How to Develop Mining and Minerals Industry
Bilquess, Rubina, Economic Review
During the 20th century much attention was paid to the development and exploitation of metallic and fuel minerals throughout the world. Non-metallic mineral deposits and industrial rocks were neglected being non-glamorous and cheap. In recent years industrial minerals have become important in chemical, refractory bricks, glass, ceramic and metallurgical industries which have many advantages for developing countries like Pakistan.
Pakistan possesses a large number of industrial rocks, metallic and non-metallic minerals which have not yet been evaluated in detail for their physiochemical characteristics and industrial uses. There is an urgent need to undertake further field and laboratory studies on these deposits for accelerating the pace of development of mineral resources and minerals industry in the country.
There is a need for undertaking intensive studies on mineral deposits by using modern techniques like sinking boreholes and doing mineralogical, chemical and industrial testing of the deposits. Efforts should also be made by the government and non-government agencies for estimating reserves and determining quality and industrial uses of mineral deposits. Data should be published in local and international journals for attracting foreign investment to Pakistan's mineral sector.
Industrial and Technological Factors
Mining of metallic minerals in Pakistan is restricted to chromite and a few other minerals. Non-metallic minerals and industrial rocks are being exploited by a large number of small private companies with crude and wasteful methods which damage deposits. Such mining groups do not hire technical personnel and use cheap semi-skilled labour in carrying out mining by using poor blasting materials and primitive equipments. Beneficiation industry remains undeveloped in Pakistan. Both government and private agencies are supplying unprocessed raw material to the industry which leads to the manufacturing of low quality products. Measures should be taken to strengthen ore dressing, cutting and polishing facilities in the country.
Most of the large industrial mineral deposits of the country are located in the backward and far flung regions. These areas lack roads, energy and water supply. The transportation of raw material is often a major component of the cost. Sometimes, heavy machinery is involved in transportation which requires well constructed roads and bridges. Most of the industries must be installed at the site of mineral deposits to save the transport cost. In these industries the local people. But even if the industries are installed at the ore site, good roads area pre-requisite for taking the products to local and international markets.
If we have a good national mineral policy, there would be surplus production of minerals and their products. In between the producers and exporters there may be the middle man. Such middle men or groups should set up large store houses in the cities adjacent to the mining sites and advertise about the available raw material and mineral-based products in the national and international media.
A large number of mineral deposits are located in tribal and other politically disturbed areas of the country where working for development and exploitation of minerals is quite risky. In tribal areas adjacent to the North-West Frontier Province and in some parts of Balochistan the law of the land is not effective. The solution to this problem is that uniform mineral concession rules should be formulated and applied in all the administrative units of the country.
Mining also involves great financial risk particularly in a developing country like Pakistan where no systematic surveys are carried out to develop modern mines. There are no big investments in the mining sector in this country because the government of Pakistan does not have any schemes to provide financial and technical assistance for developing mines. There should be a mineral development bank like the Agriculture Development Bank.
The government of Pakistan should allocate more funds for carrying out scientific research particularly in the field of economic geology. There should be more opportunities for young geologists and mineral technologists for doing their Ph. Ds. in Pakistan and abroad in various fields related to the development and utilisation of minerals. There should be joint international research projects funded by local land foreign agencies.
The government of Pakistan should fully support government and non-government organisations engaged in mineral-related research to organise international conferences on development of mineral resources and mineral-based industries in Pakistan. It is an easy way to progress if we learn from the advances in economic geology and mineral technology and implement them in the country as Japan did 20 years ago and China is doing these days. There should be frequent exchanges among researchers, mine owners, mineral-based industrialists, mineral traders and policy makers of Pakistan and other countries.
The government of Pakistan should develop permanent trade complexes where industrial exhibitions should be held every year. It will be a place for local industrialists to launch their new products. This will attract a large number of foreign businessmen to Pakistan every year. India has very successfully experimented this concept of international trade fair where business deals of billions of rupees are signed every year. Besides the Export Promotion Bureau, non-government organisations like the Society of Economic Geologists and Mineral Technologists should be supported by the government to organise various international exhibitions of minerals and rocks in Pakistan and abroad.
Encouraging Foreign Investment
The mineral sector of Pakistan should be declared backward and mining should be given industry status. In the new mineral policy, a package of concessions and special concessions should be incorporated and implemented during the next five-year plan. The terms and conditions for investment should be similar to those announced by Sri Lanka and India for attracting foreign investment in their mineral sectors. Pakistan should allow free remittance of dividends, transferability of shares, five to ten years tax holiday, incentives for undertaking research work and marketing campaigns, etc. Duty-free import of machinery and raw material for export-oriented products should also be allowed.
Simplifying Tax Structure
Taxes are collected by central, state and municipal authorities. These add to the selling price over and above transport cost, and customs duty. This burden falls on the consumers. Revenue is, of course, necessary for the government but at the same time peculiarities inherent in the mining industry warrant careful consideration in taxation which should be set in such a manner so as to serve both as a revenue-earner and provide sufficient incentives for attracting required capital to this field. It should be based on the principles by which the investor is allowed to recover his capital in the shortest possible time, and the profits must cover expenses in prospecting and supply of needed capital for the development of new mines. The net return after paying the taxes, therefore, should be high enough not only to cover the normal but also to attract risk capital.
There should be a five-year tax holiday for companies, partnerships and individuals engaged in manufacture or export of nontraditional products and a further five years of half tax for high value-added and export-oriented mineral commodities.
Federal and Provincial governments in Pakistan are developing petroleum and energy sectors. There is a need to show political commitment to developing a solid mineral sector by preparing and implementing a good national mineral policy. All private and public agencies working on any aspect of mineral development and utilisation should betaken into confidence while preparing this document of vital economic importance to the country.…
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Publication information: Article title: How to Develop Mining and Minerals Industry. Contributors: Bilquess, Rubina - Author. Magazine title: Economic Review. Volume: 26. Issue: 5 Publication date: May 1995. Page number: 75+. © 1998 Economic and Industrial Publications. COPYRIGHT 1995 Gale Group.
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