pakistan, by observing transparency and without compromising the interests of public and the state of Pakistan.   

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