PAKISTAN MINING REGULATION
Pakistan has deposits of quality gemstones, along with coal, copper, iron ore, limestone and salt. Most of the country’s minerals have not been explored or mined due to lack of infrastructure and investment. Mineral production accounted for less than 1% of GDP in 2006. One and one- half percent of the labor force was employed in the mineral industry. The minerals manufacturing sector is dominated by the cement industry, which uses indigenous limestone. Other minerals mined in Pakistan are antimony, aragonite, barite, celestite, chromite, gypsum, marble and salt.
Minerals other than nuclear minerals and those occurring in special areas (Federally Administered Tribal Areas (FATA), Islamabad Capital Territory (ICT) and International Offshore Water Territory (IOWT)) are a provincial matter under Pakistan’s constitution. Provincial Governments and federall territories are responsible for regulation, detailed exploration, mineral development and issues of safety in respect of mineral operations, whereas geological/geophysical survey and mapping, national and international coordination and formulation of national policies and plans are federal responsibilities.
PRINCIPAL LEGISLATION AND REGULATOR
The Ministry of Petroleum and Natural Resources (MPNR) is responsible for the administration and control of the mining sector through the Federal General Director of Mines. The National Mineral Policy of 1995 provides for the establishment of a Mining Investment Facilitation Authority (MIFA) in each province, FATA, and the disputed territories. MIFA members include the Chief Minister of the province, the Minister of Mineral Development, and officials from other departments. The MIFA’s responsibilities include: directing and monitoring mineral activities; reviewing the regulatory regime and administrative functioning of the sector within the province; reviewing progress on investment in the sector; ensuring protection of the environment, and assisting with support for investors (such as access to land). In this last, MIFA serves as an appellate forum for resolution of disputes between investors and the licensing authority. The Geological Survey of Pakistan is responsible for creating the geological and geophysical maps necessary for mineral exploration (GOP National Mineral Policy 1995; GOP 2003b).
The Regulation of Mines and Oil Fields and Mineral Development (Federal Control) (Amendment) Act 1976, which is a federal act, governs mineral rights at a policy level and each province and territory has adopted regulations consistent with federal policy. For example, few differences exist between the mineral regulations of the Provinces of Balochistan and Sindh. Mining regulation in Pakistan is not in accordance with international standards insofar as the holder of an exploration license does not have the right to obtain a mining lease where inconsistent with the best “interest” of the relevant province in such development. Recognising the need for updated legislation, the federal and provincial governments jointly developed the National Mineral Policy of 1995 to establish a regulatory framework, institutional arrangements and equitable fiscal regime. The government has yet to draft a new mining law as called for by the National Mineral Policy.
GRANT AND FORMS OF MINERAL TITLE
The Provincial mineral titles granted in Pakistan are small-scale or large-scale. For small-scale, they include mineral permits, exploration (prospecting) licenses and mining permits. For large-scale, they include reconnaissance Licenses, exploration Licenses, mineral deposit retention licenses and mining leases. Considerable discretion exists within the regulations as to the grant or refusal of various licences, but - once granted - the holder of a mineral title, subject to payment of dues and compliance with other prescribed obligations, has the exclusive right to explore or produce minerals, as the case may be, including the right to enter upon the licensed/leased area (subject to the rights of surface owners) and to carry out operations in accordance with the terms of the mineral title and applicable laws.
Preconditions to the grant of a mining right include the preparation of a feasibility and technical report and an environmental impact assessment. The Provincial Governments may enter into an agreement with an investor to define the terms or to predetermine procedures with respect to certain matters relating to the carrying out of operations under a license/lease, if government is satisfied that substantial foreign investment in exploration and mining operations is likely to be made and it is desirable in the interest of the development of mineral resources, to do so. The Federal Government may also become signatory to such an agreement. The Federal Government proposed to develop a model mineral agreement designed to provide additional comfort to a mining company and its lenders, but - to date - no such agreement has been prepared.
See Pakistan Environmental Regulation.